That electronic digging takes more and more power as more and more people dig for that virtual gold. Sebastian Deetman calculated in that mining would require as much electricity by as the entire nation of Denmark currently consumes.
With an approximately year discovery cycle to mine all 21 million bitcoins, mining power demand will go up exponentially. So what to do if we care about the power of blockchain and cryptocurrency as well as protecting our climate and our environment? Well, one thing we can do is consider the potential for environmentally friendly power for mining. I conclude that it can be both very profitable and far better for the environment than some other options.
I first considered combining solar power with Bitcoin mining due to my work in solar power development and my recognition of how difficult it can be to obtain a power sales contract. There are many difficult aspects of solar power development, but obtaining the sales contract is now generally the most difficult part of the process, largely because there are so many market participants chasing too few contracts.
Mining Bitcoin is one way to obtain significant revenue — potentially far greater revenue than under normal power sales contracts to the grid — without needing any sales contract at all.
Bitcoin mining profitability is determined by the cost of electricity more than any other factor. So if solar power is cheaper than buying grid power, it can make sense to combine on-site solar power with mining operations. To date, I am not aware of any significant mining operations using low-cost solar power at scale.
But this resource is far more geographically limited than solar power, which can be and is being developed all around the world. The bottom line is that solar-powered Bitcoin mining operations can be highly profitable and enjoy payback times as short as a year or two. After that, Bitcoin revenue comes with almost zero ongoing costs for another 25 years or more for solar farms — though the mining machines will need to be upgraded periodically.
There are also opportunities for obtaining very low-cost grid power, or even negatively-priced power, to increase the profitability of solar mining operations. If a large share of future mining operations use solar power, geothermal power, hydro power, biomass or wind power, the massive power demands of mining and their consequent environmental impacts could be largely mitigated.
But it’s far from the only one doing so
Low-cost and negative-priced grid power Some markets in the U. Under a negative-pricing scenario, the grid is receiving too much power and the grid operator must either temporarily shut down curtail some power plants or pay electric customers to take the excess power and avoid curtailment. Negative pricing can be caused by various factors, but it is increasingly due to renewable energy sources like solar and wind power.
California, for example, is seeing increasing durations of negative pricing during the day when solar production occurs. The figure below shows the daily grid electricity demand curve, with demand plummeting during the day when a large amount of solar power is produced from existing solar plants around the state.