To power their mining operations, bitcoin miners either purchase electricity from conventional and renewable energy sources or develop and operate their own renewable energy facilities, turning them into energy consumers.
Miners typically buy electricity from power providers, such as utility companies or independent power producers, to mine bitcoins. They then use that electricity to power their mining equipment. This can include both traditional energy sources, such as coal or natural gas, as well as renewable energy sources, such as solar or wind power.
Hydro-Quebec, the Canadian utility company that sells electricity to bitcoin miners, is a true example of how bitcoin miners can act as energy buyers. In order to take advantage of the county’s lower electricity rates, the company is actively courting bitcoin miners to start operations there and tap into excess hydropower to mine bitcoin.
In some circumstances, miners may also sign long-term agreements with energy suppliers, which can provide them with access to a more reliable and stable source of electricity. Large-scale miners can benefit the most from this, as it enables them to plan and budget for their power requirements in advance.
By creating and operating their own renewable energy facilities, such as solar or wind farms, Bitcoin miners can also assume the role of energy users and act as energy buyers. In doing so, they support the shift to sustainable energy sources as well as securing energy for their mining activities.
For example, a bitcoin miner called Genesis Mining has set up operations in Iceland and runs them using geothermal and hydropower. This allows the miners to take advantage of Iceland’s abundant renewable energy resources and reduce their impact on the environment. Additionally, one of the largest bitcoin mining facilities in the world, KnCMiner, is powered by a wind farm developed by the company on its own land in Sweden.
To take advantage of the extra energy that would otherwise be wasted, miners may also choose to locate their mining operations next to existing renewable energy facilities, such as hydroelectric dams or geothermal power plants. For example, the Greenidge Generation Bitcoin miner in upstate New York, US, generates electricity for its mining operations using additional natural gas from a local power plant. The company has also built a 7 megawatt solar farm to help meet its energy needs.