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When it comes to energy sources, Bitcoin mining can be done on or off power grids. We breakdown the pros and cons of each so you know whats best for your operation.
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If you've ever wondered what the terms "on-grid" and "off-grid" mean, you're not alone. These terms are frequently used in the context of mining, and understanding their implications is important for making informed decisions.
On-grid mining is a method of mining that is connected to the traditional power grid, which is the same grid that powers our homes, offices, and other everyday needs. This means that the energy used for mining is drawn from the same sources as the energy we use in our daily lives. On-grid mining can be a great option because it is reliable and efficient, and it can be easily scaled up or down depending on the needs of the operation.
On the other hand, off-grid mining refers to operations that are not connected to the traditional power grid. Instead, these operations rely on alternative power sources such as solar, wind, hydro, or even diesel generators. One of the main advantages of off-grid mining is that it can be more environmentally friendly than on-grid mining because it does not rely on fossil fuels. Additionally, off-grid mining can be a good option for remote locations where access to the traditional power grid is limited or non-existent.
Both on-grid and off-grid mining have their own advantages and disadvantages, and the choice between them will depend on a variety of factors such as location, energy costs, environmental impact, and the scale of the mining operation. Ultimately, the decision of whether to choose on-grid or off-grid mining will depend on a careful analysis of these factors and an understanding of the specific needs and priorities of the mining operation in question.
On-Grid
On-grid mining is the most common way to mine. In the US, there are 3 power grids: Eastern, Western, and ERCOT (which is in Texas). You may know that Texas is becoming a rising global center for the industry, highly because of cheap energy opportunities and the fact ERCOT has recognized the benefits of mining and has even used it to help stabilize their power grid. So with his in mind, we’ll focus on ERCOT.
When it comes to on-grid, you might hear people talking about something called curtailment. It's basically when they intentionally reduce the amount of energy they produce so that there's a balance between energy supply and demand. Thus when miners curtail, they're actually giving back some much needed energy to the grid, and that's how they get paid for selling their power. Check out this link for more info: miners give much needed energy back to the grid.
So, being on-grid has some pretty sweet benefits:
- You get a super reliable source of power
- Miners can actually get paid for cutting back on power usage
- It's usually easier to get things up and running.
ERCOT has a great selection of load response programs for miners, like 4CP, ERS, Non-Spin, and more. These demand response programs can save mining companies a ton of cash, and actually help keep the power grid stable, which powers about 90% of the state of Texas. Thats a win-win.
Plus, it's way easier to get set up with a location, a utility company, and a wholesale power provider when you're on-grid. If you're keen to get started, check out our 6 Step Guide to Building a Commercial Bitcoin Mining Operation.
Off-Grid
Off-grid mining, on the other hand, is when mining operations are not connected to the traditional power grid and instead rely on alternative power sources like flared or vented natural gas, solar, wind, or hydroelectric power. These operations are often located in remote areas where civilization is scarce. The miners need specialized equipment, like generators, solar panels, or wind turbines, to generate the power needed for the mining operations.
Off-grid mining has several advantages over on-grid mining. For one, it allows for increased energy independence and reduces dependence on fossil fuels. It also allows for mining operations to be located in areas where traditional power grids are not available or are too costly to build. Additionally, off-grid mining can be a more environmentally friendly option as it reduces the carbon footprint associated with traditional power generation, especially helping to reduce natural gas emissions.
We’re even seeing mining companies who use flared or vented natural gas as an energy source get rewarded with carbon credits. A carbon credit is equal to 1 metric ton of carbon dioxide emission reductions or roughly if more than 500 mcf of gas is being converted to elecricity. By miners capturing this stranded/flared gas, they are directly reducing carbon emissions.
There are also several disadvantages to off-grid mining. For one, alternative power sources can sometimes be a less reliable source, and may not always be able to constantly provide the power needed for the mining operations. However, as growth within the natural gas mining expands, many seem to report high uptime. Additionally, the cost to get one of these operations started can be significantly higher than on-grid. For example, we have partners whose generators for a stranded gas operation start for upwards of $500k. But these sites tend of make up for it in operating expenses being decreased, we’ve seen rates as low as $0.025/kwh all-in.
At RigList, we can connect you with hosting or site opportunities that run on 100% natural gas. Check here for more information.
Conclusion
In conclusion, both on-grid and off-grid bitcoin mining have their advantages and disadvantages. On-grid mining is typically more reliable and less costly, but it is also more dependent on fossil fuels and can be less environmentally friendly. Off-grid mining offers increased energy independence and a reduced carbon footprint, but it can be difficult to start and more costly up-front. Ultimately, the decision of whether to mine on or off the grid will depend on a variety of factors, including electricity costs, available power sources, and environmental concerns.
If you’d like to get started with your own mining operation, check out our listings from verified sellers across the globe.
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