How to start mining

The purpose of this blog is to answer questions about mining and provide guidance on how to start this passive income business.

Also, one of the most important questions will be answered: “By which rate should I purchase my equipment?”. 

Since this is a sensitive area of business, even for experienced users, sometimes the process ends up in “flames”, roughly meaning it is a very risky business.

But first, let’s discuss the facts that are rarely mentioned but are also important for someone who wants to start mining. For example, you’ve already bought the equipment, and you’ve started with your endeavor. The next thing you find out is a set of important facts about the byproducts of mining, which weren’t mentioned anywhere.

Before we discuss that, let’s start from scratch.

Important things you should know before entering the mining market

Mining can be really lucrative, but if you do not intend to invest a significant amount of money, you should keep it as your passive income. If you play your cards right, the return on investment could happen in less than a year, which is the most alluring fact about this business.

However, you should also be aware that we are talking about a really volatile market. You can take an easygoing approach where you choose “SafeCoin” to mine and stick to it, or constantly be on your toes and change between the most profitable coins like ETH, ETC, RVN - what is yet another set of information.

But for a start, we will tackle the basics. One of them is being aware that using the money not needed in the near future is one way to keep your head “cold” to make well-informed decisions.

ASIC or GPU?

This question is crucial and regularly discussed. But what does it mean?

Usually, it means you will go mining BTC (Bitcoin), or one of the alternative coins like ETH (Ethereum), even though it is worth mentioning that some of the alternative coins have their own ASIC machines. ASIC (application-specific integrated circuit) is a machine designed for a particular use and is usually preferred by BTC enthusiasts.

On the other hand, there is a GPU. The difference between ASIC and GPU is that GPUs can be used for mining a large number of coins on different algorithms. Algorithms are a little more advanced area of mining expertise, but that is yet another topic. So the first question you need to find the answer to is whether you will go into the plug-and-play model of mining with just one sole-purpose machine, or perhaps if that is not your piece of the pie, then you should ask yourself (if you are more of a construction type) if you would like to leave your options open with a bigger chance to resell your equipment.

However, no worries. Both options will be explained in the following chapters to explore them even further.

Fuel for mining

Before you decide to go into this business, no matter if big or small scale, the main fuel for running a stable operation is electricity. Before you do anything, do a test on your home or business electrical grid to determine its capacity. It is important to know that mining is a 24/7 operation and that it is best for electrical equipment not to be interrupted. For example, if you decide to use a 3000 W system in your house, you need to be aware that the amount of power should stay uninterrupted by all means.

For example, if you are doing your household chores at the weekend, make a rough calculation of if the chosen capacity is available if you turn on your dishwasher, oven, dryer, and maybe even a sauna if you have one. Even if it is a short operation span, those actions can cause overheating of your fuse box or even tripping your fuse.

Nevertheless, it is also good to check all your installations since there are some recorded cases where houses went down to flames - we should all be careful about that.

Remember, with every turn-off- turn-on action, you are shortening the life span of your operation. In another set of recorded cases, several machines ran for over four years on 100% performance 24/7, proving that they actually paid off so well that they paid themselves out several times, with no additional investment required after the initial one.

Where there is fuel, there is waste

Mining is a process which converts electricity into heat in a ratio of almost one to one. If your hair dryer heats a room 24/7, for instance, you should take that into account and use it to your advantage.

If you have a room such as a basement or an attic that is empty and clean, safely store your mining equipment there. In return, the mining process will dry the space or heat it for good use, and you will have a bit of sustainability there. You might feel like Greta Thunberg (in the ecological sense). There are some cases where the produced heat was used for greenhouses, drying wood chips, and heating up the house in the end.

To manage that amount of heat accumulating in such a small space, fans with small airflow are installed on most of the equipment. That also means you can place a mining machine into a room you use to dry your clothes. But the negative part is that you will need to iron those clothes sooner than you think.

Beehive

As we mentioned before, there are things to be cooled down to a certain temperature, so the operation that these machines are performing would be at their best or at least close to that. In order to achieve a quality working temperature, you need to cool down your equipment.

There are a few ways to do that, and you might have heard about them already.

