It all started with mining Bitcoin (BTC) in a dorm room. What started as a hobby with a few mining rigs scaled into twenty industry-scale mining farms across the globe. Because we scaled our operations in a new industry, we had to discover what worked and what didn’t through trial and error — because there’s no handbook for this.
Building a multi-site, scaled operation like ours isn’t easy, but if you’re looking to start your mining operations, scale what you have, or invest in a mining company, here are the seven biggest lessons we learned to help you navigate your next moves.
Lesson 1: It takes (a lot of) money to make money
There was a time when you could mine Bitcoin from a laptop, or set up some mining rigs in your room and mine, profitably. But once more miners created more competition and those who wanted to stay profitable had to scale their operations.
Soon a hobby miner couldn’t keep up with mining in a dorm room but needed a warehouse — or warehouses — full of mining rigs running day and night to stay profitable. We scaled with the industry and bootstrapped our growth as we went, but those wanting to join today no longer have the option of starting at the bottom and working their way up. That means investing in capital-intensive projects from the get-go.
Lesson 2: Establish long-term relationships
While the Bitcoin mining industry has been growing quickly, it’s still very much consolidated with only a few key players holding the power. For example, a large-scale mining operation can’t simply just order new hardware from whatever vendor they want.
There are only a few vendors supplying hardware at this point, and their production cycles are based on just a few chip manufacturers who are tightly controlling the supply — not to mention that we’re currently in a global chip shortage. This means that success relies not just on efficient and well-run operations but on building relationships in the industry, many of which will be for the long term.
Lesson 3: Obsess over operational efficiency
Speaking of operational efficiency, large-scale miners stay profitable when they have the edge over their competitors. This means optimizing electricity, having the most up-to-date hardware, and not having any downtime or issues that would cause a loss of computing power.
Make operational efficiency a priority. For example, in March 2020, when Bitcoin dropped below $4,000, many miners couldn’t survive the uncertainty and volatility, and were forced out — yet we survived due to our operational efficiency.
Lesson 4: Never stop innovating
The adage is “innovate or die.” In Bitcoin mining, where data centers have to stay powerful and fast to stay profitable, there’s no option but to keep innovating. Most importantly, this means keeping your equipment updated and not letting it get obsolete. Mining operations need to plan ahead to replace equipment and time it correctly as hardware may be on backorder for a while. Remember that any type of downtime will cost you.
Innovation also means creating better, more efficient ways for your company to run, like creating software programs specifically designed for mining operations management. In this industry, technology will give you the edge, and even the smallest improvement will keep you ahead of your competition.
Lesson 5: Choose your location wisely
“Location, location, location,” they say. Even though Bitcoin can be mined anywhere, large-scale mining operations need to consider their location when setting up shop for a variety of reasons. Not all locations will offer the same sources of electricity for the same prices, so miners need to find locations that not only have abundant, cheap electricity but to ensure that that electricity is green and sustainable as well.
Finally, go to a location that’s encouraging of Bitcoin miners, where you know political winds won’t shift overnight and shut down all operations will be shut down, like they were recently in China and Iran.
Lesson 6: Time is money
I’ve said it already, but time really is money, and any downtime or lag in computing power can be costly. This means having great operational control over hardware upgrades, a plan for serving mining rigs, and software that can manage operations efficiently. It also means getting creative: In 2015, we knew that having to wait months for mining hardware shipments was going to cut into our revenue. So we rented 747s to get the machines to us quicker, which allowed us to generate millions in extra revenue that would’ve been lost due to standard shipping.
These are the types of calculated moves you have to not only be willing to take but be knowledgeable enough about your operations to know to take.
Lesson 7: Scale is everything
Finally, scale is everything. I said before that you can no longer start at the bottom and work your way up. The race instead is to be as big as you can because scale is directly correlated with revenue: The larger you are, the more profit you make.
The term “bigger, better, faster” really does apply to Bitcoin mining, so if you’re not ready to strategize, invest time and money, problem solve, and take risks, then another industry may be for you.
