Since 2019, the mining sector has been forced to reassess the crucial balance between expenses, dependability, and regulatory requirements due to increased costs associated with fossil fuels. Renewable sources like hydropower, solar, and wind power have become more appealing due to their competitive pricing. However, challenges persist regarding energy storage solutions, grid adaptability, and lengthy interconnection timelines. Amidst these developments, and acknowledging the concerns miners have regarding total power expenses (capital expenditures plus operating expenses), we engaged in a detailed discussion with ViaBTC’s Founder and CEO, Haipo Yang.
What portion of Bitcoin mining currently utilizes clean energy, and what is the future trend?
Haipo Yang: The adoption of clean energy sources is steadily increasing. As fossil fuel costs have risen since 2019, a growing number of miners are transitioning to cleaner energy alternatives that offer a more favorable cost structure. Based on data from ViaBTC’s user base, approximately 40% to 50% of miners continue to rely on fossil fuels, while the majority utilize clean energy. Hydropower remains the predominant clean and dispatchable energy source, accounting for roughly 30% to 40% independently. Solar, wind, associated gas, and other emerging energy sources collectively contribute less than 20%, but their share is clearly on the rise.
Miners utilizing fossil fuels are commonly located in areas abundant in natural resources. Texas exemplifies this situation, featuring a robust grid infrastructure, abundant natural gas reserves, and numerous suitable locations. Conversely, in regions where fossil resources are plentiful but transmission capabilities are limited or transportation costs are high, operators may opt to monetize surplus energy locally through mining activities.
Hydropower has long been a favored clean energy source. Countries like Russia, Canada, regions of South America, and Africa possess substantial hydro resources. Major Russian mining operations tend to congregate in Siberia, an area rich in hydropower. Similarly, countries such as Paraguay, Bhutan, and Ethiopia have attracted large operators like Bitdeer and HIVE Digital, thanks to their large-scale hydroelectric dams.
Solar energy has gained significant traction recently, but the challenge of integrating solar with dependable storage remains a limitation. As a result, most setups function using a photovoltaic (PV)-plus-grid model to maintain a consistent energy supply. Additionally, utilizing associated gas from oil and gas fields is a common practice in Canada, Russia, Kazakhstan, and Argentina. Nuclear power has not been widely adopted in mining due to its high capital expenditures, complex siting requirements, and lengthy licensing processes. While waste-to-energy solutions typically involve higher generation costs, some early projects have been enabled through non-recourse financing and supportive policies.
Overall, the energy mix within the mining industry is clearly shifting towards cleaner energy, even as efforts to enhance firming capabilities, storage capacity, and grid infrastructure continue.
What represents the most significant hurdle in expanding renewable-powered mining operations?
Haipo Yang: Energy is the single biggest operational cost for miners, accounting for 30% to 70% of their income. So the main concern is the balance between cost and stability of supply. Mining operations are very sensitive to both. Constant operation is needed for steady profits, and the electricity price must be kept as low as possible to protect profit margins.
Fossil fuels have remained a popular option as they are stable, and the technology has matured, although the prices are constantly going up. Coal prices rising from 2019 onwards have pushed up the costs of thermal energy generation and in some locations, grid tariffs related to thermal energy generation have risen by as much as 50%, or even doubled. This increase has been a factor in the increase in the share of clean energy in use.
Hydropower is the most mature among the clean energy sources and the technology has been proven to work on a large scale, but it is limited by geographical constraints and seasonality. In the early days of mining, some miners relocated in the dry season to locations with surplus electricity. Fortunately, hydropower pairs very well with pumped-storage hydropower (PSH), which is the world’s largest form of grid-scale energy storage. Some Siberian power plants can store water for several years to maintain a consistent supply.
Solar and wind power are rapidly improving and can be used in some applications now, but 24/7 availability is still dependent on grid access and storage capacity. The levelized cost of electricity (LCOE) of solar and wind is generally lower than that of traditional energy sources, but storage LCOE is still quite high. In locations with well-developed PV capabilities, PV prices are generally about 70% of those of thermal or hydro generation, but storage can cost about twice the PV price, pushing up the total costs. To give you some figures: in Latin America, large-scale wind farms can typically cost about $0.018–$0.035/kWh, and PV power about $0.017–$0.023/kWh. In practice, some miners can get PV power at about $0.035–$0.042/kWh, but storage can cost about $0.085/kWh. For this reason, many operations mix PV power with industrial grid supplies or PPAs to manage overall costs.
Policy is also a key factor, and many countries are investing via subsidies, tax credits, market mechanisms, and grid improvements to improve the integration of renewable energy sources. **Canada’s smart renewables initiatives, Russia’s capacity-agreement subsidies, and Gulf sovereign investors – Saudi Arabia’s PIF, the Qatar Investment Authority, Oman’s national energy entities –**are encouraging the adoption of solar and wind power. As policy support and investment continue to grow, renewable infrastructure will become more attractive for miners.
