Crypto News

REPORT: Marathon Digital Holdings X BM PRO Present Cashing In On Trash

Published

11 months ago

October 12, 2023

The following report is a collaboration between Marathon Digital Holdings Inc. and Bitcoin Magazine Pro on integrating bitcoin mining into landfill management and methane mitigation.

TLDR

Landfills are a significant contributor to global methane emissions, which, if mitigated, could have a greater environmental impact than managing carbon dioxide emissions.Conventional methane management methods, such as venting and flaring, are inefficient and environmentally damaging, while waste-to-energy solutions, like selling electricity to the grid or distributing renewable natural gas (RNG) via pipelines, often prove economically infeasible for smaller or remote landfills.Bitcoin mining offers a market-based approach to reducing methane emissions from landfills by converting otherwise wasted potential energy into economic value. Bitcoin mining requires minimal investments in infrastructure, and it is geographically flexible, modular, and scalable. In theory, Bitcoin mining can therefore help any landfill, regardless of its size and geographic location, reduce its emissions while benefiting from an additional stream of income.

Abstract

Landfills worldwide face a growing problem with methane emissions, a potent greenhouse gas (GHG), as they struggle to manage ever-increasing volumes of waste. The traditional methods of dealing with this issue, venting and flaring, are inefficient and often environmentally harmful. Moreover, existing waste-to-energy solutions typically only work economically for larger landfills located near city centers, leaving smaller or remote landfills without a feasible alternative.

This report introduces a new solution to mitigating landfill methane emissions: a partnership between landfills and Bitcoin miners that leverages electricity generated from landfill waste for Bitcoin mining on-site (i.e., off-grid). This collaboration could offer a return on investment (ROI) by creating an additional income stream and a return on environment (ROE) by reducing emissions. Additionally, this win-win solution extends a variety of other benefits to all parties involved, presenting a more economically viable and environmentally responsible way to mitigate methane emissions, especially for smaller or isolated landfills.

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The Heap of Trouble Facing Our Landfills

Every year, over 2.0 billion metric tons of waste end up in landfills worldwide. 1 A portion of this waste is organic matter, and as it breaks down, it releases methane – a potent GHG gas with a global warming potential 80 times greater than carbon dioxide over a 20-year period. 2 Landfills are currently responsible for 11% of all global methane emissions. 3 However, recent satellite data studies on cities like Delhi, Mumbai, and Buenos Aires, suggest that methane emissions from landfills might be 1.4 to 2.6 times higher than previous estimates. 4 Moreover, according to projections by the World Bank, global waste may increase 70% to 3.4 billion metric tons by 2050. 5 This mounting pile of waste presents a critical environmental issue that must be addressed.

According to the Global Methane Assessment, “Achieving methane emissions reductions in the next decade will keep the planet significantly cooler than attempts to cut carbon dioxide emissions alone.” 6

The situation is particularly concerning in the United States, where municipal solid waste (MSW) landfills contribute to about 14% of human-related methane emissions. 7 In 2021, US MSW landfills released 3.7 million metric tons of methane, which is equivalent to 66 million gas-powered passenger vehicles or 79 coal-fired power plants, into the atmosphere. 8

Figure 1: 2021 US Methane Emissions, By Source 9

In an attempt to reduce methane emissions, the White House took decisive action in 2021. 10 The administration published revised standards for landfills without methane mitigation implementation plans and mandated that existing large MSW landfills in the US significantly reduce their methane emissions. While larger landfills are the principal focus of this policy, the heightened interest of regulators may have implications that reverberate across the entire landfill sector. As such, it has become imperative for all landfills, regardless of their size, to adopt effective strategies to decrease their methane emissions.

Venting Frustrations and Burning Issues: The Outdated Methods of Landfill Methane Management

Historically, landfills have relied primarily on two methods for methane management: venting and flaring. However, these methods are inefficient, wasteful, and often environmentally harmful.

