Amidst the rising regulatory and growth challenges, the crypto industry is witnessing the emergence of new strategies to ensure its business sustainability. This is indeed required to remain competitive especially in the wake of the overly stretched bear market which has just refused to budge for more than a year now. According to a recently published research report, more than three-fourths of cryptocurrency miners are now using cheap renewable energy resources for their mining activities, a move that signifies their quest to remain financially viable and survive in the circumstances which are increasingly becoming complex and untenable.
Renewable Energy playing Rescuer
The report was released by CoinShares, a well-known name in the crypto industry, and it reaffirmed the findings of its researches that were first published in the month of May and November last year. The report reveals that many provinces in China have been benefited by government subsidies aimed to encourage the generation of green energy. These provinces now have a surplus amount of energy available at cheaper rates – an incentive which has attracted a lot of crypto mining firms to shift their business to these places. Take, for example, the Sichuan province which generates 90% of its energy requirement from the renewable sources is now home to around 48% of global cryptocurrency miners beside hosting as high as 80% of the mining organizations of China, a report from the Morgan Stanley reveals. The report further added that around 43.2% of the Bitcoin mining which is done globally is powered by the renewable energy sources of Sichuan.
The same phenomenon is true for the places outside China which collectively accounts for 40% of the global cryptocurrency mining activities. Scandinavia and Canada lead the renewable energy chart with a penetration rate of 79% and no wonder, come across as a preferred destination for crypto miners. The report suggests that global Bitcoin mining is driven by 77.6% of renewable energy and the rest 22.4% by other fossil or nuclear sources of power. The research even goes on to say that the energy requirement of the gaming industry is going to exceed that of Bitcoin mining by around 0.2GW which is large enough to power thousands of residential homes.
The important part of the research highlights changes in the crypto industry especially from the viewpoint of the cost. The study makes a comparison of past research and present research and finds a considerable downward change in Bitcoin valuation and an increase in the hash rate. On the basis of certain cost assumptions, the publication argues that most of the cryptocurrency miners today are running the business at a loss and finding it difficult to recover their capital expenditure. This has led to the reduction in their payment for mining gears too, added the research.
Mining activity, as reported by Crypto Briefing, is a valuable addition to the Bitcoin as it makes the whole network more safe and secure. However, in the case of a price drop, miners are finding it hard to continue with the activity. It is also worth noting that going by today’s environmental conditions; it is very difficult for any new cryptocurrency mining firm, especially the small-scale, to set up a business and earn a handsome return on the investment.
Despite all these difficulties mentioned in the report, the research suggests that using low-cost energy sources is the only way for the crypto miners to remain profitable in today’s challenging environment. Switching to renewable energy sources is a good step towards fulfilling the corporate social responsibilities, but more importantly, it will help the crypto miners to save afloat amidst the ongoing crypto winter.