There are many more lessons that we’ve learned, and plenty of lessons that we’ll learn in the years to come. Today, we’ll continue to build this new industry that’s already creating a future of decentralized currency and new ways to exchange value throughout the world.
Bitcoin mining: Iceland revokes energy allocation to new miners
- Iceland revokes energy allocation to new Bitcoin mining centers
- Landsvirkjun adds the aluminum industry to the list
- Iceland provides cheap energy to Bitcoin mining companies
Bitcoin mining consumes massive amounts of energy, putting a strain on power grids across nations. Although rewarding, some countries have been forced to eliminate these actors from their locations. In a bid to eliminate new Bitcoin mining centers in Iceland, the country has announced that it will no longer offer power to them to carry out their activities.
Landsvirkjun adds the aluminum industry to the list
In the full statement, the company in charge of power in Iceland, Landsvirkjun, said that it would stop providing power to some industries across the country. A further look into the statement shows that aluminum smelters are also top of the list asides from Bitcoin mining centers. A statement from one of the company officials stated that this measure was taken to combat the effects of their activities which has caused problems.
Some of the problems caused in the country include issues relating to the country’s power grid and reducing the level of the hydro reservoir. The official statement also mentioned that some of these industries seek power from neighboring countries.
Iceland has become a sought-after location due to its abundance of energy sourced from geothermal. This energy is then used to create cheap renewable energy, which the various sector of the economy can use. In the statement, the company mentioned that it would no longer accommodate any Bitcoin mining operation henceforth.
Iceland provides cheap energy to Bitcoin mining centers
Iceland boasts of housing many Bitcoin mining firms, with Hive, Genesis, and Bitfury making the top three in the list. In the last ten years, Bitcoin mining centers have always stated true to mining in an environment-friendly way. Cloud hashing was one of the first companies to enter the country in 2013, moving nothing less than 100 miners.
Hydrominer GmbH, a company based in Austria, also entered the country in 2017. Before entering the country, Hydrominer completed an ICO, which saw the company become the recipient of $2.8 million used to purchase miners. The aluminum industry has been feeling the effects of the order after the price of the metal saw a surge of about 1.1%.
Countries have started to adopt the green blockchain initiative that was discussed at the COP26 conference. At the conference, an initiative was launched where the United Citizens Organization will use blockchain to help change the climate.
Bitcoin mining: Kazakhstan suffers power grid issues
- Bitcoin mining causes power grid issues in Kazakhstan
- Bitcoin mining hashrate is up in the country
- Mining companies are leaving South Kazakhstan
Besides trading digital assets, Bitcoin mining is another way to make huge profits in the crypto market. But the activity is not for the faint-hearted they need a lot of resources to pull it off and offer services to crypto traders. When China announced that digital assets mining had been banned in May, many people were hoping it was like the previous ban. This is because the country had tried at one point and failed as miners continued their activities. However, the miners moved their operations out of the country into other states, with Kazakhstan being a major welcoming party.
Kazakhstan’s Bitcoin mining hashrate skyrockets
With the way things are looking, Kazakhstan is feelingl the heat from presence of Bitcoin mining activities. According to a recent report, the government announced a cap on the amount of electricity they would expend and even had to seek auxiliary from its neighbor, Russia. Although, it has put Kazakhstan on the map as the country now boasts 18% of the entire Bitcoin hash rate worldwide.
Before now, Kazakhstan was only responsible for about 8% since the start of the year. Kazakhstan has cemented its place in the top three countries with Bitcoin mining presence, the U.S and Russia in first and third place at 35% and 11%, respectively. However, the statistics above do little justice to how far crypto and Bitcoin mining has overtaken Kazakhstan this year.
Mining companies are leaving South Kazakhstan
Since the previous report by the Cambridge Bitcoin Electricity Consumption Index, Kazakhstan’s hash rate has climbed a further 43%. Although all things went quiet after miners shut down their rigs and leave China, things are taking shape with the figures returning to April’s position. Even if Kazakhstan’s hash rate remained unmoved during the period, it would now be around 28.2 TH/s instead of 19.7 TH/s.