Venting, a process in which methane is directly released into the atmosphere, is used by over 50% of US landfills due to a lack of gas collection systems. 11 The major downside of venting is its significant environmental impact since methane is more potent than carbon dioxide. Additionally, because it fails to take advantage of the potential energy value of methane, it is a wasteful practice.

On the other hand, flaring, which is the combustion of methane, is considered a more environmentally friendly approach than venting. Flaring reduces the global warming potential of methane by converting it into carbon dioxide (another GHG) and water. However, it is only about 92% efficient. 12 8% of the methane is still released into the atmosphere. Flaring also brings its own set of environmental issues to local communities, including air pollution, noise, and light disturbances. Moreover, similar to venting, flaring is wasteful as it fails to harness the energy potential of methane. In fact, because of its adverse impacts, the World Bank is advocating for a complete ban on routine flaring by 2030. 13 While the proposed ban would only apply to the oil and gas sector, it is conceivable that future legislation could include other large methane emitters.

A more productive alternative has emerged in the form of waste-to-energy conversion. But this alternative is not a viable option for all landfills.

The Constraints of Waste-to-Energy Conversion

Waste-to-energy conversion technologies have shown potential for mitigating methane emissions, particularly for larger landfills located near urban hubs. These sites can convert captured methane into two forms of sustainable energy: 1) electricity, which can be sold to the grid, and 2) renewable natural gas (RNG), which can be distributed through pipelines. Despite the high upfront costs of installing these mitigation systems, the potential return on investment can make them worthwhile if financed with a low cost of capital.

However, this option has limitations. Selling electricity to the grid, although less costly upfront relative to producing RNG, contends with slim profit margins and extended interconnect queues. In this context, “interconnect queues” refers to the waiting list for gaining access to the transmission lines needed to transport electricity from the source to the grid. Conversely, refining landfill gas into RNG is potentially more profitable, but it demands considerable capital and involves building new pipelines.

Moreover, not all large landfills are located near cities, and for smaller or remote landfills, the economics of waste-to-energy conversion are often untenable. The combination of lower waste volumes and logistical limitations may inhibit their ability to generate a profitable return from energy sales.

As a result of these challenges, the number of landfills converting landfill gas to energy has been declining since 2016.

Figure: 2 LFG to Electricity Trending Down Since 20161 14

This disparity between large and small (or remote) landfills underscores an urgent need for cost-effective, scalable solutions. Ideally, these solutions would be both environmentally friendly and economically viable; they would cater to the diverse needs of different landfill sizes and locations.

Figure 3: Large vs. Small to Medium Landfills 15

From Trash to Digital Treasure: Bitcoin Mining’s Unique Solution

This is where Bitcoin mining can step in and provide a practical solution today for landfills struggling to rationalize the economics of waste-to-energy conversion. Bitcoin mining can help even the smallest landfills transform their waste into a valuable resource. This solution, in turn, supports landfill owners in implementing strategies to reduce methane emissions and comply with regulations.

How would this work? The process begins by capturing methane from landfill waste and utilizing it to power generators or microturbines, which in turn supply electricity to Bitcoin mining rigs. This process converts what was previously a GHG into a source of renewable energy and a revenue source for the landfill.

Figure 4: Landfill With an On-Site Bitcoin Mining Data Center

Landfill: The process begins in the landfill, where organic waste decomposes and produces methane.Backup Flare: The flare can burn off excess methane if there is more than what is needed for power generation. However, sizing the data center optimally could minimize the reliance on a backup system.Gas Compression and Conditioning Skid: The captured methane is then sent to a gas compression and conditioning skid. This component is responsible for refining the methane, removing impurities, and pressurizing it to the required level.Modular Gas Microturbine: The compressed and conditioned methane gas is fed into a modular gas microturbine, which utilizes the gas to generate electricity.Containerized Bitcoin Mining Data Center: The electricity generated by the microturbine is used to power a containerized Bitcoin mining data center. The data center houses specialized computers (ASICs) designed to secure and process transactions for the Bitcoin network. As a result, a once harmful GHG is converted into a valuable digital commodity.

