Solar-Powered Bitcoin Mining
- It is observable that the business of cryptocurrencies is a growing market, bitcoin alone has a value of 70 Billion Dollars. However, a growing issue with bitcoins is their mining process. Massive amounts of power are required to run these operations
Mining Energy Requirement
The metaphor of ‘mining’ is pivotal, as these bitcoins are gathered by using specialized highly powered computers to look for correct hash keys in-order to gain a coin. A process that can be categorized as similar to gold digging. A report in 2016 stated that mining processes require so much energy that by 2021, the energy consumption would be similar to that of the nation of Denmark. The algorithm for mining these bitcoins is also getting Increasingly difficult to mine over the course of time. This would require more energy and that demand can result in damage to the climate and environment.
Renewable Energy Sources
A solution could be to use environmentally friendly power for mining. Solar power being a potential source of this, is an energy source that is being used in mining operations as it has proven to be both profitable and also environmentally friendly. Before diving into this, let us consider the occurrence of a phenomenon known as negative pricing. This process is influenced by various factors, but renewable energy sources like solar and wind power greatly affect it. An example could be the state of California in the United states and how it has various increased durations of negative pricing in the day time due to the production of solar power.
If one were to forecast the substantial negative prices in various markets around the nation, then investment can be made to begin mining operations within those vicinities and in those jurisdictions. This would be economically feasible as if one were to take negatively priced electricity and use it to mine a resource that is very likely to appreciate in value over the course of time, then it would obviously lead to significant profit. In short, if an investor takes notice of negative pricing due to the presence of excess renewable energy in that area then it can lead to bitcoin mining operators earning by taking advantages of that power. This would provide profit not just through selling the mined bitcoin, but also through grid operator revenue. Another benefit of this model, is that the tax benefits gained from using renewable energy can greatly add to the growing profit in the mining processes.
Solar Energy Production
One can also pursue renewable energy and solar powered bitcoin mining by aiming to incorporate decentralized energy production. This can be done by taking very cheap land in vicinities that have no power lines or grid connection. In this mining process, that connection to the grid would be unnecessary. The miners would only need to connect to the internet, and that would be done via satellites. The entire process would be off-grid. But where would the energy required come from? For this, solar power shall be incorporated as a renewable source of energy production. The facility can also include storage systems to ensure smoother production and to allow mining to be done for 24 hours and not just in the presence of daylight. Off-grid comes with the disadvantage of not using grid power to aid in the mining using solar power, but the advantage is that it can be built very quickly and easily and it’ll be independent.
The added benefit of this process and independent mining can also be witnessed in the rare occurrence of a bitcoin price collapse occurs and leaving the investors with no profit. This is again, very unlikely as the bitcoin prices have only shown growth over the past few years. That being said, in the theory of risk assessment and evaluation, having a fallback option is prudent and crucial. Having an alternate option of earning revenue through the system, along with bitcoin mining, should be considered. This alternative could be the construction of a small-scale solar farm to act as a backup power off-taker. This would allow for the ability to utilize the power onsite to mine, as well as to offer revenue via excess sales arrangements.
This solar farming can allow for the owner to use as much power as needed to mine the bitcoins, and whenever they want, they can send the excess power to the national grid and earn from there. If mining offers more profitability, they can use the energy for that, if the bitcoin prices take a hit and selling power to the grid offers a better earning opportunity then they can engage in that instead. This entire solar-bitcoin operation can pay for the entire initial investment within a period of two years, thereby ending the risk of losing money to investment as the costs are paid back leading to minimal risk remaining.
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