but it still depends on physical resources — namely energy. Mining bitcoins is what gives them their value. There are a predetermined number of the coins in existence. For them to enter the marketplace, miners must unlock them by using computing power to solve a complex mathematical problem. If they solve it, they get the reward of a bitcoin.
This mining isn’t free though. It requires a substantial amount of computing power and, therefore, energy. According to recent estimates, the Bitcoin network could soon use 43 terawatt-hours of electricity in a year, which is more than the country of New Zealand. That volume of electricity usage could result in as much carbon dioxide emissions as around a million transatlantic flights.
The codes get more complex over time too, meaning energy requirements will continue to grow.
Bitcoin’s dependence on electricity creates another issue. It’s resulted in mining becoming concentrated in countries with relatively inexpensive electricity, such as China. Companies and mining conglomerates that can afford large volumes of electricity are pushing smaller miners with personal computers out of the picture.
One of cryptocurrency’s primary tenets is that it’s decentralized. The massive power demand of mining is causing a concentration of power in the Bitcoin network.
Mining bitcoin with renewable energy
One potential fix for this issue? Mining with clean, renewable and distributed energy resources such as solar, wind and geothermal power.
Growing number of miners are turning to these energy sources to reduce the costs and environmental impacts of bitcoin. Iceland, for instance, has become a hub for mining due to the abundance of geothermal and hydroelectric power available. It may even use more energy on its mining operations than powering its homes this year.
Geothermal and hydropower are not widely available in many other nations. Solar, however, is.
How to power bitcoin mining with solar
Consumers can access solar in a variety of ways. They can buy it from a utility that generates on a large solar farm. They can pay a portion of the power produced by a small community solar farm. They can also generate their own power by constructing a small solar system on their property.
In many cases, solar is cheaper than buying grid electricity, especially when it comes to solar you install on your property. After the initial investment, the system generates power at a low cost, meaning a solar-powered bitcoin operation would be more profitable.
If you produce more solar electricity than you need, you can even sometimes sell it back to the grid, creating a double income stream.
In some cases, utilities may even pay you to take excess solar energy. That’s because utilities can’t easily turn some power plants, such as those fueled by fossil fuels, off and on. The fact that solar panels produce varying amounts of energy depending on the amount of sunlight they get also plays into this. When solar panels produce more than grid operators expected, they need someone to take that energy off the grid. With the proper setup, bitcoin miners could take that power and use it to make money through mining.
It’s also possible to take your solar-powered mining setup, with the exception of your internet connection, entirely off-grid. You could contract to have a small solar system installed on your property, or even build one yourself and then connect it directly to your mining equipment. Although this requires an upfront investment, eventually it could pay for itself and start earning you a profit.
Using solar power to mine bitcoins has a number of advantages. It reduces mining’s environmental impacts, may make it more lucrative and can help decentralize it, bringing it closer to the cryptocurrency ideal.
This is a guest post written by Emily Folk.
Emily is a conservation and sustainability writer.
She is the editor of Conservation Folks, and you can see her latest updates by following her on Twitter.