What are the factors to consider for mining Bitcoin with solar power? Mining crypto coins, whether it is Bitcoin or any of the other thousand types of it, consumes a lot of electricity which causes a significant negative effect on the environment.
Still, people go for it because it is highly profitable.
However, the concerns of the general public as well as the environmentalists all over the world regarding its drastic impact on nature have made people look for alternative and cheaper sources of power.
This has resulted in the increase in demand for solar powered crypto mining.
However, there are a lot of things to consider before you move from traditional crypto mining to solar powered crypto mining.
This is a useful crypto mining and storage technology but it needs to be done properly after considering several factors and conditions.
People often debate on the different factors to consider for crypto mining but you will need to be precise on this aspect to make your solar powered crypto mining profitable just as desired.
That is what this particular article will help you with.
The solar system as well as the mining facility should be so designed that it is a proof of concept for complete renewable energy crypto mining at scale.
This is not an easy task because you will need to make sure that the initial cost of installing your solar power system, which is quite a lot, is not more than what it should be.
For that, you will need to consider your needs, the advantages, the economics behind it and lots more apart from the factors to set up your solar powered mining rig.
You find all these things in this article. So, read on.
Contents
Factors to Consider for Mining Bitcoin with Solar Power
Crypto mining with solar energy today is an important and perhaps an indispensable step to ensure zero carbon emission that results in serious environmental damage.
This will not only save the world from a premature death but will also ensure a high and stable economic growth for the future.
These days, using solar power to mine Bitcoin is growing in popularity increasingly because it is considered to be an extremely energy intensive process by nature.
Such a huge usage of energy quite naturally affects the operating costs.
Therefore, the miners often debate that using renewable energy sources such as solar power will be decisive in terms of the feasibility and continuity of mining crypto coins like Bitcoin.
As it is, the current rate of carbon emissions due to crypto mining, especially in the case of Bitcoin, is certainly not sustainable to continue and move forward.
The most significant issues of traditional Bitcoin or crypto mining are the carbon footprint of the process left on a global scale and the cost of operation on a personal level.
Keeping the significant issues in mind, using solar power to mine Bitcoin makes perfect sense for everyone involved in this specific type of crypto activity.
Add to that, if you have a battery backup along with an effective solar power system, you can mine Bitcoin day and night without worrying about the energy supplies.
In order to make your crypto mining effort using solar power profitable, there are two specific factors that are extremely relevant and should be kept in mind.
These are:
- The LCOE or the Levelized Cost of Energy – This refers to the total lifetime cost of installing and operating the solar power system, or any other type of power generation asset. This cost is divided by the total amount of energy produced by the system. This is an extremely useful metric that will let you know the cost of production of a Kilowatt-hour of energy with the particular power source. The value can be used as the cost of electricity required for making profitability calculations in Bitcoin or crypto mining.
- Intermittent production of solar energy – You will not get solar power consistently because the sun shines only during daytime. Add to that, the amount of sunshine will also vary daily and seasonally depending on the conditions. Therefore, you will need to make sure that you store solar energy when the sun shines. It is therefore required to use batteries to store them so that you get the power necessary to mine Bitcoin even at nights or during cloudy conditions.
Using a battery for storing surplus solar energy is however a costly proposition and is also quite cumbersome to store and transport the energy across.
Therefore, much of the solar energy produced during the day by the solar panels is highly likely to go to waste.
However, there is another significant factor to consider, which may also be considered as a major challenge for the crypto miner that is needed to overcome to make the solar Bitcoin mining venture profitable.
This is determining the uptime that the crypto mining rigs would have given the irregular nature of solar energy production.
Also, you will need to keep in mind that most of the energy produced by the solar panels will be typically stored in the batteries or consumed by the grid.
This means that the entire energy will not be used for the mining process.
Another significant factor to consider is the historical depreciation of the ASIC hardware over a long period of time, if you intend to use them for your mining purposes.
This is due to the fact that over time the mining difficulty on the Bitcoin network increases.
Increase in crypto mining difficulty refers to the situation where the number of coins mined against every terahash of the hash rate drops down.
This makes the downtime extremely costly because it will take a long time for you to breakeven on your initial cost of the systems.
If the downtime is too significant, it is highly likely that the profitability in Bitcoin mining will become net negative on the balance sheet of your energy project.
This means that it will never produce, or take a long, long time to produce enough profits that will offset the initial investment of the solar power system.
The Need and Importance
With all these factors to consider as well as the issues in crypto mining using solar energy you may tend to think what is the need for all these hassles.
