What is Bitcoin mining and why is this Philly company doubling down on it?

If you follow along with the cryptocurrency ecosystem, you know that Bitcoin has had quite a week.

On Tuesday, Tesla founder Elon Musk announced that the company had purchased $1.5 billion in Bitcoin and plans to accept payment for its products in the currency. Tesla is the latest in a string of larger companies, including Visa, PayPal and Square, to join the hype, and Bitcoin enthusiasts are excited at the prospects of institutional investment in the crypto space.

“The currency becomes more valuable as people entrust more of their time, computational power and native currencies into it,” one local expert told us late last year.

This wider adoption of Bitcoin will help drive up its value, said Don Vo, founder and CEO of of VBit Technologies, a Washington Avenue-based blockchain infrastructure solutions company. And he feels Tesla’s adoption could prompt a wave of other companies to jump on board.

Unlike the U.S. dollar, Bitcoin is a decentralized currency with no real owner, and it has a fixed supply of 21 million bitcoins. Instead of a financial institution, like your bank — which monitors your purchases to make sure that money you paid for, say, your new couch gets where it’s meant to go — Bitcoin is monitored by anyone and everyone who accesses its server. It uses blockchain technology to provide an open ledger of transactions and to keep those transactions secure.

Enter Bitcoin mining, a process done by specialized computers to secure the network and process each and every Bitcoin transaction. Miners are rewarded new bitcoins for their services, and the more miners there are, the more secure the network, the idea goes.

And Vo and his team are doubling down on the process: They announced this week amid Tesla’s news that the company is opening a third mining location in the White Fish, Montana area. That follows locations in Colorado and Calgary, Canada, and the team is exploring space in Western Pennsylvania.

The facility they’re expanding with in Montana offers the inexpensive space, hydroelectric power and cool facilities needed to power the large, energy-sucking computers needed to mine, Vo told Technical.ly.

One computer used to mine can consume as much energy as 80 refrigerators, he said. VBit will deploy its new mining hardware in a data center that is completely powered by hydroelectricity, a renewable energy source.

Now Bitcoin overtakes Argentina in annual energy use, and close to Norway pic.twitter.com/Y24pGDbexP

— Rory Cellan-Jones (@ruskin147) February 9, 2021

“From an environmental standpoint it’s therefore important for Bitcoin mining to move to a more eco-friendly energy source that not only reduces the cost of electricity consumption but also generates it from renewable sources making it environmentally friendly,” Vo said.

While the mining centers have to be built in big, open spaces, it was important for Vo to build the VBit headquarters in Philly when he started the company in 2018. The city has a good talent pool, he said, and VBit is growing the now-19-person team, adding new staff each month.

“VBit is planning to stay and grow here, and we want to help expand into Philadelphia, and help people who are actually taking advantage of this new opportunity in crypto,” Vo said.