You may think that if mining takes place in digital format, you can open a farm anywhere in the world. On the one hand, BTCs can be mined anywhere, but one of the decisive factors in decision-making is location.
Because the industry is completely new and there is no way to scale such a business yet, the Genesis Digital Assets team has learned from its own experience and solved any problems that may arise. As a result, the company has written a guide on how to create a successful cryptocurrency mining farm on a large scale.
Here are the four main factors to consider when choosing the location of your new mining farm.
Factor 1: Electricity tariff
Because crypto mining requires fast and powerful machines capable of solving the algorithm at high speed, the power supply of the equipment is the most expensive item in mining. As a result, companies that opt for such a business may suffer from high electricity prices.
When choosing a location, you should know not only the countries with the cheapest electricity, but also understand the types of electricity sources in the area.
BTC production consumes a lot of electricity – about 110 terawatt hours per year, which corresponds to electricity consumption in a small country. ASIC miner alone consumes a little over 3000 watts, which corresponds to the operation of a dryer or heater. With hundreds and even thousands of devices running day and night on mining farms, it’s easy to understand that the cost of electricity must not be out of control, but it happen.
Factor 2: Availability of green energy
Cheap electricity can be found, but will it be green? Clean energy sources, such as wind, solar and hydropower, are cheaper than land and coal.
A 2019 report found that “56% of all new public renewable energy capacities produced electricity at a lower cost than the cheapest new fossil fuel technology.”
But of course if you buy the power plant yourself, you don’t have to move to Bhutan, for example. Therefore, we leave this point entirely to your discretion.
Although sustainable energy is the cheapest option in terms of costs, not all miners use it. As more and more people become aware of BTC and what mining is, questions about the use of sustainable energy are increasingly emerging, especially after Elon Musk brought the subject to the forefront.
The argument that all BTC miners use fossil fuels hard and carelessly is unfounded. ARK Invest and the Cambridge Center for Alternative Finance found that 56% of miners actively use sustainable energy sources in their crypto mining activities.
In addition, the industry as a whole is committed to a cleaner way of working, from emission reduction commitments under the new climate crepe agreement to using excess heat from its own data center to power local greenhouses, farms and cities.
Factor 3: Region friendly to miners
Another question related to site selection: will it be mined here? If the authorities give their consent to the mining of cryptocurrencies, the attitude of politicians to mining may change overnight and end in a total ban.
It happened recently in China, when the government announced a crackdown on mining and trade in cryptocurrencies. By June 20, local authorities had stopped mining in Sichuan Province, and 90% of mining companies are expected to have left or will be forced to leave. Due to recent power outages, BTC mining has been banned in Iran as well, so it’s best not to build a farm where you suddenly have to close it.
It is important to monitor which countries are opposed to cryptocurrency mining and which support it. Many mining companies focus on Scandinavian countries rich in “green” energy. Canada approves mining so much that during quarantine due to the COVID-19 pandemic, it considered crypto mining to be a “vital service.” Chinese miners are opening new businesses in the United States, taking advantage of the abundance of green energy and a favorable political climate.
Factor 4: local staff
In fact, many people do not have direct experience in this area. Basically, you will need to select a candidate from areas where skills can be transferred to your job.
For example, Genesis Digital Assets has a farm in northern Sweden, which also houses data centers on Facebook, Google and many other companies. And this is a fairly common situation where data centers and a mining farm are close to each other. Such a neighborhood allows you to hire talented workers who will more easily learn the job.