Well, considering the current scenario, the need and significance of renewable and clean energy in the Bitcoin mining sector cannot be cannot be over- emphasized.
It is therefore needless to say that as the crypto mining industry progresses, a greater part of the miners will move from mining crypto coins by using fossil-generated electricity to more sustainable and renewable energy.
And that is what is expected to happen soon down the years in order to bridge the gap between the block chain ecosystem and the energy sector.
The world will see the miners utilize more and more of waste energy resulting from oil and gas extraction.
It will solve the issues with gas flaring and other common gas problems which will create a truly win-win situation for both the crypto industry as well as the energy sector.
It is good that the miners have realized the environmental implications and its problems due to Bitcoin mining and are driven to look for much better solutions to it such as gas flaring mitigation.
All these solutions are deemed to be economical, eco-friendly, and profitable for both the landowners and the producers as well.
Most importantly, it will meet environmental protection policies.
Therefore, it is not surprising that the miners all over the world are on the lookout to use the waste energy and solve the global issue surrounding it in terms of impacts on the environment.
All these can be easily achieved with the help of Bitcoin and crypto mining by strategic implementation of solar power as well as other revolutionary and innovative solutions.
Advantages
Larger buildings with larger roof space can generate higher amounts of excess energy.
Typically, the advantages of using solar power for crypto mining over traditional fossil-generated electricity are much more than that and fall into two major categories.
These are:
- Advantages with regards to cost and
- Advantages in terms of the effects in nature.
The cost factor:
It is needless to say that setting up a solar power system for Bitcoin mining involves some initial costs for purchasing the equipment and its installation.
However, this is a one-time investment and once it is done there will be practically no other additional expenses such as paying for the monthly electricity bills.
You will be able to make profits for free!
The solar panels are also designed to be strong and durable which means that there is no need for regular maintenance.
This means that you will be able to make profits for several years to come with virtually zero additional expense.
Some of the other significant benefits of using solar energy over usual electricity in terms of cost are:
- Negative-priced power will allow making additional earnings on surplus power produced in countries like the United States, Canada, and others
- Bitcoin mining becomes more profitable due to further reduction of cost due to the Federal solar tax credits allowed on installation costs
- Mining activities are unaffected because solar panels can generate energy even in extreme weather conditions much unlike regular electricity and
- Solar energy is infinite and it will keep on increasing in terms of its availability and reducing in price.
Considering the fact that you will need anywhere between 30 and 50 solar panels to generate the amount of electricity required to mine Bitcoin which will cost you about $35,000, it is definitely worthy to make such an investment.
Typically, this is approximately the same cost of mining a single Bitcoin, and knowing this, switching to solar energy is far less costly than paying an exorbitant sum of money every year on electricity to get the same result.
Effects in nature:
In terms of the effects in nature, solar Bitcoin mining will help significantly in the battle against global climate change.
This will bring in changes in regulation as well as in the funding of renewable sources of power.
It is expected that by moving to solar power crypto mining the massive carbon emission that is characteristic of traditional Bitcoin mining activities will be eliminated.
As of now, the Bitcoin miners get more than 56% of the total power needed for mining from renewable sources, according to some reports.
This results in some significant advantages that are offered by solar powered Bitcoin mining as opposed to traditional electricity mining such as:
- Solar powered crypto mining will increase air quality by making it free of pollution
- It will not emit greenhouse gasses which will help in combating climate changes
- It will reduce the dependence on fossil fuels and make the miners energy-independent
- It will also reduce water pollution and not affect the global water supply since it does not need water resources and
- It will also not cause soil or land pollution as extraction of fossil fuels to generate electricity does.
Apart from the above advantages in fighting climate change and cost, solar powered Bitcoin mining will also have a significant impact on the daily lives of people. Some of these benefits are:
- Individually owned solar systems will help in creating autonomous and small off-grid homes that can meet its energy needs as well as generate excess energy to mine crypto coins as well to generate some additional income at home
- The excess electricity produced and supplied will help a lot in industrial and commercial applications by leveraging it at a large scale to get higher amounts of computer processing power that can be used for crypto mining
- It will solve the issues and costs of storing and transmitting energy to remote locations in the deserts or off-shore and prevent wastage of energy due to location and scale and
- It will also help your property as well as the city in a circular economy scenario when owners or residents of a high rise share the production and storage assets along with business offices in a business park or a financial district.
All these will reduce the capital expenditure and will also result in more profits by share of profits due to excess energy generated.
