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- Individuals can earn a return on their initial investment from mining profits within about a year.
- As mining difficulties increase and competition for block rewards increases, it becomes increasingly difficult for miners at home to make profits.
- Individuals increase the chances of making mining profitable for themselves by joining a pool.
Cryptocurrency mining is big business. In April alone, when Bitcoin (BTC) hit its all-time high of around $ 65,000, BTC miners generated nearly $ 3bn in revenue resulting from the sale of the coins they had received through either block rewards or transaction fees.
Such numbers would make most people assume that Bitcoin mining is now largely reserved for large organizations, commercial entities with the resources to invest in the construction of large facilities capable of generating a significant portion of Bitcoin’s massive hashrate or computing power. However, opinion on this question is very mixed, with at least one miner-known on Twitter as burn the bridge (@econoalchemist)-recently affirming that it is possible for individuals to mine BTC profitably from the comfort of their own homes.
He said * * that even with relatively inexpensive ASIC miners, individuals can make money at home by joining a pool. On the other hand, mining companies argue that Bitcoin mining remains unattainable for the vast majority of people and that most people would be better off investing in a mining company if they want to participate in its profits.
Do-it-yourself Home Bitcoin Mining
In mid-July, US-based Bitcoin community member econoalchemist released data showing that it is actually possible to make money by mining Bitcoin at home, at least if you lived in the US and in an area of the country with relatively low electricity costs. In particular, he suggested that it is more cost-effective to mine Bitcoin yourself than to buy BTC directly with USD.
Speaking to * *, he explained that mining Bitcoin at home is feasible for the average US citizen, contrary to what many suspect.
“Several ASIC distributors are located in the United States, most households have abundant electricity capacity, and the average kWh rate is $ 0.13,” He said.
According to econoalchemist, a person running a modest 80th ASIC mining unit at a USD 0.13/KWh rate can accumulate BTC for 57% below the current market spot price.
“In continuation of this example, it means that over the course of a month, a person would spend USD on running their ASIC and earn 0.016386 BTC, a USD value,” he added.
Econoalchemist pointed out that there are a number of more modest hardware options for anyone fascinated by mining.
“I recommend starting small with an S9 ASIC, these cost about USD 450 today and they will produce about 8,000 to 10,000 Sats [USD 4.4] Per day. The newer generation ASICs will currently cost between $ 5,000 and $ 10,000,” he said.
He added that most individuals will earn a return on their initial investment from mining profits in both USD and BTC within about a year, with other things being equal.
“There are many variables that feed into these considerations, such as the total network hashrate, network difficulty, kWh rate, BTC market price, upfront costs and infrastructure requirements, and they are constantly changing. But for the average U.S. Citizen, there’s a big buffer over how low the BTC price can be and how high the network hashrate can be before mining at home just doesn’t make sense,” he explained, noting that he examined these considerations in more detail in an article published in late July.
It’s not just that mining Bitcoin at home (via a mining pool) is less expensive than buying it directly, but that mining provides a way to get BTC without having to submit to know-your-customer (KYC) regulations.
“These regulations require users to attach their personally identifiable identities to their Bitcoin activities, exposing the person to many risks, such as third-party data breaches, unrealized capital gains tax, and 6102-style seizure. Mining Bitcoin at home mitigates these risks associated with KYC, but there is another benefit that the average U.S. Citizen can get more Bitcoin for their money by mining it at home than they can buy it through a risky DCA service [dollar-cost averaging],” econoalchemist said.
Not everyone agrees that mining Bitcoin at home is the best strategy for individuals.
“Bitcoin mining is increasingly unattainable for most home-based operations. Given the scarcity and purchasing power required to source new equipment, energy, and infrastructure, domestic miners have to rely largely on used equipment and colocation facilities,” said Zach Bradford, CEO and president of Cleanpark, a Nevada-based energy technology and clean Bitcoin mining company.
