Solar energy and its cost saving renewable power could change the face of the Bitcoin mining world. On the surface, these two futuristic innovations seem to have nothing to do with one another.
Mining Bitcoin, the most popular form of cryptocurrency, is a booming industry in which large scale super computers work through complicated mathematical equations in order to “mine” small percentages of this digital money. Bitcoins exist solely within a virtual environment, from which they are mined, distributed, and traded.
Solar power utilizes photovoltaic cells to draw in the power of the sun’s rays and convert it into energy. With its potential to offset large energy bills and create a more sustainable future, solar power could be the key to increasing profitability for the Bitcoin mining industry.
It is possible to turn a profit while mining Bitcoin, however it is not easy. A career or even a side gig as a Bitcoin miner takes investment and patience. There are two factors which oppose potential cryptomining profits. They are hardware costs, and the price of energy to run said hardware.
Cryptomining hardware is not cheap. And miners consistently have to upgrade their system to compete with the ever-growing Bitcoin difficulty factor. As more miners attempt to try their luck at the cryptomining game, the equations become more difficult.
This game of electronic escalation leads to more powerful equipment. As mining equipment beefs up, it consumes more electricity. This leads to skyrocketing electric bills, and the global mining industry continues to deepen its carbon footprint. It has been estimated that the cost of mining one Bitcoin as of September 2017 was $1,567.88, solely from the cost of electricity.
Experts believe that by 2020, the collective electricity used by the world’s Bitcoin miners could power the country of Denmark.
So, when trying to determine the profitability of your Bitcoin mining operation, you have to subtract the cost of your hardware and your monthly electric bill from whatever money you make.
As an equation, it would look like this:
Wages – Hardware Cost – Power Cost = Profit
Power costs have become so burdensome to the Bitcoin mining industry that some miners have uprooted their lives to live in areas where electricity costs are lower. The town of Wenatchee Washington, for instance, has become the center of a Bitcoin miner “gold rush” of sorts.
The town’s location makes it an ideal breeding ground for mining efforts, as a series of hydroelectric dams along the Columbus River has caused the price of power to fall as low as $0.02 per kWh, six times less than the national average.
So, if you want to turn a Bitcoin mining profit do you have to move to Washington state? Absolutely not. The answer lies in the renewable cost saving power of solar.
The presence of a solar panel system on your home or business throws a whole new variable into the equation for Bitcoin mining profitability. Now, one of your largest detractors can be offset as solar power produces a percentage of the energy needed to power your mining set up.
With solar added into the mix, the equation changes.
Wages – Hardware Cost – Power Cost + Solar Savings = Profit
Let’s put this to the test. For this sample scenario, assume:
- A Bitcoin difficulty factor of 1590896927258
- A hash rate of 14 TH/s
- BTC Block reward of 12.5
- Exchange Rate of USD to BTC of 10416.67 (As of 1/30/2018)
- Mining pool fees of 2%
- Power consumption of 1,375 W
- Power cost of $0.12 per kWh (The national average)
- Hardware cost of $2,000
This hypothetical miner receives a monthly total of $677.68 for his efforts, and his electricity costs are $118.80.
Without solar, his results would look like this:
677.68 – 2,000 – 118.80 = -$1,451.12
Our miner is seeing a substantial loss for his first month on the job. He doesn’t turn a profit until four months in, once hardware costs have been paid back in full. With continued monthly losses from power consumption, he’s looking at an annual profit of $4,706.56.
Now, lets add solar savings into the mix. For the purposes of this example, our miner is using a system consisting of 30 250-Watt panels. The entire system generates 900 kWh per month. This would give him a monthly savings of $108.
So now our equation looks like this.
677.68 – 2,000 – 118.80 + 108 = -$1,333.12
He’s still taking a bath initially, but the good news is he makes back his hardware prices by the third month and continues to save on power costs all through the year. Our miner ends up turning an annual profit of $6,006.16. He has saved $1,299.60 per year through the power of a solar system.
Applying the power of solar to your Bitcoin mining operation saves you money in the long run, while remaining conscious of the environmental issues that come with increased power use. As the world burns through fossil fuels at a frightening rate, the addition of another small country’s worth of power rising unchecked will only serve to exacerbate an already volatile energy situation.
To ignore the potential of this pairing would be both socially and financially irresponsible. If the cryptomining industry continues to grow, Bitcoin and solar power could become the partnership of tomorrow.