When you combine all these elements of solar energy it will also facilitate blockchain technologies that will contribute in making those sectors that rely on blockchain technology significantly much better in performance and more reliable.
It will also result in decarbonization of environments in the urban areas and it may also help in improving public health and reducing its cost and premature mortality as well.
All these will eventually result in a cleaner and smarter city along with widening the scale for automation and help in the transition to a greener economy and environment.
Factors to Consider
One of the most crucial components of Bitcoin mining when it comes to onward financial estimation is its network difficulty.
This is because the revenue of mining Bitcoin with the hash rate of every unit generated goes down when the difficulty rises up.
And, this typically happens at a rapid pace.
According to several reports, the network difficulty has risen from 317 billion to a staggering 25 trillion since 2017.
This equals an astronomical monthly increase of more than 8%.
Now, considering the current shortage of the semiconductor chip as well as the unknown future price actions of the crypto coins, the difficulty seems to be doubling every year.
Therefore, when you consider shifting from the traditional electricity mining model to a solar powered crypto mining process, you should consider the difficulty level first so that you do not end up having no significant return on your investment.
The next important thing to consider is the way in which you would intend to route the excess energy produced by your solar power system.
Ideally, there are a number of options available to you for it such as:
- Selling it to the grid at a wholesale market price or
- Storing and holding it for later releases if you find the grid to be overloaded currently or the demand is low or the electricity price is low.
However, the best option perhaps is to use the excess electricity for mining Bitcoin or other crypto, especially when storing it is a problem due to fully charged batteries or the demand for it is low.
Economics of Renewable Energy
Now, consider the economics behind using renewable energy such as solar power for mining Bitcoin.
For this you will first need to understand how exactly the value adds up.
Typically, there are a number of ways in which you can calculate the estimated profits that you can make from mining Bitcoin or any other type of crypto coin for that matter.
First of all, you should consider the common factors for mining any type of crypto coins. These are:
- The amount of computer calculation power, or hashing power as it is referred to more commonly, that is possessed by a miner
- The amount of energy required to mine one single coin
- The cost of electricity in the region where the miner is located and
- The fees charged by the mining pools, if any.
When you know all these values, you will then need to calculate the hourly profit that you can make in order to validate the proposition of mining Bitcoin by using solar power.
You do not need to consider any energy cost when you use solar power because you are using that energy which would have been wasted otherwise.
Your mining profits will also vary depending on the type of crypto coin you want to mine.
For example, it is assumed that you will gain more profit if you mine Bitcoin since it has a higher and relatively more stable value.
Apart from that, the exchange rate of a crypto coin and cash will also affect your eventual profit amount.
When the price of a crypto coin is high, it will be more profitable for you to mine it.
Choosing the right type of coin based on profitability is also a good move especially depending on the weather conditions.
If the weather is bright and sunny, choose a coin to mine that has a higher profitability ratio because your power generation will be more to meet the mining requirements.
On the contrary, when the conditions are overcast, you may go for a coin with lower profitability because it will not need a lot of power which cannot be generated by the solar panels under overcast conditions.
The factors that affect the economy behind solar Bitcoin mining may change from time to time and therefore would affect your profitability in the end.
It will also determine how easy or difficult it is to mine a single coin.
The economics of renewable sources like solar power can also be improved if the amount of sunshine, peak sun hours, and sun quality affects the amount of power generated and thereby your mining profitability.
Typically, a lot of solar power, as well as wind power, is concentrated in remote areas.
Most of this energy goes waste because there is no financial incentive to put them into best use.
This is where the Bitcoin miners come to the rescue.
They buy this energy that would have been wasted otherwise to co-locate and create a financial incentive by building a solar or wind power system.
This eventually improves the core economics of renewable power sources.
With the prospects of crypto mining weighed down with volatility, mining these virtual currencies with solar power or semi-stranded assets that produce renewable sources of power is economically viable.
In areas where solar energy is generated in excess and the demand or use of it is low, it is these Bitcoin miners who keep these energy generating assets operational by buying the surplus energy for their mining power needs.
They act as the temporary buyers till the time when the grid is capable of absorbing the surplus energy fully.
This specific type of off-grid mining by using solar power also highlights another significant precept of the Bitcoin network.
It is that the miners are typically location agnostic and can mine the coins literally from anywhere without requiring any local infrastructure.
Typically, improving the economics of renewable energy involves making a calculation to ensure that there is a most advantageous economic mix between mining and solar power.
If the megawatts generated are much more in comparison to the megawatts used or required for mining, there is a clear situation of overprovision.
