Intel is designing a custom chip to mine bitcoin and other cryptocurrencies.

Intel

Intel will begin selling a custom chip later this year to mine bitcoin and other cryptocurrencies, the company announced on Friday. Early customers include Block payment processor (formerly Square) and two mining companies, Argo Blockchain and Griid Infrastructure.

It’s a major bet for the company on technology that could change finance and, along with a cryptocurrency-related idea called NFT, change the way we own digital assets. Cryptocurrencies and NFTs are plagued with fraud and theft issues, but Intel hopes to address another major drawback, their extraordinarily high power consumption.

With cryptocurrencies, mining is a computational process that records transactions in a widely shared database called the blockchain. The first miner to solve a complex computer problem is rewarded with a new cryptocurrency. This means that there is a strong incentive to have the most powerful machines – and also the most efficient, as electricity costs are high.

One of Intel’s main rivals, graphics chip maker Nvidia, has profited heavily from cryptocurrency mining. Indeed, miners’ appetite for its graphics processing units (GPUs) has made it difficult for gamers to find graphics cards. But major cryptocurrency mining hardware vendors, like Goldshell, MicroBT, and Bitmain, use processors called custom application-specific integrated circuits (ASICs) for mining.

Cryptocurrency mining uses gargantuan amounts of energy, with an estimated current rate of 125 terawatt-hours per year, according to an estimate by Cambridge University’s Bitcoin Electricity Consumption Index. For comparison, that’s as much as the electricity consumption of Norway in 2020, a country of 5.5 million people, according to the Energy Information Administration (EIA).

And that doesn’t even include mining other cryptocurrencies like ether and dogecoin.

Intel hopes its chip will help solve the power consumption problem.

“We are aware that some blockchains require an enormous amount of computing power, which unfortunately translates into an immense amount of energy,” said Raja Koduri, senior vice president in charge of Intel’s Accelerated Computing Systems and Graphics, in a blog post. “Our customers demand scalable and sustainable solutions, which is why we are focused on realizing the full potential of blockchain by developing the most energy-efficient computing technologies at scale.”

An increase in efficiency can help miners reduce energy costs and consumption, compounding the problems associated with the global climate crisis and depriving others of affordable energy. But don’t expect a drastic improvement in the environmental impact of mining.

This is because the prevailing “proof of work” approach to cryptocurrency means that the difficulty of the computational problem that miners must solve increases as more and more computing power arrives to solve it. This is in stark contrast to conventional computing, where gains in power and efficiency mean computers can deliver better video game graphics, meet new challenges like artificial intelligence, and expand into new markets like smart watches.

And ASICs, by their nature, are designed for a specific purpose, which in the case of cryptocurrency miners means that they are useless once they are replaced by new designs. Currently, bitcoin mining generates 31,000 tons of e-waste annually, according to Digiconomist’s Bitcoin E-waste Monitor.