The solar powered Bitcoin mining could be a profitable business model in the future. One of the major issues that many critics complain about is the energy usage associated with Bitcoin mining. The mining of Bitcoin now consumes more than 30 terawatt-hours of power globally, which is higher than the individual energy usage of 159 countries (as of December 2017).
The solar powered Bitcoin mining as a future business model
Need for environment friendly solar mining
As Bitcoin’s algorithm gets more difficult over time, the mining power demand will keep going up exponentially. Therefore, it is about time that the community consider the potential for environmentally friendly power for mining.
Additionally, Bitcoin mining profitability is determined by the cost of, so if solar power is cheaper than buying grid power, it can make sense to combine on-site solar power with mining operations.
Renewable energy for mining presently
Currently Genesis Mining, a ‘cloud mining’ operation, and some other mining operators use geothermal power (heat energy generated and stored in the Earth) in Iceland, which is cheap and sustainable. But this resource is geographically limited than solar power, which can be and is being developed all around the world.
The argument for Solar power in Bitcoin mining
The solar-powered Bitcoin mining operations can be highly profitable and can enjoy payback times as short as one-two years. Post that period, the bitcoin mining operations can be conducted with almost zero variable costs for another 25 years or so – though the mining machines at the solar farm will need to be upgraded periodically.
The negative-priced grid power
In the US, some markets are increasingly paying businesses to take excess grid power. Under a negative price scenario, the grid is receiving too much power, therefore the grid operator either shuts downs or pays electric customers to take the excess power and avoid curtailment. For example, California sees negative pricing during some times of the day when solar production peaks.
The negative-pricing is largely on account of California’s grid generation assets that cannot be turned on and off, therefore they negatively price the excess produced power to consumers.
Additionally, Texas also uses negative-priced power prompted by excess wind power on the grid. The rising focus on renewable energy in a number of states is expected to increase the negative pricing in the years to come.
The financial sense of Bitcoin mining using solar power
Bitcoin mining started as an activity that could be done on personal computers, but quickly became a high-electricity usage activity requiring specialized chips (ASICs). The trend is continuing and the cost of electricity has increasingly become of the largest factors in determining mining profitability.
It can make good financial sense to use solar power to mine Bitcoin. The solar plants can provide power that cheaper than grid power in several areas with insolation (access to solar power) and low construction costs (the grid can be constructed cheaper).
For instance, in California, a 1-megawatt solar project could provide power at about 5 cents per kilowatt-hour, nearly half-price of the 10 cents per kilowatt-hour of industrial grid power in California.
Off-the-grid mining operations
A development model has been proposed for bitcoin mining wherein off-the-grid area (an area with no power lines and cheap land) is used for Bitcoin mining. As no grid connection is needed to do mining, the miners can connect to the internet via a satellite connection – making the entire project off-the-grid with solar power being used for mining.
The last piece of the puzzle
A cheap and environment friendly mining operation is not the only part of the puzzle. In order for miners to make a tidy profit, the price of cryptocurrencies must remain high. Considering that the price of cryptocurrencies is very volatile, there is an element of risk associated with any sort of mining activity.
However, if the past were a good predictor for future growth, the prices have always witnessed an upward trend despite any sort of market crash or slowdown.