It is no longer wishful thinking or mere speculations; the future of modern banking is now cryptocurrencies. Within a short span of a decade, cryptocurrencies have penetrated the internet, with more and more people signing up to have digital wallets to trade and store these coins. And with cryptocurrencies come many questions surrounding crypto mining and the currencies in general.
There have been a lot of controversies surrounding this decentralized currency. One of the primary reasons is that there is not a central authority or regulation within the network that verifies transactions. Instead, these digital coins heavily depend on a public ledger secured using hash chains.
Another reason is the fact that cryptocurrencies, for the most part, require a lot of mining. This can often translates into substantial energy expenses for crypto miners and poses several environmental impairments.
This article explores the concept of crypto mining, how much energy is consumed by mining, and how to reduce mining costs.
What is Crypto Mining?
Crypto mining is a relatively an exhausting process. It typically involves creating and piling transactions into blocks while solving a digitized proof of word (PoW) puzzle. Crypto miners the world over compete to quickly generate the PoW that will generate a 64-digit hexadecimal hash for a particular coin.
Now, the miner who completes the hash before anyone else gets a reward of 6.2 bitcoins (approximately $265,000) released daily. Because crypto mining is a rewarding venture, miners invest in multiple graphic cards (GPUs) to upgrade the clock speed of their computers and handle calculations themselves.
As a result of crypto mining, there has been an increasing demand for graphic cards and a production shortage.
Why Mining Depends on Energy
Mining rigs (computers loaded with graphic cards) work around the clock, utilizing more power daily. Studies already show that a mining rig with at least 3 GPUs consumes up to 1,000 watts. Mining rigs also generate heat as it works endlessly to mine these currencies.
The more mining rigs exist, the more heat is generated, making the room uncomfortable for inhabitants. Thus, miners invest in powerful cooling equipment, exhausting more energy. This often results in increased energy bills at the end of the week or month.
According to the University of Cambridge’s data, about 17% of the world’s crypto hashrate happens in the US. This figure has grown nearly three times the figure from last year. While China holds the country with the highest mining operation globally, it has experienced a decline from 75.5% in 2019 to a 45% hashrate.
The reason for this is not far-fetched. China is on the move to ban massive mining operations from reducing power shortages and limiting environmental risks. Reports already suggest that about 500,000 miner rigs in China are now looking to migrate to the US. If this happens, this will increase the US’ hashrate to 40%.
How Much Energy Does Crypto Mining Consume?
According to a report, mining one Bitcoin takes up to 1,544 kWh to complete. Putting this into perspective, that is the equivalent of powering an average household for 53 days. What is more interesting is that the average cost is $0.068 per kWh. This roughly places the cost to approximately $104 in energy bills.
Bitcoin mining alone consumes more energy than the country of Argentina, according to a Cambridge analysis. More troubling is the fact that these mining operations pose adverse effects on the environment.
While mining rigs take a huge chunk of energy, nearby power plants remedy the situation by producing more energy. This has often raised the concern if the power plants will use fossil fuels to achieve that. Fossil fuels is one of the primary power sources in the US. Carbon dioxide produced from fossil fuel is discharged into the atmosphere, resulting in the Greenhouse effect.
This particular issue has raised a lot of concern both online and offline. Tesla’s CEO, Elon Musk, has announced that his company will not accept Bitcoin as payment for Teslas. While he noted that the reason was due to fossil fuel and coal used for mining, Bitcoin’s value plummeted days later.
Lowering Your Crypto Mining Cost
From what you have read so far, how do you effectively lower your energy cost when mining crypto?
- Avoid unethical habits. Many miners are often predisposed to use their work computers to mine cryptos, passing the cost to their companies. If you are an employer experiencing a spike in energy bills, this could be the reason. Critically monitor your work computers and limit any employee caught mining with work PCs.
- Invest in energy-saving mining tools. There are tech companies out there with products aimed to mine cryptos while utilizing less energy. Check out for reviews before buying any of these products.
Crypto mining, if unchecked, will cause a severe problem for the planet, apart from increased costs. We must take steps to reduce this potential danger.
While crypto mining can consume a lot of energy there are options available to miners and those looking to start mining operations. Site selection is incredibly important as the regulated vs. deregulated energy markets can drastically effect your ability to find the cheapest and cleanest energy possible. We recently negotiated an energy contract for a mining client where the total cost came in at less than $0.04 kWh.
Expense To Profit has partnered with some of the best energy procurement businesses in the country thus allowing our clients to save regardless of the industry they are in. If you are a crypto miner, investing in mining operations or frankly any other business looking to save on energy costs reach out and see how we can reduce your energy bills.