A competent business plan is the basis for profitable mining on a farm. Business plan for a mining farm (cryptocurrency mining) with a financial model

Mining cryptocurrency at home is not the best idea. Overloaded networks, flying traffic jams and constant noise lead to the fact that miners are kicked out of apartments and offices. Who offered them an alternative and how much did they earn from it?

Daniyar Latypov (Photo: Regina Urazayeva for RBC)

The sharp rise in the rate of cryptocurrencies in 2017 gave impetus to the development of home mining. First, video cards, motherboards and power supplies, components for mining farms, disappeared from store shelves. Then rapid growth created a new problem: farms consume huge amounts of electricity, wiring in high-rise buildings cannot cope with the load, computers overheat and stop working in unventilated rooms. Crypto farmers began to look for alternatives, and demand gave rise to supply - mining hotels, protected areas with a fee for renting a "bed" for the farm.

RBC discovered three hotels - in Tatarstan, Moscow and the Moscow region. How is their business organized?

How it works

Mining (from the English mining, production) is the generation of cryptocurrency by solving mathematical problems. The miner rents out the computing power of his computer, which connects to the blockchain network (a decentralized database containing information about all transactions) and maintains its performance.

A mining farm (or rig) is a powerful computer assembled from several video cards (usually four to eight), a motherboard and a power supply. The cheapest crypto farms on Avito are sold at a price of 75 thousand rubles. In a regular computer, most often there is one video card, so it makes no sense to use home and office PCs for mining.

To solve mathematical problems, miners are united in pools - teams that connect to the blockchain network. Solo mining is not popular, as it drastically reduces the chances of success. When a solution is found, a cryptocurrency is created and all pool members are rewarded proportionally to their performance. To receive this reward, you need to create a crypto wallet. You can transfer virtual currency into traditional fiat money using cryptocurrency exchangers (HotExchange, Payforia, etc.).

The most profitable, but at the same time the most expensive cryptocurrency today is bitcoin. It has been mined since 2009: originally it was done by one person under the nickname Satoshi Nakamoto. Then $1 was equal to 1.3 thousand bitcoins, on October 9, 2017, one bitcoin was already worth $4.66 thousand. Satoshi initially set a limit that only 21 million bitcoins can be created, and as the popularity of this currency grows, more and more are required to mine it computing power. Today it is not profitable to mine bitcoin on ordinary farms, it is mined on the so-called ASICs - ready-made equipment created specifically for mining. Its cost starts from 170 thousand rubles.

Typically, home mining farms are involved in the creation of altcoins - all other cryptocurrencies except for bitcoin (the most popular are Ethereum and ZCash). “I thought that it would be enough to sweat a little over the assembly, press the “loot” button and the money would flow like a river, but that was not the case. Farms need constant control, and income directly depends on the rate of cryptocurrencies. At the moment, I have invested 1.4 million rubles in mining, which, given the average monthly rate, should pay off in about two years after the start. My ten farms bring 110-120 thousand rubles a month. revenue, ”the miner, who wished to remain incognito, told RBC.

Tatar mining

Daniyar Latypov from Kazan started mining when it was not yet mainstream: he built his first farm in 2011. Radio engineering education and passion for computers helped to figure it out, but then the cryptocurrency was cheap and did not bring tangible income: Latypov earned only about 6 thousand rubles. per month, half of which went to pay for electricity.

Mining big

Mining in Russia is not legalized, but it is not prohibited either. “There is no regulation of the cryptocurrency market yet. The only document that affects this industry is a letter from the Federal Tax Service dated October 3, 2016, in which operations with cryptocurrencies are equated to foreign exchange,” says Maximilian Grishin, a lawyer in the Moscow office of the international law firm Ilyashev & Partners. According to Olga Sorokina, managing partner of O2 Consulting, the risks for hotels will arise if the owner of the premises starts paying off tenants in cryptocurrency. If the calculations are in rubles, then there is nothing to complain about - in fact, the activities of hotel miners are not much different from the business of hosting providers.