FAQs
Finally, after going through the article and getting motivated to learn more about Bitcoin solar mining, you may have a few relevant questions in your mind that you may be looking for an answer to.
And, since it is all about making profits, these questions may be typically related to the economic aspects of solar crypto mining.
Here are some of the most commonly asked questions that are put together for you.
The answers will help you to get a low-down on everything regarding Bitcoin mining by using solar power.
How many solar panels are required to be installed to mine Bitcoin?
Typically, the number of solar panels you will need to install to mine Bitcoin will depend largely on the amount of solar energy you want to generate from the system and that is required to mine a single coin as well as how much coins you want to mine.
What are the other factors that will determine the amount of power generated by the solar panels?
It will depend on other specific factors such as your location, the roof space available as well as its aspects, as well as the type of solar panels you want to install.
What is the actual power requirement to mine Bitcoin by using solar energy?
Ideally, anything between 450 watts and 500 watts will be enough to run a single mining machine.
However, if you want to use multiple Graphics Processing Units or GPUs to mine Bitcoin, the energy requirement will be much more, often to the tune of 900 watts to 1500 watts.
Do the sunny parts generate more power?
This is a no-brainer. Yes, it does. The sunny locations within a country would generate more power to the range of 229 watts per square meter of the solar panel on an average in the United States.
What are the essential components required to set up a solar power system to mine Bitcoin?
You will ideally need anywhere between six square meters and twelve square meters of solar panel.
This will be enough considering the fact that solar panels cannot generate power at night as well as taking the cloud cover factor into account.
How to keep a Bitcoin mining rig using solar power running at night?
Well, for that you will have to invest in a battery system. This will store the energy produced during the day to use it at night.
What are the components of a solar Bitcoin mining rig?
Apart from the solar power source, which is different from a common electrical source, a solar powered Bitcoin mining has almost the same components that include a motherboard, GPU cards, a large hard disk of 100 GB to 250 GB, a power switch, cooling system, and risers.
What is the cost of a solar powered Bitcoin mining rig?
The cost of a Bitcoin mining rig can be extremely variable whether it is to use solar power or not. The biggest expense perhaps is the GPUs.
However, on an average, you will get a mining rig that you can use to mine Bitcoin using solar power with a price tag ranging between $3,000 and $10,000 or more.
What are the tax consequences of mining Bitcoin using solar power?
This is a complex question and it is better that you consult with an expert tax consultant who is knowledgeable about crypto taxes.
However, if crypto mining is your business and you are using solar power for it, you may get to claim for the infrastructure required to run your operation as a tax-deductible expenditure.
Are there any tax exemptions for homes having solar power systems installed on their roof?
Yes, there are a variety of tax exemptions and grants offered by the US government to the businesses and homes that have solar power systems installed on their roof.
As of now it is about 26% which will be reduced to 22% sometime next year. Once again, you are advised to consult a professional tax accountant for further details.
Is solar powered Bitcoin mining legit in the United States?
This is a good question and the answer is yes, it is legit to mine Bitcoin using solar energy. However, make sure that you do your research before investing in it so that you have all the facts right.
Who is solar powered Bitcoin mining ideal for?
Solar Bitcoin mining is ideal for those who are conscious about the environment but want to make handsome profits from Bitcoin mining.
It is also ideal for those people who want to reduce their monthly energy bills and reduce carbon footprint.
Is it required to store solar energy while using it to mine Bitcoin?
The solar panels will not generate any power at night. Therefore, if you want to continue your mining process at night, you will need to store the excess energy generated in a battery backup.
Since Bitcoin mining is highly competitive, staying on it 24/7 will be more profitable. Therefore, it is wise to invest in batteries.
If the crypto market collapses, what will happen to the solar infrastructure?
This is quite an unlikely thing to happen but, for argument’s sake, if it does, you will need to have proper backup plans.
You may consider getting a power sales contract or a tie-up with your local utility to export the energy generated by your solar power system.
How long will it take to break even?
If you mine Bitcoin, it will take about a couple of years to break even since the value of crypto is quite high and usually stays high.
Once you break even, there is however no risk factors involved in the process. As with other types of crypto coins, the time taken to break even may be more and variable.
Conclusion
Therefore, as you can see from this article, mining Bitcoin or any other crypto coin by using solar power is quite a prudent, necessary and a profitable move.
However, you will need to do things precisely which is why you will need to consider all the relevant factors before you jump into it.
I have special interest in crypto and intend to help common people to gain knowledge about the digital asset as well as its potential. Follow Me at Linkedin.
