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Is Bitcoin Going Green?

Is Bitcoin Going Green?

Explainers Cryptocurrencies

27 Jan 2021

How much do you think it costs to mine one Bitcoin?

Say, you live in London and operate an Antminer S9 that currently costs £2,186. You pay 16.3 p/kWh and feed your little rig 22.36 KW/h. Let’s calculate! This would make you around £423.11 in annual profit, with more than £18,620 needed to cover the electricity costs. Not too great, right?

Bitcoin mining has become expensive. Of course, that does not deter professional miners. Under these circumstances, they just deploy more rigs. Of course, that comes at a price.

Bitcoin’s carbon footprint

On a global scale, the annualized carbon footprint of Bitcoin equals to the carbon footprint of New Zealand, 36.95 Mt CO2; electrical energy consumption, 77.78 TWh, is in line with Chile; and electronic waste makes 10.96 kt, which is comparable to the e-waste generation of Luxembourg.

If the challenge of making use of alternative energy sources was significant 10 years ago, now, considering Bitcoin's growth, it’s even more critical today.

Why is traditional BTC mining expensive?

Our Antminter S9 has got the capacity to compute 14 trillion hash calculations in one second, 14 TH/s, which is quite cool. Don’t try now but when Bitcoin launched in 2009, the initial difficulty level was one, and your personal computer was enough to generate a block.

Nowadays, a little mining farm consisting of multiple rigs will have to solve trillions of puzzles every single second to discover one block a month. Considering the fact that the difficulty level of those puzzles increases every 2,016 blocks, or every two weeks, there is quite some pressure on miners to keep up.

Is cheaper mining possible?

Experienced miners have, of course, figured out where and how to mine at minimum cost. There are several criteria that define how go-getters think in this context.

First of all, miners look at utility costs in a certain region. This is probably the biggest driver of where miners set up a Bitcoin mining operation.

Secondly, miners look at the climate. Cooling all of the GPUs and Asics to prevent them from overheating takes even more electricity. So it makes economic sense to set up mining farms in a colder country or region.

Also, miners will look at the cost of building a facility and overhead costs.

Lastly, miners need to take stock on the regulatory environment.

All in all, this list of criteria brings us to favored regions such as Iceland, Estonia, China, Georgia etc.

Alternative energy sources for mining BTC

We can see that although Bitcoin is a 'digital asset', it absolutely lives in the real world as well. Mining can technically be done anywhere, but where you are in the world matters.

The electricity-aspect of this entire production chain is actually quite a serious concern. Especially if Bitcoin is to appeal to younger generations miners need to find ways to mine Bitcoin without harming the environment.

That’s why, in some countries, Bitcoin has already started going green. Bitcoin mining in the Nordic region where electricity production is almost carbon-free, consisting mostly of hydro, nuclear and wind power, is already happening. Norway and Sweden lead the race.

In 2020, wet weather as well as warm temperatures have boosted hydro reservoirs across the Nordic region to the highest level in more than 20 years, which also increased power generation capacity. As a result we can see that the electricity costs there last year were about a third of those in Germany, Europe’s biggest power market.

Solar-powered rigs in the desert can also be a good investment. Once you have paid for the solar panel system itself, the cost of mining will be literally free.

Perhaps one day, each household will operate its own solar-powered rig, with neighbourhoods serving as mining pools, and where mining Bitcoin becomes as commonplace as water running from the tap.

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