Roger Karam, Northern Investment Partners at Toronto Summit: Bitcoin Mining is Replicating Mining for Gold
by Josh Anderson
TORONTO, ONTARIO — Blockchain technology has a lot of moving parts, and for many, they are more opaque than transparent. This, despite the fact that blockchain data centers are becoming more and more critical to the Canadian data center conversation. CapRE’s Canadian Data Center Summit in Toronto featured a germane panel titled Blockchain, Cryptocurrency and Bitcoin: What are They and How Do They Impact Data Center Design, Construction & Development? Towards the end of the discussion, the panel asked for questions from the audience. Below we cover the panelists’ response to a question from an eager audience member.
Q: How are these coins generated? It sounds like the equation gets more and more complex as the Blockchain gets bigger. Is there a way to make them less complex, so that we therefore need to generate less power?
Ahmed El-Nady, National Director – Data Centre Infrastructure, Trane Canada ULC: When Bitcoin started in 2008, it took within milliseconds to do a transaction. The average right now is anywhere between thirty to forty minutes. To do a single transaction. Because the equation is getting harder and harder and there are more nodes in the system. And the average [power consumption] right now, per transaction, the amount of electricity being used, is equivalent to the consumption of five entire houses in a whole day. As an average.
So it’s getting harder and harder as time goes on. There is no incentive and there’s no reward. I was reading an interesting article the other day about Cloud Mining. Where somebody goes into Alberta and says, you know what, you have some servers, you have some extra capacity, can I use them? Can I use the computing power for that? That might be the next big thing – Cloud Mining.
Q: It just seems crazy that in this day and age we are using more and more and more power. Is there some kind of incentive or something else to reduce the equation and therefore the power, or is that just the way it is?
Roger Karam, Chief Executive Officer, Northern Investment Partners Inc.: It’s what the system is based on, basically. We could have printed Bitcoins and distributed it. I could have been a Bitcoin-centered bank. And some crypto-currency are pretty much doing that. They’re doing ICOs. But the reason why Bitcoin is being more successful than other crypto-currencies is that they rely on the Proof of Work. And the fact that there is work being done and this work is getting more and more expensive, they’re kind of replicating the mining of gold.
I had a huge debate with some miners – what’s the point of it? It’s really a waste of electricity. Does it make any sense? And they said, that the reason that Bitcoin stands out among other crypto-currencies is Proof of Work. No other crypto-currency has the Proof of Work. And I told them how back in the 90s, when I was playing Dunes, I was mining and building fortresses. I don’t see the difference. We are not creating anything. We’re creating Bitcoin. But this is what it is. Gold was similar. Gold doesn’t have any intrinsic value. We can debate its malleability and its rarity, etc. etc. but it has some value on the market today.
Michel Chartier, President, Kelvin Emtech: It depends on the machine. On average, if you take the BitMain S9, it requires 1.6 kilowatts of heat generated. If they could make it, with the same amount of calculations, 100 watts, that’d be perfect. That would be perfect. But the thing is, now they’re using graphic cards that are mostly off-the-shelf to create that. And those graphic cards usually come with one or two cards in a computer at your place. So they don’t have any incentives to reduce the consumption.
So it needs to come all together to make sure they’re using the best, or just less, consumption-type equipment within. But I’m not sure if we’re ever going to get there.
For more on Blockchain from the Toronto perspective, check out previous CapRE Insider Reports:
- How Are Blockchain Servers Different From the Rest?
- Why Don’t More Blockchain Data Centers Utilize Co-Gen for Cheap Power?
- Crypto-Mining Has an Expiration Date, But Blockchain Doesn’t. So Where Does Blockchain’s Future Lie?
- Blockchain 101: How Do Miners Make Money?
- How is Blockchain Changing the Canadian Data Center Game?