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Presently, BTC mining is a controversial subject in the world of cryptocurrency.
There has been much discussion of the rising consumption and cost of electricity required to mine Bitcoin. It has been predicted that energy consumption for creating new coins could surpass all energy consumption for personal use.
The old adage of ‘you have to spend money to make money’ couldn’t be more apt when talking about the subject of Bitcoin mining costs. It’s hard to get ahead and make money in a business of any description without an investment of some kind. Be it advertisements, supplies, premises or products some initial outlay is more often than not required.
While we all try to limit costs, it’s important to spend wisely rather than cheaply. Getting the best value for money is far superior to getting the best price. Cutting corners to save a little money here and there could end up costing you much more in the long run.
Mining never used to be so expensive. The industry is highly competitive. Going from people mining using their personal CPU, to huge warehouses filled with row upon row of specialised machines. The demand on hardware and other resources has driven price increases on rigs and graphics cards.
What are the main costs of mining farms?
There are many costs to consider when starting mining BTC. Electricity, land, hardware, cooling systems, maintenance, employee costs all add up quite quickly. But undoubtedly the main cost is electricity.
Bitcoin mining farms run 24 hours a day, 7 days a week. The electrical cost of running such a vast density of rigs is quite substantial.
Plus the Bitcoin mining process creates an enormous amount of heat. So cooling systems need to be running continuously. Adding to the already high levels of energy consumption.
With substantial changes in mining efficiency in mind, industrial scale bitcoin mining farm owners are on an endless search to find new locations. Hoping to set up somewhere with the cheapest electricity prices they can find.
How different can energy prices be?
They vary massively. The price of energy is so diverse around the world that it can have a huge impact on the profitability of Bitcoin mining.
The 5 most expensive v 5 cheapest countries to mine Bitcoin.
Current rankings are…
- South Korea
- The Solomon Island
- The Cook Islands
- Trinidad and Tobago
South Korea is currently the most expensive place to mine. Mining a single coin there can cost over £20,000! Compare this to Venezuela. There the electricity is heavily subsidised by the government. So the price of mining a single Bitcoin drops significantly to just over £400.
How to reduce costs?
People are constantly working to find solutions to the high energy costs. Doing so by trying to create a more energy efficient Bitcoin mining rig. Advances are being made all the time.
Other ways to cut down costs are to run farms in colder climates. Thus resulting in lower costs accrued by running cooling systems.
A shift towards countries who have ample renewable energy sources has also been seen in recent years.
Iceland is a prime example of this with the added benefit of also having a cooler climate. Geothermal and hydroelectric plants surround the island, driving down the wholesale cost of electricity.
The debate over whether you can still make money mining Bitcoin will continue.
It is true that energy costs are high but it is still profitable. With new innovation and ongoing research into how to reduce costs, there is sure to be further developments in increasing efficiency.
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