Cryptocurrency mining to hedge renewable energy investments: A decision-support tool

Abstract

Cryptocurrency mining has been proposed to supplement conventional electricity exporting as a revenue stream with a view to improving the financial performance of renewable energy projects. To analyse this proposal, this paper presents the development of a model which is used as a decision-support tool to inform managerial decisions regarding renewable energy investments. This tool can be used to determine the feasibility of cryptocurrency mining as a hedge for a specific renewable energy project, as well as to inform various decisions that relate to the structuring of such a project. The model is implemented in both a spreadsheet-based environment and a simulation environment and is applied to a number of illustrative scenarios. The results indicate that using cryptocurrency mining to hedge renewable energy investments has potential. Furthermore, results improve for cooler climates and when a flexible approach is employed that entails switching between electricity exporting and cryptocurrency mining as revenue streams.