But why Bitcoin mining? It offers several unique advantages that no other solution in the marketplace can provide today, in particular:

Monetization with Lean Infrastructure: Bitcoin mining can monetize methane directly on-site without requiring expensive investments in grid transmission or pipeline connections. This direct approach means rapid deployment and revenue generation. With an additional income stream, landfills can invest in other LFG-to-energy projects while retaining the Bitcoin miner as an offtake for excess energy not sold.Limited Involvement from Landfill Owner: By partnering with a large, reputable miner, a landfill owner can reap several benefits with very low additional effort. The miners do the work.GHG Emission Reduction: Bitcoin mining offers a market-based approach, without regulatory intervention, to reduce methane emissions by converting otherwise wasted potential energy from landfills into economic value.Geographical Flexibility: Bitcoin miners can operate anywhere in the world; they only need an internet connection. This location agnosticism opens up opportunities for even the most isolated landfills, transforming previously overlooked sites into valuable sources of energy.Modular Capacity: Bitcoin data centers offer a high degree of customization and scalability, accommodating energy loads of varying magnitudes. This flexibility aligns well with landfills of different sizes and waste capacities. Nearly any landfill, regardless of its size, can host Bitcoin mining operations to take advantage of their methane emissions.Portability: Bitcoin data centers can be constructed in purpose-built containers. This configuration offers exceptional mobility. Mining operations can be relocated to new sites on an as-needed basis.Interruptible Operations: Bitcoin miners have the unique advantage of being able to power down and rapidly reboot within a brief 10-minute window. This capability is ideal for landfills where gas production might fluctuate due to variables like waste volume and composition.

These advantages make Bitcoin mining a mutually beneficial, win-win solution for both parties.

Economically, landfills can establish an additional income stream with minimal investment in infrastructure, while Bitcoin miners gain access to a low-cost source of renewable energy.

Environmentally, the solution converts a harmful GHG gas into energy. It reduces landfill emissions and simultaneously helps Bitcoin miners reduce their reliance on grid energy. By increasing their sustainable energy mix and reducing GHG emissions, Bitcoin miners could, in theory, make their operations CO2 neutral or even negative. 16

Operationally, landfills can quickly implement an effective means of mitigating their methane emissions, while Bitcoin miners can diversify their energy sources and site locations.

Figure 5: Landfills + Bitcoin Mining: A Win-Win Collaboration

Figure 6: Solutions Available to Landfills: Comparative Analysis

In short, by offering an effective solution to the pressing issue of landfill methane emissions, Bitcoin mining can transform what was once a troublesome waste product into a valuable resource.

About Marathon Digital Holdings

Marathon is a digital asset technology company that focuses on supporting and securing the Bitcoin ecosystem. The Company is currently in the process of becoming one of the largest and most sustainably powered Bitcoin mining operations in North America.

1 “What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050.” The World Bank. Accessed August 7, 2023. https://datatopics. worldbank.org/what-a-waste/trends_in_solid_waste_management.html#:~:text=The%20world%20generates%202.01%20billion,from%200.11%20 to%204.54%20kilograms.

2 “Methane: A Crucial Opportunity in the Climate Fight.” Environmental Defense Fund. Accessed August 7, 2023. https://www.edf.org/climate/ methane-crucial-opportunity-climate-fight.

3 Dickie, Gloria. “Landfills around the World Release a Lot of Methane – Study.” Reuters, August 11, 2022. https://www.reuters.com/business/environment/landfills-around-world-release-lot-methane-study-2022-08-10/#:~:text=Landfill%20waste%20 %E2%80%93%20responsible%20for%20about,according%20to%20the%20World%20Bank.

4 Arasu, Sibi. “Satellite Data Finds Landfills Are Methane ‘Super Emitters.’” Phys.org, August 13, 2022. https://phys.org/news/2022-08-satellite-landfills-methane-super-emitters.html.

