However, by using that same amount of money to pay for the electricity, you would be getting more bitcoin.
One way of looking at this is: At $0.13 per kWh, you will break even mining as long as BTC stays above $15,000 and the network hash rate stays below 135 Eh. Call me bullish, but I don’t think BTC is going back to $15,000, but I do think the hash rate will surpass 135 Eh/s. So, even if the hash rate spiked from there to 250 Eh/s, then so long as the BTC price held $28,000, you would still be breaking even by mining.
Do you really think that if Bitcoin shattered it’s all-time-high hashrate of 197 Eh/s by another 21% that the price of BTC would be below $28,000? I think that’s a safe margin of error and I’m placing my bets that the price does not drop below $15,000 or that the hash rate spikes above 250 Eh during the remainder of this 6.25 BTC subsidy epoch.
The fourth chart displays the USD value profitability of mining based on kWh rate. You can see that from February through May, when BTC was trading above $35,000, even paying $0.25 per kWh was profitable. At the peak you would have been paying $21.00 per day in electricity but earning about $33 in bitcoin. There were points in the last year when you would have been earning $3 in BTC for every $1 you spent on electricity at $0.13 per kWh. Think about that: At the U.S. average electrical rate you would have been accumulating bitcoin at 66% below market price.
To recap my main points form this section based on a modest single 80 terahash (Th) ASIC and paying the U.S. average $0.13 per kWh:
Network hash rate could climb to 250 Eh and you would still be profitable mining so long as BTC held $28,000. Or if BTC fell to $15,000, then so long as the network hash rate stayed below 135 Eh, then you would still be breaking even.
I am placing my bets on the network hash rate not breaking 250 Eh and the price not dropping below $15,000.
Why not put some of your capital to work if you’re just going to keep it in cold storage anyway? Get an ASIC, get your ROI after about a year and then keep that nominal number growing.
Nobody can deny that DCA is the best accumulation method. But by doing it through your electric bill, you can get bitcoin for a substantial percentage below market price while avoiding KYC.
If you take upfront hardware costs into account, you may be better off just buying bitcoin if you pay more than $0.06 per kWh in the near term. However, I think mining is a long game and if you’re serious about it, then it is better than auto-DCA for a number of reasons beyond just the accumulation of discounted bitcoin, such as the lack of KYC risk, enhanced privacy and the fact that mining is permissionless.
Another important consideration: There is no KYC involved with mining at home. Here is an example of the accumulative USD value of custodial BTC in a 6102-style event:
Auto-DCA services use KYC and keep custody of your bitcoin until you withdraw to your own wallet. You could be censored from accessing your bitcoin overnight in that situation. Even if you withdraw your bitcoin to your own custody, it is still attached to your identity because of the KYC. In a hostile, 6102-style event, you would have a target on your back if taking self custody.
There are services that provide automatic withdrawals to your own Bitcoin wallet, which is a good start for self-custody. The issue is that these services require KYC which irrevocably attaches your identity to a bitcoin purchase. Simply having custody of your bitcoin will not safe guard you from a hostile 6102-style event. Mining at home is impervious to this effect as there is no KYC involved.
How To Get Started Mining Bitcoin From Home
If you are interested in learning more about mining non-KYC bitcoin at home, you can find all the information you need by reading Diverter’s guide: “Mining For The Streets” or my guide “Home Mining For Non-KYC Bitcoin.”
Sourcing: Start by looking for ads in the Telegram channel “Hardware Market Verified Listings.” The sellers who post here have given their identification to the channel admin. This is not a silver bullet against scammers, but it is a good start. If you have any hesitations, reach out to someone like myself or Diverter or RoninMiner for advice.
When you find an ad for something you want, don’t hesitate because there is a minimum order quantity (MOQ). Contact the seller and get on their radar. Many sellers will consolidate small orders to reach their MOQ. Once you strike a deal, be patient, it will likely take a month or longer from the time you submit your payment until your hardware arrives.
