During the 2021 bull run, many large mining companies took out large loans to purchase the equipment and appropriate infrastructure needed to mine cryptocurrencies. However, the collapse of cryptocurrency exchanges FTX and Celsius led many such companies to file for bankruptcy.
The current bear market, coupled with the Bitcoin network’s high hash rate and low profits, has once again made the crypto industry doubt whether miners will be able to recover from their losses. While this remains questionable, it’s clear that today’s mining companies are increasingly focusing on alternative energy sources to cut costs, secure profits and, in some cases, reduce environmental impact.
Alternative energy sources used by miners
Steven Lubka, managing director of Bitcoin-focused financial services firm Swan Bitcoin, told Cointelegraph that while average rate The price to mine one Bitcoin (BTC) is around $26,000, with mining companies focusing on renewable energy charging between $5,000 and $15,000 per BTC.
A spokesperson for U.S.-listed Bitcoin mining company Riot Blockchain told Cointelegraph that wind and solar energy generated across Texas helps Riot ensure the lowest costs for cryptocurrency mining. “As stated in our Q2 investor profile, it costs Riot $8,389 to mine 1 Bitcoin,” he said.
Kent Halliburton, president and COO of managed Bitcoin mining provider Sazmining, told Cointelegraph that the largest expense in mining has always been electricity:
“Bitcoin miners are naturally incentivized to find the lowest-cost electricity. Excess electricity is at the lowest price. Renewable energy sources often produce excess electricity, which makes them ideal for Bitcoin mining.”
Halliburton added that independent sourcing data Research from the Bitcoin Mining Council shows that the Bitcoin network may indeed be one of the most sustainable industries. According to sources, 59% of mining operations are carbon-free and are growing at nearly 4.5% annually.
“All of our mining operations in Wisconsin and Paraguay are utilizing excess hydropower,” he said.
For miners considering long-term success, the shift to alternative energy sources appears to be a trend. Phil Harvey, CEO of crypto mining infrastructure provider Sabre56, told Cointelegraph that the company is currently working with dozens of mining companies to install machines at Sabre56’s three facilities in Wyoming and Ohio.
Harvey explained that Sabre56’s facility in Gillette, Wyoming, known as “Bonepile,” houses nearly 2,200 mining machines that are powered by a combination of energy sources, including material contributions from renewable energy sources. The 5,200-square-foot site leverages Basin Electric’s hybrid energy product portfolio.According to Basin Electric websitewhich includes 24% wind energy, 0.6% recycled energy and 4.3% hydropower, for a total of 28.9% renewable energy.
Harvey said: “The machines at our Bonepile site consist of a mix of MicroBT Whatsminer M50 and Bitmain Antminer S19. In terms of site design and approach, we have a forced air design, which means air is forced into the facility to cool the machines.”
Harvey said the Bonepile facility is designed to ensure excess air is provided. Harvey explained that this approach reduces overheating and stress on mining equipment while also allowing miners to naturally vent hot air through overpressure.
“This differs from the standard designs commonly used in the mining industry, which often use additional mechanisms to extract hot air without systems in place to help the air get into the facility,” he commented.
OceanBit, a company developing a renewable energy platform using ocean heat, takes a different approach. OceanBit co-founder Michael Bennett told Cointelegraph that the company is integrating Bitcoin mining into its ocean thermal power plant design. “This will allow us to balance variable loads, deliver power to offshore operations more quickly and monetize excess energy to improve plant profitability,” he explained.
Bennett said ocean thermal energy is the largest untapped source of energy on Earth. “It’s a base-load source of renewable energy, like hydro or geothermal, but uses the temperature difference in seawater to generate electricity.”
Bennett believes that Bitcoin is the missing piece needed to scale energy to global adoption, as it solves many of the Ocean Thermal Energy Conversion (OTEC) business challenges.
Nathaniel Harmon, co-founder and CEO of OceanBit, elaborates: “The by-product of OTEC’s power generation process is four-degree cold water, making it ideal for cooling ASICs, and the by-product of ASICs is low-grade heat, making it ideal for cooling ASICs. Ideal for use in OTEC processes. This combination increases efficiency while reducing costs for both.”
Bennett revealed that OceanBit plans to launch its R&D power plant in Hawaii in 2024.
Some alternative energy sources are controversial
Pennsylvania cryptocurrency mining company Stronghold Digital Mining is using coal waste to power its mining operations.
This waste – also known as gobs, stalks or bones – is the result of the refining process of coal mining. These unrefined lumps of coal are mixed with shale, slate or other impurities and piled up on thousands of acres of abandoned mine land in Pennsylvania.
Stronghold Digital Mining CEO Greg Beard told Cointelegraph that his company is working with the Pennsylvania Department of Environmental Protection and local environmental protection agencies to clean up piles of waste coal and use it to power Bitcoin mining operations.
“The acidic mine drainage from these piles is one of the largest sources of water pollution in Pennsylvania,” he said. “For decades, the piles have caught fire due to spontaneous combustion, releasing toxic pollutants into the air. Stronghold converts the coal waste through specialized facilities for electricity and then supplying electricity to the local grid or using the electricity to mine Bitcoin.”
Beard added: “Continuing waste coal cleanup activities requires Bitcoin mining, which makes Bitcoin mining more efficient than miners looking for energy.”
While this does provide a way to clean up large amounts of coal waste, it also constitutes a “Catch-22” from an environmental perspective.
Special plants that can use waste coal still burn hydrocarbons.The Pennsylvania affiliate of the Energy Justice Network Project even Argumentative Abandoned coal-fired power plants pollute more than new coal-fired plants.
Stronghold itself came under further scrutiny from environmental groups when it applied to burn tire fuel at its Panther Creek plant.
Clean Air Council activist Russell Zerbo recently stated on a podcast that the plant “uses the electricity it generates to generate cryptocurrency; the plant should not be selling electricity to the grid but should be fully relicensed as a solid waste incinerator and comply with Higher air pollution monitoring requirements.”
Challenges faced by miners may hinder adoption
While it’s worth noting that alternative energy sources are being used by cryptocurrency mining companies, certain challenges may hinder their adoption. Halliburton claims that misinformation about alternative energy is common:
“Local people may put up barriers because they don’t realize that Bitcoin miners are bringing net benefits to local communities by creating jobs and monetizing wasted or excess electricity. Electricity is also misunderstood. It’s very expensive to store, If electricity is not utilized or stored as it is generated, it is wasted – quite literally, on the planet.”
In addition, the challenges associated with using renewable energy are also evident. Harvey noted that Gillette, Wyoming’s altitude results in thinner air quality. As a result, the machines in the Sabre56 bone pile factory may have difficulty drawing in enough air for cooling.
Next is the challenge of thermal pollution, as hot air is released into the atmosphere from mining machines, something Cointelegraph witnessed firsthand onsite at Bonepile, Wyoming. Given this, some mining companies are looking for unique ways to reuse heat.For example, Genesis Digital Assets use Hot air produced by mining equipment in the Nordic region is used to grow vegetables.
All things considered, the future of mining operations is likely to depend on renewable energy. Margie Feng, head of marketing at Bitmain, a leading producer of crypto mining equipment, told Cointelegraph that the company has shifted gears and is now working to promote water-cooling technology, as she believes demand for such equipment will only grow in the future.
Feng added that Bitmain found that almost a quarter of Bitcoin miners use water to power their equipment, with wind and nuclear energy being the second and third largest contributors respectively.
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