One of the main obstacles that make turning a profit mining cryptocurrency difficult is the cost involved. Miners must purchase or build expensive rigs capable of producing the amount of processing power needed, plus pay for the electricity to power those rigs. In addition to these costs, concerns have been raised over the environmental impact. Solar-powered mining rigs could have benefits in reducing costs and improving the environmental impact of mining cryptocurrency.
1. Reduced Costs
Mining operations can use as much electricity as a small country, which can easily result in miners spending more money to run their rigs than they are making mining currency. To combat this problem, miners are turning to solar panels. By setting up solar-powered rigs in the desert, where there is lots of access to sunlight, miners can drastically reduce the cost of powering their rigs and increase their profits.
2. Reduced Payback Times
While a basic cryptocurrency mining rig can be put together for as little as $3,000, most professional miners spend upwards of $8,000 on an average rig. It is estimated that it takes about 72,000 GW of power to mine a single bitcoin. After combining the cost of electricity with the cost of the rig, it can take a substantial amount of time to earn back the money it takes to run a mining rig and some miners never make a profit at all. By contrast, once a miner has a solar rig set up, the cost of power is virtually nothing, making it much faster to earn back the miner’s initial investment.
3. Negative-Priced Grid Power
Solar production in some regions has led to too much power being added to some electrical grids. When this happens, the grid operator must either shut down power plants or pay customers to take the excess power. This practice is referred to as negative pricing. Negative pricing can benefit miners by providing them with a way to actually earn money off of some of the power their operation uses. Miners can now forecast where significant negative pricing is expected to occur and set up mining operations in those locations.
4. Less Volatility
Another benefit of using solar power is that there is less volatility involved in the pricing. Solar power plants can be expected to produce a consistent amount of energy at a consistent cost most of the time. By contrast, the price of electricity can fluctuate rapidly with changing conditions, such as the 2021 energy shortage in Texas that resulted from unusually cold weather conditions.
5. Additional Revenue Stream
Large solar operations installed to power cryptocurrency mining operations can generate secondary revenue streams by selling excess solar power. Miners can enter into contracts with power companies or other businesses to sell any excess solar energy not being used by the mining operation.
6. Off-Grid Mining Operations
Mining operations that rely on traditional power sources must be located in areas with connections to traditional power grids. Solar-powered mining makes it possible to purchase or lease cheap land in places that don’t have any connection to traditional power grids. Onsite storage can be used to extend operations beyond daylight hours.
7. Safety Net
Cryptocurrency has a history of price volatility. One of the major risks of a crypto mining operation is that the price of cryptocurrency could plummet, making it impossible for most miners to turn a profit or even recoup their investment in equipment. By obtaining a power sales contract, solar-powered mining operations can use the ability to sell power to the grid as a safety net for times when the mining operation may not be as profitable. Additionally, because the solar-powered model recovers the initial investment faster than traditional models, there is less overall risk involved.
The massive power consumption of cryptocurrency mining operations is an environmental concern, a barrier to entry, increases risk and makes earning a profit difficult. Switching to solar power can address all of these issues.
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