Ventilation: ASIC’s produce a lot of heat and you will need to do something with it, otherwise you will heat up the space that the ASIC is in and it won’t run if it overheats. You need to think about how you will provide adequate ventilation.
Some people try to capture this heat to use in warming their homes and there is no shortage of creative solutions that can apply here. For myself, I decided to pull cool air in from outdoors and just vent the hot air back out through a nearby window. I also installed an inline duct fan to help keep the air moving.
Noise: ASIC’s are loud — very, very loud. The ASIC I’ve been using for an example in this article will be around 95 decibels (dB). For reference, that’s roughly as loud as having a lawn mower running in your living room.
So, you need to make careful considerations about how you will handle these noise levels… these 24/7 constant noise levels. If you have a family, their sanity is at stake, so plan carefully. If you can get even a 10 dB attenuation, it will make all the difference in the world. This is easier to do than you may think, it can be done by building a simple enclosure that still allows for adequate ventilation or by installing your ASIC in a basement or garage. For my setup, I built an enclosure out of plywood and medium-density fibreboard (MDF). Consider using fire-rated materials instead if you decide to go this route.
Electrical: Make sure that you have the appropriate electrical infrastructure ready to go for your new hardware. These ASICs need 240 volt power sources and one ASIC will pull roughly 15 amps. For example, if you want to run two 80 Th ASIC’s at 3,500 watts each, make sure you have at least a 30 amp dedicated circuit run in 8 American wire gauge (AWG) terminated to two outlets, typically with NEMA 6-20 receptacles.
Now, if you have no idea what I just said, that is a great indicator that it’s time to call a licensed electrician. They are not as expensive as you may think and no amount of bitcoin is worth the safety of you and your family.
Pool: By connecting to a mining pool, you will be combining your hash power with that of many other miners and together, the entirety of the pool’s hash power is used to work in a coordinated effort in solving for a block.
You technically can run a solo miner with your own node or with CK Pool. The disadvantage is that if you do not find a block, then you do not get any rewards. But if you did find a block then you would get 98% of the block subsidy (6.25 BTC) plus the transaction fees mining with CK Pool. For example , on June 3, 2020, a single 50 Th S17 mined a block solo. Personally, I joined Slush Pool and consistently stack mining rewards daily as the pool finds blocks.
Connecting to a pool is the easiest part about all of this. You plug your ASIC into power, connect it to the internet with an Ethernet cable, then open a web browser on your local network and log into your ASIC with the IP address, kind of like how you log into your home router. Once logged in, simply copy/paste the pool URL in your miner’s configuration page and that’s it, you’re done.
Then you can log into your pool’s dashboard to monitor your miner’s status and input the Bitcoin address you want your funds deposited to. I recommend updating your Bitcoin deposit address often and not reusing it. Slush Pool, for example, doesn’t require any identifying information other than an email address to set up an account. Be aware of this looming threat posed by creeping KYC regulations, Slush Pool gives its detailed perspective on current events in this Twitter thread.
Conclusion
I’m bullish on mining non-KYC bitcoin at home. It’s not like you’re trying to compete with institutional mining operations. You’re just trying to DCA through your electric bill.
I think that the majority of people can mine bitcoin at home profitably. There is a wide range of margin where mining will continue to be profitable, even for home miners on residential electrical rates. Mining at home is safer and more private than using a KYC service to accumulate bitcoin.
I hope that this article has given you some insight into notable Bitcoin events this year as they relate to mining and how this has affected the landscape. I can’t tell you if mining is right for you or not, that is a decision you will have to arrive at on your own. I have tried to put together as much information as I can and offer my perspective on it so that you can make a more informed decision for yourself.
To learn more, check out Episode 0.3.1 of Citadel Dispatch by Matt Odell , featuring Diverter , RoninMiner and myself .
This is a guest post by Econoalchemist. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.