Small mining hotels up to 300 sq. m will not withstand competition with large companies that are already beginning to fill the market, says Anatoly Knyazev, founder of the Bitcoin Fund hedge fund. One of the pioneers in this area was the Internet Ombudsman Dmitry Marinichev, whose company Radius Group has equipment for mining cryptocurrencies on the territory of the former Moskvich plant.

Igor Shuvalov, appointed by Vladimir Putin responsible for the development of cryptocurrency technologies, plans to bring mining to the level of state corporations. “We talked about the future of this sector in Russia, given that it is developing so rapidly in the world. Among other things, it was about generators of electrical energy, near which such [mining] centers could be placed. But there are no specific projects yet,” Shuvalov.

There is already an alternative to mining hotels - this is cloud mining, the collective use of computing power. Companies that provide such services purchase equipment and offer customers to rent part of this capacity. In return, they receive income minus the cost of the Internet, electricity and the commission of the organizer. However, many market participants do not understand the economics of such projects. “Think for yourself: why rent out a money printing machine that can bring high income to the cloud owners themselves?” asks Alexei Ivanov from SberBit. According to the owner of the mining hotel Adam Guchigov, such a scheme gives less income than independent mining, and does not allow you to control whether the owners fairly share profits with tenants.

Dear Capital

Muscovite Aleksey Ivanov thought about mining as a source of income in April 2017, when he was choosing computer components with a friend. “I was surprised to note that video cards have disappeared from store shelves,” recalls Alexey. — We realized that people are buying hardware to mine. A logical question arose: is it possible to make money on this? Ivanov, an IT specialist by training, a former employee of the Russian Venture Company and co-owner of office equipment maintenance firms, decided to understand the technology.

Aleksey Ivanov (Photo: Oleg Yakovlev / RBC)

Together with partners, he assembled several farms that he installed in the office of his company. It turned out that this is much more convenient than home options. “Keeping a farm at home is risky: you just can’t turn on the washing machine or the kettle - it will knock out the plugs. People tried their best: they tried to strengthen the wiring and rented separate apartments in order to put farms there, ”says Ivanov. He decided to take up hosting mining farms professionally.

First of all, he assessed the demand: he created a website on which he posted an ad about the services of a mining hotel (Ivanov claims that he was the first to come up with this phrase). There were about ten calls in a few days, and he decided to act. As a test site, together with five partners (friends and colleagues), I rented a 40 sq. m, brought a separate power line, installed ventilation, purchased iron racks, temperature and humidity sensors. All this cost 300 thousand rubles.

The premises were filled in a week, and Ivanov rented another 200 sq. m. m of office space in the same business center (at a rate of 1-1.2 thousand rubles per 1 sq. m). Now the SberBit mining hotel occupies 300 sq. m. Ivanov offers clients an all-inclusive package - a guarded site, payment for the Internet, electricity and administrator work. Placement of each device for mining will cost the client 5 thousand rubles. when consuming up to 1 kWh of energy, 6 thousand rubles. at a flow rate of 1-1.5 kWh, and 8 thousand rubles. at a flow rate of 1.5-2 kWh. Another 2.5 thousand rubles. you will have to pay for the installation of the farm.

During the first month, Ivanov managed to attract about 20 clients (mainly through an ad on Avito and contextual advertising on Google). Now the hotel has 300 mining farms. For four months, the company's revenue from this activity amounted to 2 million rubles, net profit - 200 thousand rubles. These are low figures, Ivanov admits, there are no sufficient electrical capacities in office premises and expensive rent, production premises with large connected capacities are needed.

From garage to workshop

Adam Guchigov first heard about cryptocurrencies in 2013, when a potential client came to him, a stockbroker for an investment company. “A person invested in the purchase of bitcoin and asked what he should do with this good,” recalls Guchigov. “At that time, bitcoin cost $20, we didn’t work with it and advised the client to exchange it for dollars.” He became interested in cryptocurrency only in 2017, when they started talking about it on federal TV channels. Together with his colleague Daniil Munaev, Guchigov bought 12 video cards (480 thousand rubles were spent on this) and found a specialist who, for 20 thousand rubles. helped build two farms.

