How much energy does it take to mine Bitcoin
This question often sends shivers down the spine of environmentalists who have always rallied against crypto mining. Regulators already frown upon the existence of cryptocurrencies, and major thinkers across the US are mulling over introducing a hard ban on crypto.
It might seem unfair, but these inflated emotions seem justified when you look at the stats: CoinGecko reported that a solo miner would require 266,000 KwH to mine 1 Bitcoin. Now that the halving is upon us, this number will increase.
Amidst environmental fears, skeptics often ignore one thing: According to CryptoSlate, more than 50% of Bitcoin mining relies on renewable sources of energy. Furthermore, more than 23% of it is done using hydropower, and over 7% of those renewable mining operations rely on solar power according to the same source.
This percentage might not be that low for long. There have been concerted efforts to make solar energy more viable, with some conglomerates already setting up mining operations that harness the power of the sun.
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How much impact has solar power had on the cryptocurrency market? Let’s explore the nuances of solar-powered crypto mining and see how this future of energy might push the crypto adoption rate.
Benefits Of Using Solar Mining
Solar-powered crypto mining is now seen as more viable than ever, and there are many reasons for this.
First, solar energy is clean and abundant. If harnessed properly, it can power whole mining operations without contributing to greenhouse gas emissions.
However, harnessing such energy comes at a cost. According to Finbold, considering a standard 400w solar panel, powering one mining rig will require 35 solar panels. But, this is easily curtailed since panels are now becoming more affordable thanks to the clean energy incentives introduced by the Inflation Reduction Act.
In fact, the cost of harnessing solar power has been falling for a long time.
Shawn Rumery, senior director of research for the Solar Energy Industries Association, said, “Over the last decade, prices have come down by over 50% in the residential space.”
Another big plus of using solar-powered mining is independence from the grid. It reduces the risk of power outages, causing less disruption to mining operations.
This has resulted in Bitcoin mining becoming a new niche in the solar business. New players who want to engage with the crypto market in an affordable way are finding that investing in solar panels is a good way to go about it.
For instance, in late 2022, Meco announced the launch of the world’s first solar-electric crypto mining rigs. Other companies, such as TeraWulf, Argo Blockchain, Gridless, and more, are also trying to bring sustainable crypto-mining solutions, many of which use solar energy.
Major investment companies are also rallying behind Bitcoin mining firms that leverage solar energy. For instance, Aspen Creek, a Bitcoin mining company that uses solar power for its mining operations, raised $8 million in 2022.
Now, the perks of solar mining won’t be limited to providing a clean ecosystem to mine; it can also encourage more investment into solar-powered systems. In the Bitcoin Clean Energy Initiative Memorandum, Ark Invest wrote, “Bitcoin mining could encourage investment in solar systems, enabling renewables to generate a higher percentage of grid power with no change in the cost of electricity.”
They further noted that this can allow energy providers to “play the arbitrage between electricity prices and bitcoin prices.”
This statement denotes a symbiosis between the two concepts — bitcoin mining and solar energy — paving the way for both sectors to prosper. These points are just the tip of the iceberg of reasons to be bullish about solar-powered Bitcoin mining. However, achieving a full transition to using solar energy is not easy.
Challenges Of Using Solar Energy For Bitcoin Mining
It is easy to ignore the realistic flaws of using solar-powered mining when benefits are all we want to see. Here, let’s discuss some of the key challenges people are going to contend with when implementing solar-powered mining.
Upfront Cost
It all starts with the upfront cost of running a mining operation. While I already highlighted that solar panels are getting affordable, we have to ask ourselves if they are cheap enough.
The truth is, we still have ways to go in terms of mass affordability.
In an effort to highlight the cost-related challenges of solar-powered mining, I reached out to CEO of Solar Exclusive, Rich Feola.
“A full transition to solar energy for mining Bitcoin is going to be difficult,” he shared. “For now, individuals need to install multiple solar panels to run a single mining rig. As mining rigs become more energy efficient, we might see some growth, but it would be foolhardy to think that a complete transition to solar-powered Bitcoin mining will be coming so soon.”
According to Architectural Digest, the national average cost of a solar panel is $20,650. Considering the large number of solar panels to power a mining rig, an individual would be set back by more than $700k well before starting a mining operation.
Intermittent Nature Of The Sun
Solar energy is abundant, but it is also intermittent. For a solar panel to generate enough electricity, the sun should be bright and high. That means panels will not generate as much energy on cloudy days.
Even though a high-voltage battery can be installed alongside the solar panel to store energy, don’t expect that power to last long during the rainy season: Solar batteries may not have enough capacity to constantly supply power to a mining rig.
Lack Of Space For Solar Panel Installation
Another big challenge is having the space to install the panels. According to Freedom Solar Power, Bitcoin miners would need anywhere between 6 to 12 square meters of solar panels to power one formidable mining rig. A wider area is required if clouds are properly considered.
If one buys the area to install solar panels, there will be additional upfront costs to deal with. And if that space is rented, the mining operation will have massive overhead to be paid monthly.
The latter choice could put a severe dent on the profits made from Bitcoin mining, which is a big issue considering its volatility.
Bitcoin’s Volatility: Is It Worth It?
Considering the upfront costs and space-related requirements of solar-powered mining, another big factor we must look at is whether mining Bitcoin is worth it. Bitcoin is an inherently volatile asset. Even though halving is coming and more market leaders, such as Cathie Wood, are inclined to believe that it might reach $1.5 million, chances of it happening are not set in stone.
Furthermore, there are concerns about whether Bitcoin mining will be profitable after the halving. According to Cantor Fitzgerald, an American financial services firm, 11 publicly listed miners may not be profitable once the upcoming halving arrives.
Beyond halving, we must consider the other factors dictating the price of Bitcoin. Many countries don’t have any regulations in place to properly govern crypto yet, and those that do aren’t fond of the uncertainty this asset brings.
Further, there is the community’s sentiment to consider, which changes on a whim. For instance, spot Bitcoin ETF approval was seen as a golden event that would bring institutional investors and pump the BTC price. Instead, the value of the world’s leading crypto went from $46k to $42k when the approval happened.
While these challenges make people think twice about the prospect of solar-powered Bitcoin mining, one cannot deny its eco-centric appeal. Furthermore, there are cryptocurrencies beyond Bitcoin that are aiming to make solar energy more accessible.
Cryptos That Seek To Democratize Solar Energy
Since it became clear that investors are veering towards solar energy and other renewable resources for their mining needs, multiple cryptocurrency projects have emerged to make renewable energy more viable.
SolarCoin is a leading project that rewards users for generating solar energy. For every one MwH energy generated, this project rewards miners with one SolarCoin. This incentive-based model acts as a motivator to make solar energy more mainstream.
On the other hand, more large-scale projects like Powerledger seek to democratize renewable energy by allowing households, organizations, and even grids to trade energy.
Such initiatives can create a symbiotic relationship between cryptocurrency and renewable energy resources. A growth in one could mean growth for the other.
There Is Cautious Optimism Around Solar-Powered Mining
As crypto miners move towards renewable energy sources, solar energy is slowly catching their attention. Abundant and clean, solar power can make crypto mining more independent and affordable.
However, it is equally important not to be blind to the challenges of solar-powered mining. Upfront costs are still high, the cryptocurrency market is still volatile, and there are only a few places where the sun shines bright and high enough to properly power a solar battery.
Thankfully, certain cryptocurrency projects have entered the scene to make renewable energy more democratized. They are working in tandem to create a crypto boom in the market. But how loud will this explosion be? Only time will tell.
