Energy and crypto mining
Since energy prices are paramount to the process of mining and the main cost factor over time, HydroMiner has conducted intensive research to identify the best energy supply solution for its business. The European energy sector is a dynamic market that is influenced by all of its participants, including private and business customers, power plants, and governments, as well as the European commission. Very little attention has been given to the consequences of market liberalization since 1998, and in particular, how it shifted the risk allocation. In a nutshell, whereas previously almost all the risks of different kinds were carried by the customers (or even by the state), the three EU Energy Packages have shifted the conventional energy generation risks completely onto the power companies. Looking to the future, apart from selected investments in peaking stations, few, if any, new conventional stations will be built, so the challenges relate to making the correct future decisions about the existing fleet. 6 The set of challenges shows how the operating environment is continuing to become more difficult for the power sector. Society has placed so many different and changing requirements on it that it is difficult to provide the necessary consistency and stability for the industry to function efficiently and be financially positioned to make the investments required. The imperative of decarbonization is clear, and now that the main guidelines have been set, along with the ambitious intermediate target to achieve 40% decarbonization in 2030 vs. 1990 levels (i.e. a 20% reduction in a decade, as compared with the same reduction over three decades through 2020 – and that was with the benefit of the closure of inefficient factories in Eastern Europe). 7 While the ambitions and goals of the EU commission are clear, it is entirely unclear how these goals will be achieved. However, it seems obvious that low-carbon forms of energy generation are going to be favored over energy generation that is connected to high carbon emissions. It is to be expected that in the future, the European commission will introduce more taxes and regulations on energy forms with a higher carbon output. On the other hand, we also expect that new energy forms with low carbon emission will receive substantial subsidies, which in turn will make this form of energy expensive, or at least expensive to purchase. Therefore, HydroMiner has chosen to rely on eco-friendly forms of energy production. Since wind and solar power do not produce a steady supply of energy, we are left with either biogas or hydro power. In the biogas sector in most of Europe, energy production is heavily subsidized so that net prices range between 6 and 8 cents per kWh. In the hydro power sector, subsidies typically ended between 2010 and 2014, so that producers, especially those with smaller power stations ranging from 100 to 1000 kWh, are now forced to sell their energy to distributors at a price currently around 3.0 cents. This price level can easily compete with energy prices in Northern Europe and even China. The retreat from nuclear energy, which many expect to cause a rise in energy prices in general, will probably not substantially affect the market. This is because most of the contraction, in terms of decommissioning old facilities, has already happened, so current facilities are considered safe and will be operational for many more years, and the total share of nuclear energy is less than 10%.