On the surface, solar power and Bitcoin appear to have no common ground. One is the fastest growing form of renewable energy on the planet, while the other is a rapidly rising form of cryptocurrency, currently seeing huge value worldwide.
Many believe that solar and Bitcoin will have a profound positive impact on the world in years to come, but can they work together? Does the energy saving power of solar have practical applications in today’s cryptomining world?
Not only are these two vastly different industries interconnected, but solar might be the answer to maximizing future Bitcoin mining profits.
Why is Bitcoin Mining So Difficult?
Bitcoin is a 100% digital form of currency, which does not operate on the gold standard. It is one of the most popular forms of cryptocurrency, and the Bitcoin mining industry is one of the fastest growing occupational industries in the world.
Cryptocurrency is “mined” by a series of computers working to solve complex mathematical equations. The difficulty of these mining equations is determined by the Bitcoin Difficulty Rate, which increases as more miners enter the field. As the mining process becomes more complex, more advanced hardware is needed to successfully generate currency. Whereas at one time, Bitcoin could be mined by one person at a personal computer, now it takes entire pools of miners working together utilizing vast supercomputers to uncover infinitesimal fractions of Bitcoin.
This form of electronic escalation consumes an increasing amount of power. If hardware upgrades continue unchecked, experts believe that, by 2020, the global cryptomining industry could be consuming an annual rate of power comparable to that of a small country like Denmark. As one would expect, as energy demand rises, energy use rises, and energy costs skyrocket.
It was estimated in late 2017 that the cost of mining one Bitcoin from energy alone would come out to $1,567.88, based on the national average power cost of $0.12 per kWh. Such extreme costs coupled with the rising price of more advanced hardware call into question the continued profitability of the cryptomining industry.
So, the question becomes, how does one counteract the cost of energy to reap the benefits of mining efforts?
Move to a Crypto-Profitable Area
What is a crypto-profitable area? That’s a location in which energy costs are kept low and monthly utility bills plummet. Many Bitcoin miners have packed up their equipment and made such a move, so much so that the small town of Wenatchee Washington is in the midst of a small-scale Bitcoin gold rush.
Wenatchee is the perfect storm for cryptomining profitability. A series of hydroelectric dams on the Columbus River have caused energy prices to plummet as low as $0.02 per kWh. That’s six times lower than the national average. This price point, coupled with Wenatchee’s low climate make for an ideal mining setting. The low temperatures found in places like Washington State and Canada help mining productivity by keeping equipment cool, thus preventing overheating.
Switch to Solar Power
If moving your life to a whole new place seems a bit much to aid in your cryptomining efforts, then a switch to solar power might be more helpful. Solar panels help limit energy consumption by taking in the sun’s rays and converting it into clean and renewable power. Solar systems can knock huge percentages off of utility costs. Using solar panels, miners would only pay for electricity needed after their systems had exhausted all generated power. (More on solar benefits at PowerScout.com)
When trying to determine mining profitability, you would use an equation that looks like this:
Currency Received – Cost of Equipment – Cost of Electricity = Profit
Solar adds a whole new variable. With a renewable solar system, the equation for mining profitability would read:
Currency Received – Cost of Equipment – Cost of Electricity + Solar Savings = Profit
Let’s examine mining profitability, first without the use of a solar system. In this sample scenario we assume the following:
- 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
- Mining pool fees of 2%
- Power consumption of 1,375 W
- Power cost of $0.12 per kWh
- Hardware cost of $2,000
This hypothetical miner makes a monthly total of $677.68 and his electricity costs are $118.80.
Our no-solar equation would be as follows:
677.68 – 2,000 – 118.80 = -1,441.12
Hardware costs eat up a sizable chunk of change, and a profit is not seen until the fourth month. After that, annual profit for the first year would come out to $4,706.56.
Now, adding solar into the equation, we will assume our miner is using a system made up of 30 250-Watt panels. The system generates 900 kWh per month, granting a monthly savings of $108.
So, our profitability equation with solar reads:
677.68 – 2,000 – 118.80 + 108 + -$1,333.12
Hardware costs still put us in the negatives for the first month, but thanks to solar we break even in month three. Then, with continued power savings throughout the year, we see an annual profit of $6,006.16. We’ve saved $1,299.60 per year through the use of our renewable solar system.
The Partnership of Tomorrow
By working together, cryptomining efforts and solar power could forge a strong partnership. The affordability of solar makes Bitcoin mining far more profitable and that will cause growth. As more mining companies begin to pop up more solar panels will be needed, creating a symbiotic partnership that could see the flourishing of both industries.
Thanks to Kevin Kessler from PowerScout, a home solar marketplace that lets you compare multiple quotes for home solar, for contributing this article.