Since 2019, the cost of fossil energy has been continuously rising, forcing the mining industry to reassess the "electricity cost - stability - compliance" triangle: on one end, the cost-effectiveness of clean energy sources such as hydropower, photovoltaics, and wind power is constantly improving, while on the other end, the current situation of energy storage and grid flexibility has not yet been fully addressed. In the face of various anxieties surrounding mining costs, we invited Yang Haipo, the founder and CEO of ViaBTC, for an in-depth discussion.
What is the current proportion of clean energy in Bitcoin mining? What is the overall trend?
Yang Haipo: The proportion of clean energy in Bitcoin mining is steadily increasing. Especially since 2019, as the cost of fossil energy continues to rise, more and more miners are turning to clean energy, which offers a cost advantage. According to user samples held by ViaBTC, miners still using fossil energy account for about 40% to 50%, while the rest primarily use clean energy. Among them, hydropower is the most common clean energy source, accounting for 30% to 40%; other new energy sources such as solar, wind, and associated gas together account for less than 20%, but this figure is gradually increasing.
Miners still using fossil energy are mainly concentrated in resource-rich areas. For example, in Texas, USA, the local grid and infrastructure are well-developed, and natural gas reserves are abundant, leading many miners to build mining farms there; while in some areas rich in fossil energy but with high costs for exporting electricity, there is a tendency to utilize excess local electricity through mining activities to achieve greater economic effects.
Hydropower has always been the most favored clean energy among miners. Regions such as Russia, Canada, South America, and Africa have abundant hydropower resources. For instance, leading mining companies in Russia are mostly deployed in hydropower-rich Siberia; countries like Paraguay, Bhutan, and Ethiopia have attracted large mining companies like Bitdeer and HIVE Digital to collaborate on mining farms due to their large hydropower stations.
Solar energy has received much attention in recent years, but due to storage issues, it still relies on a "photovoltaic + grid" approach to ensure stable power supply. The model of generating electricity using associated gas from oil and gas fields is also quite common in Canada, Russia, Kazakhstan, and Argentina. As for nuclear energy, due to high infrastructure construction and comprehensive costs, its application in Bitcoin mining is still limited. Emerging directions like waste-to-energy, although having higher generation costs, are also beginning to see experimental projects due to financing or policy subsidies.
Overall, the energy structure of global Bitcoin mining is accelerating its transition to cleaner sources. Although the infrastructure for some new energy sources has not yet fully matured, the trend of steadily increasing clean energy proportion is very clear.
What is the biggest challenge in promoting renewable energy mining?
Yang Haipo: Currently, electricity cost has become the largest ongoing cost for miners, often accounting for 30% to 70% of their revenue. Therefore, for miners, the core decision lies in the balance between electricity cost and supply stability. Bitcoin mining is highly sensitive to costs and revenues: on one hand, it requires long-term stable operation to ensure profits, while on the other hand, it needs to minimize electricity prices to enhance net profits.
The reason fossil energy has long held an important position is due to its stable supply and mature supporting systems. However, the problem is that costs are continuously rising. Since 2019, the increase in coal prices has driven up the costs of thermal power, with many regions seeing thermal power hosting fees rise by 50% or even double, which is also a significant reason for the increase in the proportion of clean energy in recent years.
Among clean energy sources, hydropower is the most mature, with well-developed infrastructure and rich experience in large-scale utilization. However, hydropower resources are constrained by geographical conditions, with high-quality resources relatively concentrated and subject to seasonal variations due to climate. In earlier years, there was even a phenomenon of miners "following the electricity," where miners would migrate to areas with more abundant power resources during dry seasons. Fortunately, hydropower has a relatively mature energy storage method—pumped storage, which is currently the largest form of energy storage globally. For example, some hydropower stations in Siberia, Russia, can store water across years to maintain long-term balance.
Photovoltaics and wind power have developed rapidly and have been implemented in some scenarios, but they still struggle to achieve 24/7 uninterrupted power supply, relying heavily on the grid and energy storage. Although their cost per kilowatt-hour is lower than traditional energy sources, their storage costs are relatively high. For instance, in areas with well-developed photovoltaic facilities, the photovoltaic electricity price is about 70% of that of thermal and hydropower, but the corresponding storage cost is about twice the electricity price, significantly increasing the overall cost. For example, the cost of large-scale wind power in Latin America is about $0.018–$0.035/kWh, while photovoltaics are about $0.017–$0.023/kWh. In practical applications, some miners can obtain photovoltaic electricity prices of about $0.035–$0.042/kWh, while the corresponding storage electricity price is about $0.085/kWh. Therefore, current miners often adopt a combination of "photovoltaics + industrial electricity" to control overall costs.
The impact of policy is also crucial. Most countries promote grid upgrades and the integration of new energy sources through fiscal subsidies, national funds, or special investments, such as Canada's "Smart Renewable Energy and Electrification Pathway" plan, Russia's capacity agreement subsidies, and the active investments of Saudi Arabia's Public Investment Fund, Qatar Investment Authority, and Oman National Energy Company in solar and wind energy. It is foreseeable that with policy promotion and capital inflow, the infrastructure for new energy will become increasingly mature.
Will more mining companies layout renewable energy mining in the future? What objective conditions are needed to support this?
