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Electricity & energy: the economics that decide everything
Mining is fundamentally an energy business: revenue per must exceed the cost of electricity per hash. This pushes miners toward cheap and energy — power that can’t reach profitable markets and therefore sells cheaply:
- Excess hydro — e.g. Sichuan and Yunnan in wet season (pre-ban).
- Natural-gas flaring — oilfields burn stranded gas; mining captures waste energy (Texas, North Dakota).
- Geothermal / remote renewables — Iceland, El Salvador, geothermal regions.
Critics: PoW consumes as much electricity as a mid-sized country, and much of it comes from fossil fuels at the margin. The carbon footprint is real and worth scrutiny.
Counter-arguments: miners are uniquely flexible loads — they can locate anywhere and curtail instantly, so they chase the cheapest energy, which is often zero-marginal-cost renewables or waste (flare gas that would have been burned anyway). Some argue mining can help balance grids and monetize stranded renewables. The honest take: the mix is improving but not all mining is clean; it’s an empirical question per region and era.
Industrial mining today: warehouses full of machines
Solo mining is now impractical for Bitcoin: the chance of an individual ASIC finding a block is vanishingly small, so income is extremely lumpy. The industry has scaled up:
- Large-scale farms — warehouses of ASICs with industrial cooling and power contracts.
- Publicly-traded miners — MARA (formerly Marathon Digital), Riot Platforms, CleanSpark, Hut 8, Core Scientific, and others mine BTC as their core business and report hash rate and energy mix to investors.
- — a customer owns ASICs and pays a facility to house, power, cool, and maintain them for a fee.
- — miners combine hash power and split rewards proportionally, smoothing income. Major pools include Foundry USA, AntPool, F2Pool, and Binance Pool. Pool concentration is a real decentralization concern.
Why miners join pools
As hardware and energy costs rise, mining concentrates among the most efficient operators. No single pool controls >50% of Bitcoin hash power today, but the trend is worth monitoring — a 51% attacker could reorganize blocks or double-spend.