5 “What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050.” The World Bank. Accessed August 7, 2023. https://datatopics.worldbank.org/what-a-waste/trends_in_solid_waste_management.html#:~:text=The%20world%20generates%202.01%20billion,from%200.11%20 to%204.54%20kilograms.

6 “Global Methane Assessment: Benefits and Costs of Mitigating Methane Emissions.” UN Environment Program, May 6, 2021. https://www.unep.org/resources/report/global-methane-assessment-benefits-and-costs-mitigating-methane-emissions.

7 “Trashing The Climate: Methane from Municipal Landfills.” Environmental Integrity, May 18, 2023. https://environmentalintegrity.org/reports/trashing-the-climate/.

8 Ibid.

9 “Basic Information about Landfill Gas.” Environmental Protection Agency, August 3, 2023. https://www.epa.gov/lmop/basic-information-about-landfill-gas.

10 “U.S. Methane Emissions Reduction Action Plan.” The White House, November 2021. https://www.whitehouse.gov/wp-content/uploads/2021/11/US-Methane-Emissions-Reduction-Action-Plan-1.pdf.

11 “LMOP Landfill and Project Database.” Environmental Protection Agency, August 3, 2023. https://www.epa.gov/lmop/lmop-landfill-and-project-database.

12 “Gas Flaring.” IEA. Accessed August 7, 2023. https://www.iea.org/energy-system/fossil-fuels/gas-flaring.

13 “Zero Routine Flaring by 2030 (ZRF) Initiative.” The World Bank. Accessed August 7, 2023. https://www.worldbank.org/en/programs/zero-routine-flaring-by-2030.

14 “LMOP Landfill and Project Database.” Environmental Protection Agency, August 3, 2023. https://www.epa.gov/lmop/lmop-landfill-and-project-database.

15 Ibid.

16 Daniel. “35 LANDFILLS MINING BITCOIN = A NET ZERO EMISSION BITCOIN NETWORK.” Batcoinz, May 28, 2023. https://batcoinz.com/50-landfills-mining-bitcoin-a-zero-emission-bitcoin-network/.

Bitcoin Mining Offers an Economical Solution to Mitigating Methane Emissions from Landfills

Crypto News

Trump Election Victory Could Send Bitcoin to $125,000, Says Standard Chartered Analyst

Published

14 hours ago

September 12, 2024

According to Geoff Kendrick, Head of Crypto Research at Standard Chartered bank, a Donald Trump victory in the 2024 U.S. presidential election could drive Bitcoin to $125,000. However, Kendrick notes that new all-time highs (ATHs) for Bitcoin are likely no matter who wins the election, with Bitcoin still expected to hit $75,000 if Vice President Kamala Harris secures the presidency.

JUST IN: A Trump victory could send #Bitcoin to $125,000, but new ATHs are likely no matter who wins election, says Standard Chartered bank 🚀 pic.twitter.com/SfGoRSyKwn

— Bitcoin Magazine (@BitcoinMagazine) September 12, 2024

In the new report, Kendrick explained that while the outcome of the election will impact the Bitcoin industry, the risks of a Harris presidency may be overstated. “BTC will end 2024 at fresh all-time highs under either election outcome – [circa] $125,000 level under Trump or c.$75,000 level under Harris,” Kendrick wrote. While a Harris win could initially result in a price decline, he emphasized that “dips would be bought as the market recognizes that progress on the regulatory front will still be forthcoming.”

Despite concerns within the industry that Harris may adopt a more hostile stance toward Bitcoin, Kendrick believes that her administration would be “much less negative” for digital assets than a second Biden administration. Furthermore, Standard Chartered maintains its bullish outlook, forecasting that Bitcoin will hit $200,000 by the end of 2025, regardless of who wins this year’s election.