The test was unsuccessful: the farms that worked in Munaev's garage overheated and constantly turned off. Entrepreneurs sold them for 540 thousand rubles, and with the proceeds they ordered others in China, with an additional cooling system. The new system worked without interruption and brought about 1.5 thousand rubles. arrived per day.

By June, the number of miners and the complexity of calculations had grown, and the payback period for farms had fallen from four to 10-12 months. “We understood that mining was difficult to scale, and we were looking for a more reliable business model,” the entrepreneur recalls. The idea was submitted by a truss assembly specialist who helped Guchigov at the start. “Orders came to him almost daily, the bill went to millions of farms in Moscow alone. Where are they all stored? Guchigov was perplexed. It turned out that most of the collector's clients keep farms on balconies.

Photo: Regina Urazaeva for RBC

Guchigov relied on newcomers who bought two or three farms and placed them at home. “Farms are very noisy and generate a lot of heat; if you live with them in the same room, you can go crazy,” says Adam. He decided to create a commercial mining platform with 24/7 security and monitoring. Unlike Ivanov, he did not deal with expensive Moscow real estate, but rented part of the production workshop in Podolsk (70 sq. M. for 28 thousand rubles per month), installed the Internet, installed ventilation, purchased metal racks for storing farms, three robots vacuum cleaner for cleaning and hired one administrator. The workshop is located in a closed area with access control - this is how we managed to save on security. It took about 130 thousand rubles to start. Guchigov found his first clients even before the opening: he was helped by the connections of a familiar farm adjuster who offered accommodation in a mining hotel to his clients.

The hotelier charges 3,000 rubles for his services. from every farm. Electricity is paid separately depending on the power of computers: on average, an additional 2-3 thousand rubles are paid per month. Now in the Podolsk mining hotel there are 72 computers and this is not the limit - on each of the 70 sq. m premises can be installed four farms, says Guchigov. The place will soon come in handy, he is sure: “Rain, snow, hurricane winds - all these delights of Moscow autumn are in our favor. As soon as the weather turns bad, all those who still keep the farms on the balconies will run to us.”

View from the outside

“Sooner or later the big players will take over the market”

Alexey Noskov, Head of the Mining project at the Xelent data center

“The market is going through a gradual transition from apartment mining to a more civilized scheme: lone miners move equipment to hotels in search of safer conditions. But this period will not last forever: sooner or later, the market will be captured by large players who will build professional data centers under the guise of mining hotels. I believe that small private hotels will be relevant for no more than two or three years.”

"Solution for those who were kicked out of the apartment"

Pavel Sukhachev, co-founder of SAVL (cryptocurrency storage and exchange wallet)

“Mining hotels are an extremely dubious and temporary solution for inconspicuous market players, some private miners from the category of those who were kicked out of their homes by their families for noise, heat and a huge amount of electricity bills. The future belongs to powerful data centers with cheap electricity, which work on direct contracts with thermal power plants, in which residual electricity is bought.”

“Mining hotels are like selling shovels during a gold rush.”

Alexander Borodich, founder of Universa blockchain

“Accommodation in mining hotels is best suited for beginners who do not want to endure the headaches of constant problems with farms: looking for an opportunity to bypass electricity meters, tolerate noise, regulate temperature and humidity. Those who have already wintered with farms managed to find a solution to these problems even without hoteliers. But the market is replenished with new people, and at this stage it is an easily calculated and recouped business: it can be compared with the sale of shovels during the gold rush.”

Save
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In this article, I will briefly describe the first steps in a business that is based on cryptocurrency mining. In order to open any business, start-up capital is needed, without it now there is no way. Therefore, if you think that you can earn on mining without investments, as a beginner, then you are mistaken. Unless, of course, you publish informative and useful articles on websites or develop blockchain applications, and God forbid, promote your ICO project. But again, you will invest in cryptocurrency and its mining from these earned funds.

What can you invest in:

• • ASIC farms.
  • Farms from video cards.
  • cloud mining.
  • In the cryptocurrency itself, for speculation on the exchanges.

