How solar-powered cryptomining can help avoid energy crisis
The mission and promise of cryptocurrency, decentralized finance, and Web3 are tremendous and truly disruptive, just like all these ideas are at their core. Having started in 2009, the realm of decentralization had served as an arena both for great startups and unfortunate scams, attracted investors’ and regulators’ attention, developed, grew, and fell, going bearish or bullish at different times. The industry of crypto has its genuine upsides as well as faces serious challenges. One of these challenges is the energy-exhausting process of mining.
A logical alternative to artificial electricity production is green energy, in this case ― solar power. This article will point the direction for resolving the problem of extensive resources spent on mining with the use of natural resources and shed some light on how to reduce the mining costs in the face of possibly upcoming crypto winter.
Challenges of traditional crypto mining
As mentioned above, the main fatal flaw of traditional crypto mining is its extensiveness and, therefore, the cost. According to the research held by Cambridge University, a year of Bitcoin mining roughly equals Argentina’s annual energy consumption. Of course, a high net cost is what primarily determines the 5-digit valuation of Bitcoin, but maintaining the high price of these operations isn’t always stable; due to various reasons and influencing factors, the price can be volatile.
Russia’s invasion of Ukraine and the following sanctions imposed on it caused a substantial price rise in traditional energy sources. The further the sanctions go, the higher the price becomes: for instance, the sixth package released on Friday, June 3rd, includes an immediate embargo on more than two-thirds of crude oil imports, with a temporary exception for pipeline delivery. As a result, provided that the European Union and a big part of the rest of the world will have to go through the process of getting used to alternative energy sources, the increased demand will make crude oil and its extraction more expensive. At first glance, these natural resources don’t concern cryptomining, but disruptions to energy markets caused by Russia’s invasion do. On June 6th, the White House released the Declaration of Emergency, the premises of which is not only an all-out war but also extreme weather conditions & climate change, as well as the projection of electricity supply shortfalls and record electricity demand.
Another disturbing factor comes into play every four years and, supposedly, is already breathing down miners’ necks: the crypto winter. In the circumstances where the crypto asset’s price falls as dramatically as it did the last couple of months, lowering operational costs wouldn’t just make sense but could also serve as a guarantee that the miners aren’t spending more than they are making.
Solar-powered crypto mining benefits
Like any other renewable energy resource, solar power’s price doesn’t depend on political events. There’s even more to that: you can anticipate more grants in the field of green energy in the context of the European Union’s desire to become greener and reduce its dependency on non-renewable energy sources. Such a course is already taken by companies worldwide when they produce carbon credits.
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Renewable energy is a great solution to keep crypto mining profitable, but reducing the operational check shouldn’t be your only goal during crypto winter. In the best-case scenario, one more wise step would be to accumulate your mined reserves rather than sell them. Selling the minted currency not at a current lower level of $30,000 but letting it appreciate and boost is what’s in your best interest: if you stay patient, you’ll be able to sell it at twice or even three times the low price crypto winter is making it be. Of course, this procedure requires reducing operating costs even more. How to finance not only mining but also approximately a year of selling abstinence, given that the interest rates are growing and the economy’s growth is slowing down?
Security token offering as a means of financial security
Tokenizing the company’s stock and conducting an STO (security token offering) could be an adequate and efficient means of not just financing the whole process of switching to green sources but also maintaining the company’s needs before the market goes bullish again. While preparing an offering, it’s possible to choose either equity or debt type of financing: debt entails borrowing money from investors, paying interest for a set length of time, and then repaying the total quantity, while equity suggests selling your company’s shares to investors.
Security token offering is not just about finding an additional source of financing for your projects while you are going green. It has two unobvious but significant advantages.
- The market goes mainly bearish during crypto winter, and people tend not to rely on cryptocurrency investments anymore. Instead, it would make sense for a regular investor to diversify their portfolio and focus on other assets, one of which is traditionally stocks.
- After the crypto winter is over and the market stabilizes, your business will be on track to offer its stock to investors hungry to redeem the losses they went through during crypto winter or just those who will have inspiration and pockets ready for new and better investments.
Today’s market conditions are influenced by both natural and unexpected factors. While any crisis times require sacrifices, switching crypto mining operations to solar power energy seems a progressive step rather than a downgrade. Consider conducting a security token offering to get funding for such a transformation and refrain from selling mined currency at low rates. Don’t hesitate to request a free 30-minute consultation with Stobox experts if you have any questions.