Putting it into perspective, one mining rig belonging to Xive that had to go offline in South Kazakhstan would have made about 57,500 TH/s. According to a recent statement from Xive boss Didar Bekbau, the situation in the country is very real, and miners have started to source power elsewhere asides from the power grid.
After the statement, a video on Twitter to showed Xive packing up its Bitcoin mining equipment and leaving the area. One of the reasons this has happened is that miners are looking for cheap energy to carry out their activities. Kazakhstan hopes that crypto mining might increase the inflow of cash into its purses by $1.5 billion in five years. However, it notes that most of these crypto and Bitcoin mining companies are not licensed to operate.
StormGain promises bitcoin mining in the cloud, but doesn’t pay users
Mining bitcoin by mobile, without wasting battery and CPU, quickly and profitably. All alarms point out that StormGain’s operation is classic “too good to be true”.
The miracle being propagated is already starting to create problems, with dozens of claims of blocked money and insurmountable barriers to real profits.
Due to the high cost of electricity, mining the world’s main cryptocurrency has become an impossible or unprofitable task even for those who have immense computational power at their disposal.
But suddenly you can do it from your cell phone, earning up to 0.0318 bitcoin per day, which at the time of production of this text is equivalent to R$ 10 thousand.
That’s the promise of broker StormGain, which explores a concept of mining through the cloud.
The explanation of how this is possible is vague: “Cloud Mining runs on equipment owned by StormGain and does not use the resources of the user’s device, ie the device’s CPU, battery, graphics cards or other hardware resources. Users can manage and view transactions only through the StormGain cloud mining app.”
StormGain on Reclame Here and on Reddit
Reddit users who claim to have used the app, say that every four hours you must enter the app, press a button and that’s it. You are “mining” bitcoin.
According to the company, after having mined the equivalent of at least 10 dollars in Bitcoin, the user can withdraw the amount within 72 hours. There seems to be the problem.
A client of Juiz de Gora (MG) reported on the Reclame Aqui website that it is practically impossible to reach a proposed level of US$30 within the stipulated time; when the miner arrives, the “deadline” has expired and the withdrawal cannot be made.
“The first US$ 10 that are retained, we can get it quickly. After that, mining only starts to decline and sometimes even regresses. It’s impossible to reach US$ 30 before it expires”, he says.
Another client, this one from Londrina (PR), says: “I carry out mining on this application, but the values disappear and I never manage to reach 10 dollars”.
A point raised by Reddit users is that the company separates its customers into tiers and those who have more money in their accounts have greater speed in alleged mining.
It turns out that bitcoin mining is influenced only by the computational power that is employed in it, having nothing to do with the amount of money or even BTC that someone has.
O Bitcoin Portal contacted StormGain, but has not received any feedback as of this writing.
Expert analyzes StormGain
Mining expert Denny Torres spoke to the Bitcoin Portal about the operation. First he explains: what exists is to operate rigs remotely through a cell phone application. The mining itself, always who do it are the physical boards that are wasting computational energy.
“I can’t talk about this specific site because I don’t know all the details. But in their model you have to put in money, supposedly for them to equip, and you ‘have a rig’. Economically it is not a viable operation. The cost that the company has to buy a rig, the necessary payback, maintenance, cleaning, and then having to share what these partners/customers would be. It doesn’t close”, he says.
Torres says that this type of operation takes place when there is a very large base of trust. “I know a group of people who live in the US and have relatives in Brazil. People here send money to buy equipment and monitor the rigs from a distance. Relatives in the United States earn a fee. But it works because it is a huge base of trust, between relatives”, he says.
Speech also comes from personal experience. Torres remembers that in 2017 he put money into Hash Flare’s “cloud mining” in a very similar scheme to Storm Gain’s and never managed to get the money out again. “Many people and I lost the money placed there,” he says.