How to start mining.

First of all, you need to evaluate the volumes. If you plan to start with an amount of about 150 or 200 thousand rubles, then you can buy an ASIC or assemble a farm from video cards. Earlier in my articles, I talked about payback periods, about the pros and cons of mining equipment. You just have to decide what is convenient for you: a noisy ASIC, which the hell knows where to buy, so that they don’t cheat and so that it works, or buy video cards, the payback period for each is twice as long as that of the ASIC, but there is a store guarantee for three years, and high validity period.

A balcony with a terrace is enough to maintain a small farm, but if you are planning to expand, it is better to move to the garage, with good new copper wiring that can withstand a lot of amperes. Wiring, ventilation system and room - I will attribute this to the costs. I just want you to know what else you will have to spend on, except for paying for electricity, if you are not a freeloader with a magnet on the meter.

With the unchanged rate of the mined cryptocurrency (Bitcoin), the ASIC Antminer s 9 will pay off in about half a year, you can buy yourself a second one, and in three months a third one. As a result, three ASICs will consume 5 kilowatts of energy and bring you about 70 thousand rubles a month, and given the fact that bitcoin is growing, then you have all the trump cards in your hands. This is how they do mining in China, only the volumes of each such entrepreneur are colossal.

With video cards, things are a little more complicated on the income side, if an ASIC worth 180 thousand rubles a month brings about 30 thousand rubles, then the right video card for mining (Amd rx 470480570580 or nvidia 1060) worth from 17 thousand to 25 thousand brings about 1.2 per day $, this is 2000 rubles per month, all indicators at the current rate of cryptocurrencies and the complexities of blockchain networks. The payback of the video card fluctuates in connection with these indicators. In the winter of 2017, it was possible to collect farms and recoup them in the spring, due to the fact that the rate of a profitable cryptocurrency for mining - Ether, jumped from $12 to $300. And those who have been mining it for a long time and have not “leaked” it have replenished their budget on long-term storage quite well, but those who started mining before its jump also benefited. Now the payback of farms on video cards is a little over a year, many forecasters are angling that Ethereum will jump to $500 in 2018. And if by this moment you have mined at least some amount of coins, then the payback period will automatically decrease for you.

Many people make mistakes with the number of video cards they buy for a farm, without thinking in advance how it will be more profitable. They buy 4 video cards for 25,000 rubles with an overpayment for a brand or some specifications that can be neglected. Although you can buy 5 or 6 video cards at a price of 15,000 to 18,000 rubles, each of which can give either a little less or the same mining speed.

Example: 6 video cards 1060 will be more profitable than 4 rx 580 8 GB, while 1060 gives on the air from 22 to 24 MH / s, and a flashed and overclocked RX 580 8 GB - from 25 to 31 MH / s. And now the Equihash algorithm is very well mined on the Nvidia 1060, which also approximately works out for mining on Dagger Hashimoto (Ethereum) for the RX 580.

Or buy to buy 1070 instead of 1060 - it also turns out to be unprofitable, for the purchase, because the price of 1070 is too high. 32,000 against 18,000 rubles. Dy and 1060 are more profitable in terms of power consumption, which means savings on power supplies and benefits in terms of price-power ratio (or earnings).

But in general, an experienced miner has both ASICs and farms on video cards from different video chip manufacturers, and cryptocurrency is mined with a long-term expectation. And constantly think about the payback period is unnecessary. If you periodically buy one new video card, increasing the total processing power, for a part of the earned funds, then you will forget about what the payback is.

Here is a screenshot of my profitability calculator in Hashflyer with an investment of 50,000 rubles.

Mining prospects for the year.

