Three variables of Crypto mining business
Now you may be thinking, Okay, I have an electrical outlet right next to me… How much energy does it take to mine crypto?
Cambridge University found that identified facilities draw on average 28% of their energy requirements from renewables
Among the types of renewables, hydroelectric power generated from the movement of water is the most common used for crypto mining. Now miners are looking for facility locations that have an abundance of low-cost renewable energy that is unused and stranded, which can usually be found near these renewable energy plants. Like China, mining facilities in the United States are also using hydroelectric power. Facilities in the State of New York have capitalized on the hydroelectric from the Valatie Dam while facilities in Washington are taking advantage of dams located on the Columbia River. One problem this relationship may encounter is overproduction.
If the production capability is less than the demand of the mining operation, it may result in an increase in local energy prices, ultimately hurting local businesses. Having an energy mix not only helps the environment but it can also save you money in the long term. The first and most obvious way renewables can save you money is by decreasing your electric bill.
The last variable I will mention is the crypto itself. What cryptocurrency are you mining? Each crypto utilizes a particular mining algorithm for it’s proof of work. The algorithm that is supported the most by hardware manufacturers is Ethash, which is used by the Ethereum network. SHA-256 & Equihash are tied for the second most supported. In today’s market there are a few companies to buy hardware from some well known manufacturers are Bitmain, Nvidia and Canaan.
Cambridge University's research team found that there are 128 reported mining facilities around the globe. The crypto industry is primarily driven by companies based in North America, China, India and western Europe. Over the past few years there has been a substantial growth of mining activities in North America, but China remains to be the biggest hub. It is estimated that China controls around 70% of the markets Bitcoin and 73% of the world’s ASIC manufacturers are located in China.
As mining facilities continue to distribute throughout the world, this will make it more difficult for attackers to shut down mining facilities. Having facilities dispersed around the world will also decrease the impact that local economies and political parties play on the mining industry.