The 2024 election has drawn attention to the differing approaches to Bitcoin regulation by the two candidates. Trump has become an ally to the Bitcoin industry, speaking at the Bitcoin 2024 conference in Nashville this summer, where he expressed support for Bitcoin. The Republican National Committee has also included Bitcoin in its platform, pledging to defend the right to mine Bitcoin and protect self-custody.

In contrast, Vice President Kamala Harris has remained silent on the issue, opting not to attend the Bitcoin conference. The Democratic Party’s platform makes no mention of Bitcoin or cryptocurrency, which has led to concerns within the industry about the potential regulatory environment under a Harris administration. Although Harris has not publicly shown hostility to crypto, some fear a continuation of the stricter regulatory policies seen during President Joe Biden’s term, notably shaped by figures like Senator Elizabeth Warren and SEC Chair Gary Gensler.

A Trump win could fuel a Bitcoin rally, though new all-time highs are expected regardless of the 2024 election outcome.

Crypto News

Revolutionizing Bitcoin Mining: The Power of Three-Phase Systems

Published

17 hours ago

September 12, 2024

Bitcoin mining has seen exponential growth since the first ASIC miner was shipped in 2013, improving hardware efficiency from 1,200 J/TH to just 15 J/TH. While these advancements were driven by better chip technology, we’re now reaching the limits of silicon-based semiconductors. As further efficiency gains plateau, the focus must shift to optimizing other aspects of mining operations—particularly the power setup.

Three-phase power has emerged as a superior alternative to single-phase power in bitcoin mining. With more ASICs being designed for three-phase voltage input, future mining infrastructure should consider adopting a uniform 480v three-phase system, especially given its abundance and scalability across North America.

Understanding Single-Phase and Three-Phase Power

To comprehend the significance of three-phase power in bitcoin mining, it’s essential first to understand the basics of single-phase and three-phase power systems.

Single-phase power is the most common type of power supply used in residential settings. It consists of two wires: one live wire and one neutral wire. The voltage in a single-phase system oscillates sinusoidally, providing power that reaches a peak and then drops to zero twice during each cycle.

Imagine you are pushing a person on a swing. With each push, the swing moves forward and then comes back, reaching a peak height and then descending back to the lowest point before you push again.

Just like the swing, a single-phase power system has periods of maximum and zero power delivery. This can lead to inefficiencies, especially when consistent power is required, although this inefficiency is negligible in residential applications. However, it becomes significant in high-demand, industrial-scale operations like bitcoin mining.

Three-phase power, on the other hand, is commonly used in industrial and commercial settings. It consists of three live wires, providing a more constant and reliable power flow.

In the same swing analogy, imagine you have three people pushing the swing, but each person is pushing at different intervals. One person pushes the swing just as it starts to slow down from the first push, another pushes it a third of the way through the cycle, and the third person pushes it two-thirds of the way through. The result is a swing that moves much more smoothly and consistently because it’s being pushed continuously from different angles, maintaining a constant motion.

Similarly, a three-phase power system ensures a constant and balanced power flow, resulting in higher efficiency and reliability, particularly beneficial for high-demand applications like bitcoin mining.

The Evolution of Bitcoin Mining Power Requirements

Bitcoin mining has come a long way since its inception, with significant changes in power requirements over the years.

Before 2013, miners relied on CPUs and GPUs to mine bitcoins. The real game-changer came with the development of ASIC (Application-Specific Integrated Circuit) miners as the bitcoin network grew and competition increased. These devices are specifically designed for the purpose of mining bitcoins, offering unparalleled efficiency and performance. However, the increased power requirements of these machines necessitated advancements in power supply systems.

In 2016, a top-of-the-line miner was capable of computing 13 TH/s with a power consumption of approximately 1,300 watts (W). While considered highly inefficient by today’s standards, mining with this rig was profitable due to the low network competition at that time. However, to generate meaningful profits in today’s competitive landscape, institutional miners now rely on rigs that demand around 3,510 W.

The limitations of single-phase power systems has come to the fore as the power requirements of ASIC and the efficiency demands of high-performance mining operations grows. The transition to three-phase power became a logical step to support the growing energy needs of the industry.

