Elon Musk depends closely on Bitcoin

Elon Musk is making headlines again, but not in space this time. Instead, its ground-based EV company Tesla has invested $ 1.5 billion in bitcoin currency. In addition, the company intends to accept cryptocurrency as a means of payment.

This announcement signals the growing importance of Bitcoin and cryptocurrency in general. Tesla only follows MicroStrategy as the largest Bitcoin company owner. Tesla’s $ 1.5 billion investment, while huge, represents a relatively small fraction of the company’s available funds. According to Bloomberg, Tesla ended 2020 with more than $ 19 billion in cash after generating $ 12 billion in stock sales to take advantage of the recent surge in its share price.

The purchase of Tesla has also brought back attention to bitcoin mining, the energy-intensive process of creating more of the digital currency. Miners use banks of dedicated and powerful computers that run special software to mine bitcoins. This intensive and time-consuming process uses enormous amounts of electricity. Some estimates suggest that power consumption related to Bitcoin mining has increased more than eightfold since 2017.

Potentially harmful environmental emissions caused by bitcoin mining by power sources depend on how and where the power is generated. For example, coins that are mined where hydropower is cheap, abundant, and environmentally friendly – such as in the northwestern US Pacific – are more desirable in coal-intensive regions such as China or India.

Another way to increase the revenue from mining bitcoins is to improve the efficiency of the chip hardware involved in the process. Mining is the process of adding transaction records to Bitcoin’s public ledger, the blockchain. It is in place so that every transaction can be confirmed and every single user on the network can access this ledger. It is also used to distinguish legitimate Bitcoin transactions from illegitimate ones.

So computing power generates the amount of money. Greater efficiency, processing power, and energy consumption mean a greater proportion of the bitcoin currency a miner can accumulate. The need for improved computer hardware and software has resulted in a significant increase in semiconductor ASIC chips specifically designed for mining Bitcoin.

“Bitcoin mining is a huge business,” noted Adam Traidman, CEO of BRD, CEO of Ripple Asia from Soft Bank Investment (SBI) and CEO of SBI Mining Chip. “It’s a large sector of the semiconductor business that is relatively unknown in the US, in part because many of the mining companies are based in China, which drives much of the optimization of chip manufacturing.”

Any small increase in efficiency in the chip’s hardware design depends directly on how much more a Bitcoin miner can make of their mining operation. Traidman explains that if you perform 0.2% better, you can literally calculate exactly how much more money you will make per minute of operation.

But today’s mining computing boxes are neither cheap nor energy efficient. A reputable mining box contains between 200 and 500 ASIC-customer-specific ASIC chips and consumes between 2.5,000 and 4,000 watts.

Returning to the question of Elon Musk’s large investment in Bitcoin, Traidman shared this perspective:

“Lately, many large companies have invested parts of their corporate coffers in Bitcoin. The strange part is that some of these companies announce this after investing. Most of the time when companies buy gold or similar commodity money, they don’t disclose it. People are touting Bitcoin because they want the price to go up and the cryptocurrency to be supported. In fact, it was recently written on Bloomberg that the Harvard Endowment Fund actually invested in Bitcoin a few months ago. And didn’t tell anyone. But there have been many companies that have announced they have invested hundreds of millions or billions. Regardless, all of these large investments signal a strong and new floor in the Bitcoin price, which means there could be significant upward momentum this year. That is extremely positive for the industry. “

The growth and maturity of cryptocurrencies like Bitcoin, Ethereum, and others have been a boon for startups like BRD, providing users with a safe way to get into business. According to its CEO, BRD has over 7 million customers worldwide who collectively have $ 20 billion worth of crypto stored in their application. In fact, BRD is becoming a new type of large bank, but one that is decentralized and user-controlled. It’s a whole new world for high tech and high finance.

Adam Traidman, used with permission
Adam Traidman, CEO of Soft Bank Investment’s Mining Chip subsidiary, holds up the company’s latest 300mm Bitcoin mining ASIC. (Image source: Adam Traidman, used with permission)

John Blyler is a senior editor for Design News, covering electronics and advanced manufacturing areas. With a BS in technical physics and an MS in electrical engineering, he has years of experience in hardware-software network systems as an editor and engineer in the advanced manufacturing, IoT and semiconductor industries. John has co-authored systems engineering and electronics books for IEEE, Wiley, and Elsevier.

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