Feed-in Tariff

A feed-in tariff (FIT) is a policy mechanism that guarantees producers of renewable electricity a fixed payment for every kilowatt-hour they generate and feed into the grid, typically under a long-term contract of 10 to 25 years. By setting a stable, cost-based price and guaranteeing grid access, a feed-in tariff removes most of the market risk from building solar, wind, or small-hydro capacity — which is why it has historically driven a large share of global renewable deployment, from Germany's landmark program onward. For a miner, it is also something subtler: the number against which every kilowatt-hour of self-generated power must justify itself.

How the mechanism works

The tariff rate is usually set to cover a technology's actual generation cost plus a modest return, and it is differentiated by source and project size — rooftop solar, utility-scale wind, and micro-hydro each receive rates matched to their economics. Three pillars make a FIT effective: guaranteed interconnection (the utility must accept your power), a long-term purchase commitment (revenue certainty a bank will lend against), and payment pegged to generation cost rather than volatile spot prices. Well-designed programs ratchet rates downward for new entrants as technology costs fall; poorly designed ones famously overpaid early solar adopters for decades. Many jurisdictions have since evolved toward net metering — crediting exports against consumption at retail rates — or its stingier successors, which pay exports well below retail. The distinction matters enormously to the arithmetic that follows.

The miner's decision: export or hash

Feed-in tariffs shape the economics of self-generation at the margin. An operator with renewable capacity faces a continuous choice for every surplus kilowatt-hour: export it for the guaranteed tariff, or divert it into on-site mining. The comparison is clean — the FIT rate is your opportunity cost, and mining wins whenever expected revenue per kilowatt-hour (a function of your fleet's efficiency, network difficulty, and bitcoin price) exceeds it. Where tariffs are generous, exporting wins and the grid is your best customer. But the global trend is the reverse: FIT rates have been cut, capped, or closed to new entrants across most jurisdictions, and homes with legacy solar increasingly face export rates a fraction of retail. Every cut shifts the calculus toward hashing the surplus — converting what is effectively stranded energy behind a stingy meter into bitcoin. And uniquely, mining pairs the revenue with a second product: heat, which the export meter pays nothing for but a workshop in a Canadian winter values highly — the heat reuse dividend stacking on top of the hashrate.

Reading your own tariff

One structural insight ties the whole comparison together: a FIT pays for energy, indifferent to when it flows, while mining revenue is denominated in a volatile asset but earned at a rate you can forecast from difficulty and efficiency. The export tariff is the stable leg, the miner is the upside leg, and a hybrid operator holding both effectively owns a free option — exercised hourly, in whichever direction the numbers favor.

The practical homework is jurisdiction-specific: find your actual export rate (contracted FIT, net-metering credit, or spot-linked), note any caps and time-of-use structure, and compare it honestly against your miner's expected revenue per kilowatt-hour at current conditions. Time-varying rates reward hybrid strategies — export during premium windows, hash during the floor. Feed-in tariffs contrast with the negotiated, bilateral pricing of power purchase agreements and with merchant capacity market revenue; see also the renewable energy certificate for a separable incentive that can stack on either. The sovereign framing is the durable one: a FIT makes you a price-taker from the grid, while a miner behind your own meter is a buyer of last resort you own outright — a guaranteed bid for every watt your panels produce, at whatever hour policy decides your exports are worth little.