Things to Consider When Starting a Bitcoin Mining Operation

Bitcoin mining has become a competitive industry within the cryptocurrency economy. With all the large data facilities and pools these days people often wonder what it takes to get involved with mining.

Also Read: Bitcoin Mining: A Closer Look Under the Hood

A Few Calculations Before You Start Mining

Many people are interested in mining bitcoins from home, but these days it’s become increasingly harder for home-based miners to make a profit. In order for an individual to join the mining environment, they need to figure out if it is worth it by calculating a bunch of different factors. Then they must either build a machine capable of mining or purchase a pre-built mining rig to join this aggressively competitive sector.

The first thing people need to do is check a few statistics. This includes the mining hardware’s hashrate execution, the Bitcoin network’s current difficulty, and the electrical costs associated with a mining device. These steps are needed to assess the performance of a custom built or purchased a mining computer. Building custom mining rigs are slowly becoming a dying art as pre-assembled mining computers with Application-Specific Integrated Circuitry (ASIC) have become a dominant force within the industry.

The Four Variables

Hashrate

A pre-built mining device from a well-known manufacturer will give you the details of the machines hashrate execution or the speed at which the device can perform mining calculations. Device performance is typically measured in terahashes for every calculation solved per second. This statistic can be measured against the current bitcoin difficulty [the calculation of how difficult it is to find a hash] which can give a person a rough idea if their machine performs well. Mining difficulty changes every 2016 blocks and the current network difficulty is 460,769,358,091 at the time of writing.

Electricity

Mining also includes the cost of electrical consumption. Unless someone is stealing or getting free electricity, the cost to power a mining rig always comes into play. In order to figure out a machines return on investment (ROI) miners must divide the hash execution performance by the number of electrical watts consumed. Large mining facilities have found ways to offset electrical costs by utilizing more different types of resources such as hydropower and geothermal power. Electric power has different costs depending on where you live, for instance, the U.S. the average people pay is roughly 12 cents per kilowatt-hour. In other areas around the world, electricity is cheaper particularly in regions like China, and India.

Device Cost

Another calculation to figure into the equation is the cost to acquire a mining device. Pre-manufactured mining rigs can be anywhere from US$500 to $2,000 depending on performance and if the device is new or used. To get ahead of your original investment you have to mine enough bitcoins to cover the price of a machine and only after meeting this cost a person then can profit. Other things to consider are buying racks for multiple machines, connectors to tether all of the miners together in unison, and keeping capital handy for replacement parts.    

Time and Maintenance

Bitcoin mining also takes time to set up the machines and maintain them. Also just like any computer that operates consistently, factory parts can malfunction, and bitcoin miners often need fan replacements because devices run so hot. Additionally, it helps to be computer savvy and know how to use software, command lines, and be able to configure wiring and replacement parts. Larger data facilities hire employees to take care of thousands of machines running 24-hours a day.       

  Popular 2017 Mining Rig Companies and Products

Currently, there are only a few dedicated mining rig manufacturers that produce mining rigs. The two most popular mining rigs available in 2017 from the Bitmain Antminer brand include the R4 home miner and the S9 series. Both machines consume roughly 845-1375 watts and calculate hash solving at 8.6-12.9 terahashes per second (TH/s).

Furthermore, this past November another mining device manufacturer Canaan announced the launch of the Avalon 721 ROQ Solid Miner. The latest release from Avalon uses custom 16 nm ASIC chips and what the firm calls a “Smart Layout.” The Avalon 721 operates at six TH/s and uses 900-1200 watts while operating. Avalon also boasts an open source repository for its mining software.  

People can also build their own custom mining rigs or assemble a data station using devices and parts from multiple companies. Parts to make a homemade rig and mining machines made by a manufacturing company are in high demand and can be expensive. Anyone can estimate a mining ROI with variables given from the machine’s performance and today’s bitcoin difficulty statistics. There are also calculators on the web that can assess the performance of a miner and estimate an ROI. However, every day after the ROI timeframe will be different due to increases in electrical cost, and changes to the network’s mining difficulty.

Bitcoin Mining Can Be for Money and for Fun

Getting into the bitcoin mining game isn’t easy, and it can be difficult meeting the original investment. For some machines, it could take a year or longer to get an ROI with today’s difficulty. Moreover, machines have to be maintained and being technically savvy can help a great deal as there are a lot more variables to deal with when beginning to mine bitcoins. A lot of people say that individual mining isn’t worth it these days so many people join pools to better their chances at reward. Furthermore, some people mine just to help support the network and participate because it can be a fun hobby. Whatever the case may be preparing to mine bitcoins is a bit more complicated than it used to be.

What do you think about individual and home mining? Do you think it is still profitable? Let us know what you think in the comments below.

Images courtesy of Pixabay, Bitmain, Avalon, and Bitcoin Wisdom. 

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