Bradford also noted that as mining difficulty levels increase and competition for block rewards increases, it is becoming increasingly difficult for miners at home to make profits. He admitted that in some cases certain miners may do reasonably well, but most will be priced out of the mining sector on average.
“I could imagine a scenario where someone would be able to use stranded or excess renewable energy to increase access and reduce energy costs, but competitive mining equipment would still be too expensive for most domestic operations,” he said * *.
Aside from these concerns, not everyone involved in the mining industry believes that Bitcoin mining is out of reach for the individual. For the CEO and founder of BitRiver, Igor Runets, individuals increase the chances of making mining profitable for themselves by joining a pool.
“Although clients of our colocation services are mainly institutional mining companies, some of our clients are actually pools of individuals who combine their resources to receive bulk pricing from both the machine vendors and the data center that provides hosting for these machines. Someone with modest means could also join such pools to get the most out of their resources,” he said * *
Opinions are also mixed on whether mining at home has been declining in recent years or whether it is at least making a modest resurgence as knowledge of its feasibility spreads.
“It has declined along with the growth of large, well-funded companies around the world that are now mining gold.”Mining equipment is now so specialized that it is often out of reach for do-it-yourselfers and miners at home,” Bradford said.
On the other hand, econoalchemist suggested that because of what he himself has experienced since the end of 2020, mining from home has actually increased.
“Until [Bitcoin blogger/expert] Diverter wrote Mining for the Streets, the narratives around mining at home were negative; ‘It’s too expensive to mine at home’, ‘you can’t compete with industrial miners’, ‘ you’d be better off buying Bitcoin from an exchange.”Well, Diverter absolutely destroyed those narratives and wiped the floor with them,” he said.
Since reading Diverter’s article, econoalchemist has written its own guide to home mining, which has helped spread knowledge about mining and give people enough confidence to solve common mining problems (such as too much noise and heat) on their own.
“Fast forward to today and there’s Steve Barbour designing the black box enclosure, Matt Odell presenting home Mining in his Citadel Dispatch podcast (episode 31 & 38), and people like CoinHeated taking immersion cooling to the next level,” he said.
Looking at the middle of both poles, Igor Runets said that while domestic mining has grown with the popularity of cryptocurrencies since the introduction of Bitcoin, industrial-scale mining has grown much faster and is responsible for the largest Bitcoin mining in the world.
“This is not only due to the increasing economic impracticability of small-scale mining, but also to the increasing noise and heat problems for operation at home,” he said.
There is also a new service launched this week by Compass Mining, a US-based online marketplace for Bitcoin mining hardware and hosting. Called at-home mining, it is described as a direct-to-consumer service that allows the purchase of Bitcoin mining equipment for the home, with an ASIC mining machine delivered to them, allowing customers to mine Bitcoin without having to pay additional hosting facility fees.
Some tips for wannabe Miners at Home
Assuming you want to try home mining yourself, there are a few things you need to consider.
Start by joining a mining pool as it is extremely unlikely to find a block if you are solo mining.
“Personally, I like SlushPool; it’s super easy to set up, they have a cool mobile app that allows me to monitor my ASICs on the go, and they’re not part of the Bitcoin Mining Council. When you join a pool, you’ll see mining rewards every day” Econoalchemist said.
Secondly, you need to be aware that scammers can try to exploit your eagerness to acquire mining hardware. Fortunately, there are a few more trusted channels through which you can source devices.
“Use the hardware market Verfied Listings Telegram channel. MineFarmBuy and Kaboom Racks are reputable distributors and often post ads there. Even if the ad has a minimum order quantity (MOQ), do not hesitate to contact the seller because they often consolidate several small orders to reach their MOQ,” explained econoalchemist.
On the other hand, Zach Bradford suggested that most people would be better off investing in a trusted mining company.
He says: “Do your research. Find a company that fits your values [.] Setting up at home is probably prohibitive for most people at this time. However, there are many ways to get involved in building and supporting the Bitcoin blockchain.”