Yang Haipo: I am optimistic about this trend. The global power system is undergoing a green transformation, and Bitcoin mining, as a highly cost-sensitive industry, will embrace this change sooner. In recent years, we have seen more and more collaborative cases: many renewable energy generation companies are teaming up with mining companies to absorb excess electricity and reduce payback periods. For example, Marathon Digital in the U.S. acquired a 114 MW wind farm in Texas to utilize wind power that would otherwise be wasted during low-demand periods; Hive Digital in Canada planned to build a 100 MW hydropower data center in Paraguay last year; and Riot Platforms in the U.S. invested in waste-to-energy company Reformed Energy, using plasma gasification technology to convert urban waste into electricity.
In the future, I believe three objective conditions will become key driving forces: first is economic viability. When renewable energy completely outcompetes fossil energy in terms of "full-cycle costs including storage," miners will have no reason to continue relying on coal or gas, and new Bitcoin hash power will naturally tilt towards clean energy. Second is infrastructure and energy storage; only when the grid has stronger dispatch capabilities and storage costs significantly decrease can miners achieve constant year-round operation, eliminating the need for "baseline" fossil energy.
Finally, policy signals are crucial. When major countries introduce clear incentive measures, such as green tax incentives, clean electricity subsidies, or explicit requirements for using clean energy in hash power, these will become transformative driving forces. In fact, we have seen many oil-producing countries in the Middle East propose carbon neutrality visions in recent years: Saudi Arabia plans for renewable energy to account for 50% by 2030, the UAE aims for a 32% share by 2030, and Kuwait, Oman, and Qatar are also accelerating the construction of solar and wind power. These policies and investments will not only accelerate local energy transitions but also provide new development opportunities for Bitcoin mining companies.
Overall, as the conditions of economy, technology, and policy gradually mature, I believe more and more Bitcoin mining companies will choose renewable energy.
Can large mining companies leverage policies or capital to achieve lower electricity costs, leading to greater global hash power concentration? Will the difficulty of mining continue to increase for small and medium miners?
Yang Haipo: It is undeniable that large mining companies, leveraging capital advantages and policy subsidies, can obtain cheaper energy. For example, they can directly invest in building power generation facilities to acquire electricity at prices lower than market grid prices or sign long-term power purchase agreements with energy companies to lock in lower electricity costs and higher operational certainty. At the same time, publicly listed mining companies like Marathon can also utilize the financing advantages of capital markets to invest heavily in the latest generation of efficient mining machines and clean energy projects.
These advantages enable them to maintain a capacity for continuous expansion in industry competition. According to data from TheMinerMag, in January 2024, 19 publicly listed companies with self-mining operations accounted for 22% of the total Bitcoin output, while this figure has risen to about 30% this year, reflecting the increasing trend of large mining companies' share in the overall hash power.
Small and medium miners indeed find it challenging to compete with these vertically integrated large mining companies on electricity costs, thus increasing the difficulty of participation, but this does not mean they will be completely eliminated. In the ViaBTC mining pool, there are still many users operating with a small number of mining machines who have achieved sustainable cash flow through the pool. For example, with an electricity cost of $0.06 per kilowatt-hour, the breakeven price for mainstream mining machines, including common home mining machines, is approximately $50,000 to $70,000, still below the market purchase price of Bitcoin at $100,000. Additionally, the flexibility and creativity of small and medium miners are also at play: for instance, in some high-latitude areas, some miners utilize the waste heat from mining machines for home heating, improving energy utilization efficiency and indirectly reducing overall costs.
In the current context of rising mining costs, what role do you think mining pools will play in the future?
Yang Haipo: If the capital and energy advantages of large mining companies drive the scaling of the industry, then the existence of mining pools ensures that Bitcoin mining remains open and decentralized. First, the emergence of mining pools has significantly lowered the threshold for Bitcoin mining. Early mining was almost exclusive to technical players, requiring them to configure software or even write programs themselves. I have a deep understanding of this, as I completed the code for ViaBTC myself, and I am well aware of the various barriers to early mining. Nowadays, one only needs to connect their mining machine to a mining pool to easily participate in mining. Whether it is a large-scale mining company or an individual miner with just one or two machines, they can achieve stable returns through the mining pool.
The process of Bitcoin block generation is essentially a probabilistic event; the greater the hash power, the higher the chance of receiving rewards. Without mining pools, small hash power miners would find it difficult to mine blocks within a reasonable timeframe and would ultimately be forced to exit the market, leading to network centralization. The PPS+ revenue distribution model of the ViaBTC mining pool precisely addresses this issue, allowing participants of different scales to fairly share the rewards, thus maintaining broad participation and security in the network.
It is important to emphasize that while mining pools connect the hash power of many users, there is no so-called "decentralization crisis." There have been reports suggesting that "the top mining pools control most of the Bitcoin network's hash power, leading to a decentralization crisis," which is actually a common misunderstanding. Mining pools do not own the hash power; it belongs to the miners, who can switch connections at any time. If a mining pool acts against the interests of miners, they will immediately shift their hash power, which is also an important guarantee for the healthy operation of the industry.
ViaBTC open-sourced the Bitcoin mining pool code as early as 2021, including mining services, protocol implementations, and support modules for multiple joint mining currencies. Any miner with technical interest can optimize and develop their own mining services based on this foundation. I personally strongly support and advocate for open-source technology, so I hope to promote the healthy development of the community through practical actions, allowing more people to participate and enjoy the dividends of Bitcoin mining.
In summary, whether for large or small hash power miners, regardless of their familiarity with mining technology, we hope everyone can easily join and reap rewards. Mining pools are not only the infrastructure for aggregating hash power and distributing rewards but also an important way to promote the Bitcoin network towards an open, transparent, decentralized, and mutually beneficial direction.
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