Last month, we suggested that the beginning of February would be the perfect time to buy Bitcoin, as that would mark 2 weeks before Chinese New Year, which had proven to be the ideal buying opportunity for 5 years in a row.
How did we do? Well, Friday February 2nd was the target date, and price action did initially seem that a significant low and rebound was underway. However, the following Tuesday there was another drive lower, with Bitcoin briefly dipping below $6000. The price has made a massive move higher since then, and at the time of writing is hovering around the $11,000 mark – almost 80% off the low.
While we were 4 days wrong on the date, it was still within our early February window. It seems that the low on Bitcoin is now in, and it will be interesting to see how our investment does in 2018.
Meanwhile, we were intrigued to learn about developments in Bitcoin mining, and about how Iceland is making big strides in this competitive niche.
First, we should probably explain a little bit about Bitcoin mining. Whenever a Bitcoin transaction occurs, a validation procedure needs to be run by a computer running Bitcoin mining software. Miners around the world compete to validate the transaction in as short a time as possible, and whoever wins the race, receives a new piece of Bitcoin as a reward.
Now, this validation uses a ton of computer processing capacity, and there is a significant cost in terms of electricity. For this reason, bitcoin miners concentrate themselves in areas where electricity is cheap. China is one such place, and by the end of 2017, it was estimated that 70% of mining capacity was located in that country.
However, there is a growing rival to this Chinese domination.
Little Iceland is blessed with abundant, cheap electricity thanks to the volcanic activity under every Icelander’s feet, and more and more miners are renting out data centres across the country in order to compete with the Chinese.
It is now estimated that the Icelandic power used for mining Bitcoin and other cryptocurrencies will double in 2018 to a massive 100 Megawatts. Incredibly, that is more energy than all Iceland households use in a year.
While the cheap electricity is what draws miners to this island in the North Atlantic, its location also offers a side benefit. The cold Arctic air reduces the need for air-conditioning in those data centres, thus further making cost savings. Since the power-hungry chips used to mine cryptocurrencies produce huge amounts of heat when run at their maximum efficiency, there is now a further reason to choose Iceland.
It will be interesting to see how much of an impression Iceland can make in the Bitcoin mining market, and as we like to see the little guy do well, we wish our Nordic cousins the best of luck.
Did you pick up some Bitcoin in the early February fire sale? If yes, will you HODL it, or spend it on a hot date with a London escort companion from Viva?