480v Three-Phase in Bitcoin Mining

Efficiency First

480v three-phase power has long been the standard in industrial settings across North America, South America, and other regions. This widespread adoption is due to its numerous benefits in terms of efficiency, cost savings, and scalability. The consistency and reliability of 480v three-phase power make it ideal for operations that demand greater operational uptime and fleet efficiency, especially in a post-halving world.

One of the primary benefits of three-phase power is its ability to deliver higher power density, which reduces energy losses and ensures that mining equipment operates at optimal performance levels.

Additionally, implementing a three-phase power system can lead to significant savings in electrical infrastructure costs. Fewer transformers, smaller wiring, and reduced need for voltage stabilization equipment contribute to lower installation and maintenance expenses.

For example, a load requiring 17.3 kilowatts of power at 208v three-phase would need a current of 48 amps. However, if the same load is supplied by a 480v source, the current requirement drops to just 24 amps. This halving of the current not only reduces power loss but also minimizes the need for thicker, more expensive wiring.

Scalability

As mining operations expand, the ability to easily add more capacity without major overhauls to the power infrastructure is crucial. The high availability of systems and components designed for 480v three-phase power makes it easier for miners to scale their operations efficiently.

As the bitcoin mining industry evolves, there is a clear trend towards the development of more three-phase compliant ASICs. Designing mining facilities with a 480v three-phase configuration not only addresses current inefficiencies but also future-proofs the infrastructure. This allows miners to seamlessly integrate newer technologies that are likely to be designed with three-phase power compatibility in mind.

As shown in the table below, the immersion-cooling and hydro-cooling techniques are superior methods in scaling up bitcoin mining operations in terms of reaching higher hashrate output. But to support such a much higher computation capacity, the configuration of three-phase power becomes necessary for maintaining a similar level of power efficiency. In short, this will lead to a higher operational profit with the same profit margin percentage.

Implementing Three-Phase Power in Bitcoin Mining Operations

Transitioning to a three-phase power system requires careful planning and execution. Here are the key steps involved in implementing three-phase power in bitcoin mining operations.

Assessing Power Requirements

The first step in implementing a three-phase power system is to assess the power requirements of the mining operation. This involves calculating the total power consumption of all mining equipment and determining the appropriate capacity for the power system.

Upgrading Electrical Infrastructure

Upgrading the electrical infrastructure to support a three-phase power system may involve installing new transformers, wiring, and circuit breakers. It’s essential to work with qualified electrical engineers to ensure that the installation meets safety and regulatory standards.

Configuring ASIC Miners for Three-Phase Power

Many modern ASIC miners are designed to operate on three-phase power. However, older models may require modifications or the use of power conversion equipment. Configuring the miners to run on three-phase power is a critical step in maximizing efficiency.

Implementing Redundancy and Backup Systems

To ensure uninterrupted mining operations, it’s essential to implement redundancy and backup systems. This includes installing backup generators, uninterruptible power supplies, and redundant power circuits to protect against power outages and equipment failures.

Monitoring and Maintenance

Once the three-phase power system is operational, continuous monitoring and maintenance are crucial to ensure optimal performance. Regular inspections, load balancing, and proactive maintenance can help identify and address potential issues before they impact operations.

Conclusion

The future of bitcoin mining lies in the efficient utilization of power resources. As advancements in chip processing technologies reach their limits, focusing on power setup becomes increasingly critical. Three-phase power, particularly a 480v system, offers numerous advantages that can revolutionize bitcoin mining operations.

By providing higher power density, improved efficiency, reduced infrastructure costs, and scalability, three-phase power systems can support the growing demands of the mining industry. Implementing such a system requires careful planning and execution, but the benefits far outweigh the challenges.

As the bitcoin mining industry continues to evolve, embracing three-phase power can pave the way for more sustainable and profitable operations. With the right infrastructure in place, miners can harness the full potential of their equipment and stay ahead in the competitive world of bitcoin mining.

