Starlink Bitcoin Mining and Decentralization – Bitcoin Magazine
This is an opinion editorial by El Sultan Bitcoin, former CEO of Coinspree and current Head of Product Marketing in Latin America at Ledn.
How decentralization of mining can be stimulated
Over a year has passed since the great bitcoin mining migration began, when the network experienced a 60% plus reduction in hash rate due to the Chinese Communist Party’s attack on bitcoin mining. The aftermath of China’s mining ban equated to the US absorbing a larger portion of the hashish power that used to reside in mainland China. Hash rate recovered and reached all-time highs again. No questions arise about Bitcoin’s resilience here. However, one may wonder how decentralization of networks and mining can be promoted to limit the impact of similar attacks on Bitcoin.
Lack of Internet access is a hindrance in remote locations
Although mining is an activity spread across the globe, miners flock to locations primarily based on energy costs. As covered by Nic Carter, energy is a local phenomenon. Highly concentrated energy production sites are usually located in remote areas; Quebec, Canada and Sichuan, China are both good examples of this. Here, the installed hydropower capacity exceeds the demand for electricity, and since energy is not an easily transportable commodity, producers with excess capacity find themselves wishing for alternative buyers or assuming wasted energy from operations. Essentially, this is why wasted energy is the miners’ platonic love. Under the guise of a jurisdiction-neutral bidder, bitcoin miners can be buyers of last resort to cash in on stranded energy.
However empowering the subject may sound, in practice trying to tap into cheap, high-energy sites often involves mining on a large scale, and when talking about remote locations, internet connectivity can be another issue. For a multi-million dollar mining farm, accessing a corporate internet satellite service would be no problem, as the size of their revenue would make such connection costs appear minimal on the income statement. In contrast, this leaves out the likelihood that the average Joe lives near stranded energy sites.
How Starlink would enable remote Bitcoin mining
Individual connection to the internet has reached 60% of the world’s population. This means that there are now fewer than 3 billion people who are not connected to the internet, with the majority of these people located in South and East Asia and in Africa.
Improving the quality and reliance on people’s connectivity is also an unsolved problem: enter Starlink. Led by SpaceX, Starlink aims to provide high-speed, low-latency broadband internet to remote and rural locations around the world. Leveraging SpaceX’s experience building rockets and spacecraft, their mission is to deploy the world’s most advanced broadband internet system.
Hardware costs to set up a Starlink access point hover around $600 in addition to $3,000 per month. While the expenses may be considered too high for the average person, imagining how this could affect Bitcoin brings up interesting theories.
How Remote Bitcoin Mining Can Accelerate Hyperbitcoinization
Envisioning miners subsidizing Starlink costs in rural areas to harness stranded energy while enabling internet connectivity might not be too far-fetched, considering we have a bitcoin miner running greenhouses in the Netherlands. If the generation of wasted heat is subsidized to grow produce and bloom flowers in one place, the same may apply to enabling internet-based services in unconnected areas in exchange for newly minted bitcoin.
How this can also play a role in reducing centralization of internet service providers (ISPs) may also be of interest. As reported by DARPA’s “Are Blockchains Decentralized?” paper, “For at least the past five years, 60% of all Bitcoin traffic has passed through just three ISPs.” Also, “As of July 2021, about half of all public Bitcoin nodes operated from IP addresses in German, French, and American ASes, the top four of which are hosting providers (Hetzner, OVH, Digital Ocean, and Amazon AWS).”
On the flip side, community-based approaches seem to be proliferating in the Bitcoin ecosystem to reduce centralization. With projects like Fedimint looking to accelerate decentralization of custody and home mining setups gaining interest in recent years, one might ask:
“Is Starlink well on its way to becoming one of the last mile bitcoin mining and network decentralization enablers?”
It remains to be seen.
This is a guest post by El Sultan Bitcoin. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.