Do you think that more mining operations will use renewable energy sources in the future? What conditions are needed for this to happen?
Haipo Yang: I am optimistic. Power systems all over the world are adopting greener technologies, and as mining is extremely sensitive to costs and has a portable load, our industry will adopt these technologies faster than many others.
We are already seeing more partnerships between miners and energy generators to make use of curtailed energy and reduce payback times. Marathon Digital acquired a 114 MW wind farm in Texas to use the off-peak energy that is curtailed. HIVE Digital has announced plans for a 100 MW hydro-powered data center in Paraguay. Riot Platforms has invested in Reformed Energy, which converts municipal waste into electricity by using plasma gasification.
Looking ahead, three requirements will be the most important drivers of growth. Firstly, economics: when renewables are decisively cheaper than fossil fuels, including storage costs, miners will have no economic reason to use coal or gas, and additional hashrate will naturally be directed towards reliable clean energy. Secondly, infrastructure and storage capacity: miners can only operate at a consistent output throughout the year by eliminating the need for fossil fuels as a “baseload” source, which only happens when grids offer greater dispatchability, ancillary services, and congestion relief, and storage costs drop significantly.
Policy will be the third catalyst. When major governments introduce incentives – green tax breaks, clean-power credits, accelerated depreciation, preferential wheeling, or explicit clean-energy requirements for compute – these become major drivers of change. We are already seeing this in the Middle East, where several oil-producing countries have announced carbon-neutrality plans: Saudi Arabia aims for 50% renewables by 2030, the UAE aims to raise renewables to 32% by 2030, and Kuwait, Oman, and Qatar are all accelerating PV and wind capacity build-outs. These policies and investments will speed up the local energy transition and offer new locations and contracting options for Bitcoin mining businesses.
To conclude, I am sure that as the economic, technical, and policy conditions all improve together, more Bitcoin mining companies will switch to renewables and design their operations for “firmed” uptime.
Larger mining operations can use policy and money to get cheaper electricity. Does this run the risk of concentrating global hashrate? What does this mean for smaller miners?
Haipo Yang: Larger operators have certain advantages. They can directly invest in energy generation and obtain electricity at below-market prices, or enter into long-term PPAs to stabilize costs and mitigate risks. Public mining companies like Marathon can use equity markets to invest in the newest, most efficient ASICs and support large-scale clean-energy projects. This can lead to further expansion. TheMinerMag noted that in January 2024, 19 public miners produced 22% of the network BTC, which grew to 30% this year, reflecting their growing hashrate.
It is more difficult for small and medium-sized miners to get those lower energy prices, but they are still able to compete. ViaBTC still has many small operators on our network who use the pool for a steady income. Break-even BTC prices for common mining rigs and home units at approximately $0.06/kWh typically fall between $50,000 and $70,000, which is still below spot prices of around $100,000. Smaller miners can also benefit from flexibility and ingenuity. In regions at higher latitudes, some miners repurpose ASIC waste heat for home heating, improving energy efficiency and reducing overall costs.
As costs increase, how will mining pools evolve in the future?
Haipo Yang: If capital and energy advantages give large miners scale, then pools ensure that Bitcoin mining remains open and distributed.
Pools have made it much easier to get started with mining. Mining was previously for tech experts as you had to configure or even write software. I know this very well as I wrote the initial ViaBTC code and remember the challenges. Now, you can simply connect your rig to a pool and start mining. Whether you have a large farm or a couple of machines at home, pools offer stable and predictable payouts.
Block discovery is probabilistic, so a larger hashrate gives you a higher chance of success. Without pools, smaller miners would struggle to find a block in a reasonable amount of time and would have to quit, which would centralize the network. Our PPS+ payout model allows participants of all sizes to share the rewards fairly, supporting widespread participation and ensuring network security.
Some people wrongly assume that pools create a risk of centralization as a few brands appear to “control” the majority of the hashrate. Pools do not own hashrate, the miners do. Miners can switch pools at any time and if a pool acts against the miners’ interests, the hashrate will migrate, which is a strong market force that protects decentralization in practice.
In 2021, ViaBTC open-sourced our Bitcoin pool stack, including mining services, protocol implementations, and modules for multiple merged-mining coins. Miners with technical skills can build on this to optimize or launch their own services. I support open-source initiatives, as they improve the health of the community and encourage more people to get involved and benefit from mining.
In summary, whether your hashrate is large or small and whether you are technically skilled or not, pools are the coordination layer and payout infrastructure that make joining and earning straightforward, which supports Bitcoin’s transition towards being more open, transparent, decentralized, and profitable for all.