This is a guest post by Christian Lucas, Strategy at Bitdeer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Why Three-Phase electrical systems can offer a competitive advantage to miners with ASIC efficiency gains tapering off.

Crypto News

Bitcoin Vaults and the Future of Bitcoin Custody

Published

1 day ago

September 11, 2024

Bitcoin, the original cryptocurrency, has come a long way from its informal past. From an experimental digital currency that occupied cypherpunk niches on the internet, it has grown to a trillion-dollar market cap asset valued at over $66,900 per coin as of this writing.

While investing in Bitcoin is still considered a wild ride, the asset is quickly maturing. Financial institutions are closing in and creating hybrid vehicles to invest in cryptocurrency. The ecosystem reached a new milestone with the advent of Bitcoin ETFs, making people realize the immensity of Bitcoin’s potential in traditional markets and spurring new demand.

As more people and institutions invest in Bitcoin, Bitcoin vaults become more crucial. Here, we examine the features and importance of Bitcoin vaults and how they contribute to ensuring a reliable infrastructure that promotes sustained value and investability.

We explore their role in professionalized and institutional custody. Secure custodians are vital to protecting digital assets from theft and loss. This article also tracks the fast-advancing technology of Bitcoin vaults and how it relates to future developments in the custody space.

What are Bitcoin vaults, and how do they work?

Bitcoin vaults are offline digital asset storage solutions offering enhanced protection against online threats. This protection is created through multiple security layers.

As the Bitcoin investment sphere grows, new products are being created. Bitcoin vaults are a critical component of these new financial products. While hot wallets and exchange accounts offer easy transaction access, they are vulnerable to hacks.

Bitcoin vaults are fortified digital safes. They protect your Bitcoin by taking it offline and shielding it from the constant openness to online attacks. Their multiple layers of security include withdrawal delays, multi-signature or multisig authentication, and cold storage solutions.

One highly secure approach to Bitcoin or crypto vaults is called air-gapping. Air-gapped storage offers robust protection against malware attacks, phishing scams, and unauthorized access.

Many Bitcoin vaults integrate advanced encryption techniques. They typically require multiple authorizations for transactions to proceed. Advanced encryption and the need for layered authorization steps bolster security posture.

As a Bitcoin investor, ensuring that your coins are kept in air-gapped and layered security vaults protects your investment and helps you hold it long-term.

Vaults: Vital Components of Bitcoin Custody

Bitcoin vaults are a component of Bitcoin custody solutions. Bitcoin custody is the entire process of holding and securing BTC.

Because Bitcoin is a digital asset, it requires unique storage solutions to protect it from theft and loss. As BTC’s value rises, so does the interest from cybercriminals and hackers. Therefore, secure custody solutions are essential for protecting these digital assets.

The Advanced Technology Behind Bitcoin Vaults

The following advanced technologies combine to create the security behind Bitcoin vaults. Understanding them helps you understand, evaluate, and appreciate their robustness.

Cold Storage

Cold storage is a security method that keeps Bitcoin offline or away from internet-connected devices. Being offline reduces the risk of cyberattacks. Bitcoin cold storage is often used with multi-sig technology to provide maximum security.

Multi-Signature Technology

Multi-signature or multisig technology requires multiple private keys to authorize a Bitcoin transaction. This method implies that even as one key is compromised, the Bitcoin in the wallet cannot be transferred. The transaction still requires the other keys to be approved.

Multisig technology enhances security by distributing ownership and control over Bitcoin. It makes it very challenging for a single entity to access or steal the assets.

Hardware Security Modules (HSMs)

Hardware Security Modules (HSMs) are tamper-resistant and hardened devices that secure cryptographic processes. They generate, protect, and manage keys used for data encryption and decryption, as well as digital certificates and signatures.

