Mining Companies Embrace Alternative Energy Sources to Cut Costs and Ensure Sustainability
Summary:
During the cryptocurrency market downturn, mining companies are turning to alternative energy sources to cut costs and ensure profitability. This article explores how miners are using renewable energy, such as wind and solar power, to reduce expenses and minimize their environmental impact. However, there are also controversial practices, such as using coal refuse, which raise concerns about air pollution. The future of mining operations appears to be leaning towards the adoption of renewable energy sources.
Large mining companies in the cryptocurrency industry took on heavy loans during the 2021 bull market to acquire equipment and infrastructure for mining. However, the bankruptcies of FTX and Celsius, two crypto exchange platforms, have left these companies in a tight spot. With the current bear market, along with high Bitcoin network hash rates and low profits, the future of miners' recovery remains uncertain. In response, mining companies are shifting their focus towards alternative energy sources to reduce costs, ensure profitability, and minimize their environmental impact.
According to Steven Lubka, the managing director of Swan Bitcoin, mining companies that utilize renewable energy sources are experiencing lower costs, ranging from $5,000 to $15,000 per Bitcoin (BTC) mined. Riot Blockchain, a Bitcoin mining company based in the United States, cites wind and solar energy from Texas as their source for low mining costs, with each Bitcoin costing them $8,389 to mine.
Kent Halliburton, the president and COO of Sazmining, explains that electricity has always been the biggest expense for miners. With renewable energy sources, there is often excess electricity, making it an ideal fit for Bitcoin mining. Data sourced from the Bitcoin Mining Council reveals that approximately 59% of mining operations are carbon-free, with this figure growing at a rate of nearly 4.5% per year. Halliburton adds that their mining operations in Wisconsin and Paraguay utilize excess hydroelectricity.
The adoption of alternative energy sources appears to be a long-term trend for miners seeking success. For example, Sabre56, a crypto mining infrastructure provider, is collaborating with multiple mining companies to set up machines in their facilities in Wyoming and Ohio. Their Gillette, Wyoming site, known as "Bonepile," uses a combination of energy sources, including renewable energy provided by Basin Electric. This approach helps reduce overheating and strain on mining equipment while facilitating the natural exhaust of hot air through overpressure.
OceanBit, a company harnessing ocean thermal energy for renewable energy platforms, is integrating Bitcoin mining into its power plant design. By capitalizing on the temperature difference in ocean water, they can generate electricity. Nathaniel Harmon, the CEO of OceanBit, explains that the process allows for the efficient cooling of mining equipment while utilizing the low-grade heat generated by ASICs to contribute to the power plant's operations. The company plans to unveil their R&D power plant in Hawaii in 2024.
However, some alternative energy sources used by miners are controversial. Stronghold Digital Mining, a mining company in Pennsylvania, utilizes coal refuse, a byproduct of coal mining, to power their operations. Although this method contributes to cleaning up tons of coal refuse, it still involves burning hydrocarbons, raising environmental concerns and potential air pollution. The company faced scrutiny when it sought a permit to burn tire-derived fuel at its Panther Creek plant.
Despite the adoption of alternative energy sources, certain challenges hinder widespread implementation. Misinformation about these energy sources often leads to local opposition, as people overlook the net benefits of Bitcoin miners, such as job creation and utilizing otherwise wasted electricity. Additionally, using renewable energy sources presents challenges, such as thinner air quality affecting cooling efficiency and the release of hot air into the atmosphere. Some mining companies, like Genesis Digital Assets, are repurposing the heat produced by their machines for other applications, such as greenhouse farming.
Considering these factors, the future of mining operations is expected to heavily rely on renewable energy sources. Bitmain, a leading producer of crypto mining equipment, is actively promoting hydro-cooling technologies, anticipating growing demand for this type of equipment. Nearly a quarter of Bitcoin miners already use water as a power source, while wind and nuclear energy contribute significantly as well, according to Margie Feng, the head of marketing at Bitmain.
Published At
9/18/2023 1:01:00 PM
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