Switching to Renewable Energy Can Improve Crypto Mining Dramatically
20 Aug 2022
Crypto mining requires huge amounts of electricity and is becoming less profitable due to the cryptocurrency market downturn. To avoid a mining ban and continue to earn, miners are switching to green mining to get the cheapest energy possible.
Bitcoin mining requires more and more energy because of increasing difficulty in opening each subsequent block. Today, mining with just one device is almost impossible. Crypto enthusiasts use miners – special super-powerful equipment. Let’s assume that you will use AntMiner which will work all year round 24/7 and will mine 0.85 BTC. This will require about 15,000 kWh of electricity. If you translate this into money, then one bitcoin mined will cost you from $600 to $1800 depending on potential energy costs.
For more profit, miners create entire mining rigs and even plants, increasing power and the need for electricity, respectively. Such huge electricity costs cannot go unnoticed.
For example, crypto mining has already been banned in Kosovo, and the Swedish financial inspectorate Finansinspektionen recentlycalled on the EU to do the same because of tremendous energy consumption. To stay profitable, mining companies and individual miners should look for modern solutions that can make mining more efficient. We will talk about them in this article.
What is wrong with the energy consumption when mining cryptocurrencies?
Cryptocurrency mining is a very energy-intensive industry: according to the University of Cambridge, the total annual energy consumption by Bitcoin mining is 175 TWh, which is about 0.32% of the total global energy consumption.
Over the past five years, energy costs for Bitcoin mining have increased from 11.8 to 120.5 TWh per year. This number will continue to grow – many experts predict that by 2027, electricity consumption for bitcoin mining could rise to 706 TWh. Here’s another startling statistic: Bitcoin consumes more electricity annually than Argentina. This raises many questions among environmentalists.
In addition, the difficulty of mining is constantly growing, and miners are forced to be in an ongoing search for ways to make crypto mining more efficient.
How can green mining change the industry?
To date, a significant portion of the energy that crypto mining uses comes from renewable sources (57%). This includes hydroelectric power plants, wind and solar energy, nuclear and geothermal energy, and other forms of energy produced in a green way.
Given that miners are looking to minimize energy costs, and green energy is now the cheapest source of electricity in many countries, according to The World Economic Forum. So we expect that the share of green mining will also grow, bringing important benefits to miners.
Possibility to make mining cheaper
As we wrote above, green energy is the cheapest energy available today. In the context of a severe crisis and a drawdown in the cryptocurrency market, reducing electricity costs for miners is very important. In addition, it is worth remembering that mining difficulty adjusts every two weeks,making this potentially process more and more expensive for miners. The use of green electricity will significantly reduce costs.
Contribution to the protection of the environment
If electricity consumption during mining remains the same, more countries may begin to prohibit such activities. This entails additional costs (for example, for transporting equipment to a new location). If mining really goes green, government agencies won’t ban it, and our planet will indeed be greener.
“Energy constitutes more than 90% of ongoing costs of mining. Thus, going green should be the top priority for all miners. However, the current economic environment isn’t very suitable for capital expenditures. This is where securities tokenization comes into play as an alternative funding model that can efficiently cover capital needs of miners.”
Head of Business Analytics at Stobox Borys Pikalov
Balancing the consumption of green energy
Miners can enter into agreements with local power grids whereby, in exchange for discounts on electricity, they agree to turn off mining rigs at the peak of electricity usage. At the same time, they can consume excess electricity generated by hydroelectric power plants, solar power plants, and wind turbines. Such an agreement helps to balance the industry.
Attracting investors for development
Investors began to lose faith in cryptocurrencies, but they increasingly believe in green technologies. By switching to green energy and offering an original business model, you can attract investors of any scale. For example, you can create a mining farm in the middle of oil and gas fields and feed your equipment with natural gas, which would have been burned anyway.
Or you can build a factory on the shore of the lake to use the energy of water for mining. Another option is to build a plant that feeds on coal waste and use this energy for mining. There are a lot of options for organizing green mining today, and innovative solutions can attract many investors.
Investment funds, institutional and private investors, and other financial market players pay a lot of attention to sustainability right now. Therefore, companies that are engaged in mining on an industrial scale are forced to look for new, more modern, and green approaches, and they find them.
Featured image via Unsplash.