These specialized devices, in other words, are designed to protect and manage your digital keys. They provide a secure environment for cryptographic key generation, storage, and usage, ensuring that the private keys are never exposed to potential threats. HSMs are often used in Bitcoin vaults to enhance the security of the stored assets.

HSMs are recommended for those with significant BTC holdings. They are also ideal for businesses handling Bitcoin and other crypto. While integration can be complex and require continued maintenance, the security benefits far outweigh the cost for those with high-value holdings.

Furthermore, HSMS are tested, validated, and certified to the highest standards. They enable organizations to meet and exceed emerging and established regulatory requirements for cybersecurity.

Companies Offering BTC Custody Solutions

As Bitcoin and its related financial products gain popularity, so does the need for reliable custody. Companies that offer this service are called Bitcoin or crypto custodians and are a critical component of the digital asset industry.

These companies or platforms offer secure BTC and crypto storage and provide services such as private key management, online security solutions, and transaction processing.

Crypto custodians are gaining prominence as the cryptocurrency market grows. They are essential in ensuring that assets are stored and managed securely. Moreover, they protect investors’ funds by providing layers of security beyond what public wallets or exchanges offer.

However, it must be noted that exchanges, trading desks, and investment platforms run their own custody solutions. In addition, some exchanges are also the most noted custody providers. Examples of top custody providers, most of which offer investment access, include Swan Bitcoin, BitGo, Coinbase Custody, Anchorage, Gemini Custody, Bakkt, and Bitcoin Suisse.

How To Choose Among BTC Custody Providers

Several companies are competing in the crypto custody market. If you are a regular BTC trader or investor, you might be curious about how to choose what works for you.

Photo by Traxer on Unsplash

Platforms should enable users to buy and store Bitcoin easily. While popular exchanges like Binance and Kraken offer a wide range of services, including retail buying and selling of crypto, they have downsides. They may not provide the best storage options for your crypto, and they may be more vulnerable and open to various hacks.

Long-term BTC investors usually shun day trading and prefer the buy-and-hold strategy. Swan Bitcoin is a low-fee platform specializing in BTC-specific investments. It offers a full suite of BTC financial services, including Swan Vault, simplifying BTC storage for users. If you’re curious how it compares to large global exchanges, check out the Kraken review on Swan Bitcoin’s site.

The best Bitcoin vaults give you complete control over your coins, with user-friendly and straightforward features for setup, deposits, and withdrawals. They use the most reliable hardware to provide users with the most robust security. An example of such hardware is the Blockstream Jade signing device, a hardware wallet used by Swan Bitcoin to ensure BTC owners’ full access to keys offline.

You need signing devices that store two private keys to unlock a Swan Vault. Swan manages a third key called the Cloud Key, which is recommended for use as a second key to prevent bringing both hardware signing devices to the same location.

Bitcoin vaults must have sound recovery strategies for BTC theft or loss, as 72-hour holds for Cloud Key withdrawals. Moreover, these vaults need to offer comprehensive support services, including secure storage of spare keys to assist you in moving funds and customer support manned by trained specialists.

When Investing in BTC, Choose a Reliable Custodian

Bitcoin vaults are becoming increasingly important as more people and institutions invest in Bitcoin. As digital assets gain legitimacy through legalized financial products, security custody solutions become increasingly vital to protect them from theft and loss.

By leveraging advanced technologies such as multi-signature authentication, cold storage, and Hardware Security Modules, Bitcoin vaults provide a robust security solution for digital assets. In addition, multi-layered features ensure secure storage of private keys and means of recovery in case keys are lost or stolen.

Bitcoin vaults are not just meant to store BTC securely. They form the bedrock of the asset’s long-term viability as an investment vehicle.

It is not enough to leave the knowledge to technical experts or institutions. By understanding the importance of secure Bitcoin storage and the advancements in custody solutions, investors can make better-informed decisions about safeguarding their digital assets.

This is a guest post by Ivan Serrano. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

As Bitcoin grows in value and popularity, custody solutions become more critical. Learn about Bitcoin vaults and their importance in the custody space.