Mining BTC is a thrilling and rapidly growing industry to be a part of. Just make sure you plant your roots in the proper spot.
We should know because we are one of them. Large-scale miners are the dominating participants in Bitcoin (BTC) mining. In under eight years, our team at Genesis Digital Assets has evolved from a few mining rigs in my dorm room to over twenty industrial-scale mining farms throughout the world. We continue to scale and build more every quarter.
You might believe that because mining is done digitally, you can set up a farm anywhere. While it is possible to mine Bitcoin from anywhere, having on-the-ground operations requires more planning than simply establishing up shop somewhere. Whether you’re starting your own farm or seeking for farms to invest in, the location of your mining operations will be the make-or-break aspect.
We’ve learnt as we’ve gone, faced every issue that could come, and worked hard to address it because it’s such a young business with no handbook for growing Bitcoin mining operations. We’ve been effectively creating the manual on how to establish successful large-scale mining operations, and I’ll share some of that knowledge with you. When choosing a place for your new mining farm, consider the following four important aspects.
Factor 1: Electricity rates are the factor to consider.
Because mining operations require fast and powerful mining rigs to solve algorithms quickly, the most expensive aspect of a mining operation is powering the gear. High electricity rates can easily damage operations that think they’re doing well. When it comes to selecting a place, operations must know not only which power sources are the most cost-effective, but also which types of electricity are available in that location.
Bitcoin mining uses a lot of electricity – roughly 110 terawatt hours per year, which is about the same as a small country’s electricity consumption. A single ASIC miner consumes just over 3000 watts, which is enough to power an air conditioner, a dryer, or a space heater. It’s simple to understand how electricity costs might spiral out of control when Bitcoin mining farms run hundreds or thousands of miners all day and night. The last thing you want to do is open a business only to discover that your electricity cost is so high that you’ll never be profitable.
Factor 2: Green energy availability
You might be able to locate inexpensive electricity, but is it a long-term solution? The good news is that renewable energy sources such as wind, solar, and hydropower are all less expensive than fossil fuels. “56 percent of all newly commissioned utility-scale renewable power generation capacity produced electricity at a cheaper cost than the cheapest new fossil fuel-fired option,” according to a research published in 2019.
However, despite the fact that sustainable energy is the most cost-effective alternative, miners haven’t all used it. More issues about Bitcoin’s usage of sustainable energy are developing as more people invest in and learn about it, especially after Elon Musk’s tweets brought it to the forefront.
The claim that all Bitcoin miners are greedy and careless in their use of fossil fuels is false. According to ARK Invest and the Cambridge Center for Alternative Finance, 76 percent of miners actively use sustainable energy sources in their operations. Additionally, the industry as a whole is pushing for more environmentally friendly practises, including as agreeing to reduce emissions through the new Crypto Climate Accord and using excess heat from its data centres to power local greenhouses, farms, and cities.
Factor 3: Mining-friendly areas
Another consideration while deciding on a place is whether or not they will allow me to mine here. Is the political attitude toward mining such that, if I am allowed to mine here, they could change their minds and shut down mining activities completely overnight?
This happened recently in China, where the government indicated that it will start cracking down on Bitcoin mining and trade. Local officials in Sichuan Province shut down Bitcoin mining activities on June 20, and it’s now projected that 90% of mining operations will be shut down or forced out of the country. In addition, in the aftermath of frequent power disruptions, Iran has just outlawed Bitcoin mining. As a result, it’s advisable not to establish a mining farm that you’ll have to shut down unexpectedly.
However, these measures demonstrate which governments are opposed to Bitcoin mining and which are optimistic about the future of the cryptocurrency. Many mining companies are turning to the Nordic countries, which are rich in renewable energy. Canada is pushing mining to the level that it classified mining operations as “essential services” during their COVID-19 pandemic shutdown. In addition, because of ample green energy and a favourable political atmosphere, many Chinese miners are migrating to the United States to start new businesses.
Factor 4: Local skill is a to consider
As I previously stated, there is no manual on how to set up a Bitcoin mining operation, which means that few people have firsthand knowledge. You’ll need to recruit from industries or jobs that have similar functions and problem-solving challenges so that the talents may be transferred.
For example, we have farms in Northern Sweden, which also happens to be home to data centres for Facebook, Google, and a slew of other companies — it’s not uncommon to see data centres and mining farms in close proximity. This allows for easier onboarding and training of staff than, instance, where the sole accessible talent has manufacturing or industry expertise.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.