The first and the most expensive one is immersion cooling. Immersion cooling is a process of using dielectric fluid in order to sink your equipment in and cool it by cooling the liquid. The second and usually the most direct way (once you find out that you need to do something to cool your equipment down) is air conditioning, or simply installing an air conditioner in a room and cooling the temperature down. The last and the most used one is air cooling or, simply put, the fan-based method of cooling: meaning you will be using fans attached to machines and allow them to have a certain flow of air in a room you have designated it for.

Whichever approach you choose, and that hugely depends on which conditions you are putting your machines under, please know that any solution you choose includes electricity, and that is something that needs to be taken into consideration while starting with this business.

In a standard data center, there is a metric called PUE, used for measuring the electricity if the amount you are using is above the limit of the quantity of electricity you need. It can also be applied in a way that that number needs to be as closest as possible to 1.00.

That said, most of the people who start mining are using only the power of fans attached to their machine, but what they might not know is that those fans are highly efficient, which basically means they are really loud. That also depends on the number of machines you have.

The good thing is that those fans working on mining machines can make machines operate in ambient temperatures up to 30°C. This is one of the most important things for you to know if you do not want to get into some sort of quarrel with your landlord, family, or whoever you share your home with.

What to choose?

Now, once you are familiar with all of the opportunities that this activity can bring to your life, let’s talk a bit more about the direction you might want to move towards. Even though this is not something that you need to decide immediately, once you go in one direction, it is hard to shift the lane.

When we talk about the benefits of choosing BTC-oriented equipment, that choice will bring you to lower initial cost, faster ROI, less trouble, faster configuration, and only one chunk of metal to carry around the house until you find a good spot for it. On the other hand, you need to know that even though a machine has a lifespan of a little bit over two years, it can become obsolete faster, almost in a year’s time. Then it is harder to get the right supplier that will deliver a machine under 60 days after you pay 100% upfront.

If you choose to proceed with a GPU mining machine, that choice will bring you more betting options, better revenue after ROI, lower power consumption for equal performance level as a BTC machine, faster build-out time, and unlike BTC machines, you can find it easily in the stores.

Another piece of advice is that you should read all the blogs you can find that are related to this topic or watch youtube tutorials in order to configure your machine. There are many pieces of your machine that require some kind of maintenance with initially higher cost but more scalability.

The cost

The cryptocurrency industry does not differ from other industries in terms of prices from a macro perspective. Prices are defined by the price of two main coins, BTC and ETH. As you may notice, the price of gas is lagging behind the price of a barrel of oil. The same thing goes for mining. The price of the equipment is hugely lagging behind the price of coins. 

The price that you are willing to pay needs to consist of two variables: cost of equipment and cost of electricity. Since you know this is quite an unpredictable market, the best thing is to buy equipment when the price is no more than eight working months of ROI. That means that you will be able to payout equipment along with the cost of electricity in 240 days after you’ve started mining. 

You can easily calculate that on one of the tools available online, like WhatToMine. Be aware this is just a snapshot of the current situation; it does not predict the future. There are some other metrics like hashrate and difficulties which will not be covered in this “mining-beginner-guide”. 

Winter time

An interesting fact about winter weather is that it can bring prosperity in terms of heating up the entire house with the equipment you own, and yes, it’s a process that sounds like a blast. Also, you should be aware that the government is not so up to date with mining as people think, so occasionally, when the snow falls on the rooftops, it melts because of your mining equipment in the attic, and policemen mistake mining operation for a marijuana operation.

This is truly an honest mistake because both of the operations require a lot of electricity, and all of that is usually heating the space quite heavily. So if you decide to place your equipment in the attic, maybe you won’t need to clean the snow from your rooftop, but some random police officer can come to knock at your door, wondering what you are doing.

How to proceed?

Since we are talking about the mining industry as relatively new on the market, there is a lot of misleading information about it and a lot of scam artists who also entered this industry to earn money by cheating people. Be careful to whom you will entrust your money because many scammers promise a very good profit and might leave you empty-handed. Mining is really profitable in most of the world because it is ecologically very “clean” and does not require as many theoretical learning materials as you might think.

As we mentioned earlier, mining is a volatile market, so if you have extra money that you don’t mind losing, you may want to consider getting into this business.

Your take on the subject

They say knowledge has power only if you pass it on - we hope our blog post gave you valuable insight.

If you want to share your opinion or learn more about the business of mining, feel free to contact us. We’d love to hear what you have to say!