For the next 2018, we continue to purchase video cards so that Zcash (or whatever is now profitable on the same algorithm, you can find out in the Hicehash service) on Nvida. We save Ether and wait for its pump up to $500-600, if you mine other cryptocurrencies that are profitable for your equipment, then exchange and store most of it in Ethers. Ethereum and Bitcoin are best kept on the exchange in half, let's say you mined different cryptocurrencies in the amount of 100,000 rubles, the amount of 10,000 remains scattered over different crypts, 90,000 is split in two: 45,000 rubles in BTC, 45,000 rubles in ETH. This method of long-term storage is less risky in terms of varying the rates of different coins. But Ethereum and Bitcoin are definitely growing and will continue to gain momentum.

If you can’t decide which mining algorithm to invest in on Hashflaer, then buy Sha-256 (Bitcoin) hashrate, it is now the most profitable, and after entering the exchange, exchange part of Bitcoins for Ether and wait for growth. But also buy some power on the ETHASH mining algorithm to mine Ethereum, suddenly the situation in the mining world will change dramatically, the network difficulty in the Dagger Hashimoto blockchain will drop, and you have rented power! It will be very nice, and just mining the ether is already nice than not mining anything, even if we are talking about cloud mining.

Follow the news, join the public, so as not to miss new articles.

Comments

2 Vyacheslav Admin 04.01.2018 14:10

Quoting Vyacheslav:

Vyacheslav, good day! I have read several of your articles and am a bit confused, ie. Is working with cryptocurrencies a work for the future with a payback period of at least 1 year? Is there any scheme that would allow at least the current expenses to be covered in the process? Because if you devote all your time to working on the Internet (as they say in other articles for 10 hours a day) - there will simply be nothing to live))))

I mine, I write articles, sometimes more than 10 hours a day, sometimes less than an hour.
Every business in which you invest money or effort will always have a payback period.
If you are a trader with experience, you will be able to win back 100k rubles and 1000,000 on the exchange in a week.
I describe all the schemes constantly in different articles, and everywhere there will be a payback for about a year.

In this article, I will briefly describe the first steps in a business that is based on cryptocurrency mining. In order to open any business, start-up capital is needed, without it now there is no way. Therefore, if you think that you can earn on mining without investments, as a beginner, then you are mistaken. Unless, of course, you publish informative and useful articles on websites or develop blockchain applications, and God forbid, promote your ICO project. But again, you will invest in cryptocurrency and its mining from these earned funds.

What can you invest in:

• • ASIC farms.
  • Farms from video cards.
  • cloud mining.
  • In the cryptocurrency itself, for speculation on the exchanges.

How to start mining.

First of all, you need to evaluate the volumes. If you plan to start with an amount of about 150 or 200 thousand rubles, then you can buy an ASIC or assemble a farm from video cards. Earlier in my articles, I talked about payback periods, about the pros and cons of mining equipment. You just have to decide what is convenient for you: a noisy ASIC, which the hell knows where to buy, so that they don’t cheat and so that it works, or buy video cards, the payback period for each is twice as long as that of the ASIC, but there is a store guarantee for three years, and high validity period.

A balcony with a terrace is enough to maintain a small farm, but if you are planning to expand, it is better to move to the garage, with good new copper wiring that can withstand a lot of amperes. Wiring, ventilation system and room - I will attribute this to the costs. I just want you to know what else you will have to spend on, except for paying for electricity, if you are not a freeloader with a magnet on the meter.

With the unchanged rate of the mined cryptocurrency (Bitcoin), the ASIC Antminer s 9 will pay off in about half a year, you can buy yourself a second one, and in three months a third one. As a result, three ASICs will consume 5 kilowatts of energy and bring you about 70 thousand rubles a month, and given the fact that bitcoin is growing, then you have all the trump cards in your hands. This is how they do mining in China, only the volumes of each such entrepreneur are colossal.

With video cards, things are a little more complicated on the income side, if an ASIC worth 180 thousand rubles a month brings about 30 thousand rubles, then the right video card for mining (Amd rx 470480570580 or nvidia 1060) worth from 17 thousand to 25 thousand brings about 1.2 per day $, this is 2000 rubles per month, all indicators at the current rate of cryptocurrencies and the complexities of blockchain networks. The payback of the video card fluctuates in connection with these indicators. In the winter of 2017, it was possible to collect farms and recoup them in the spring, due to the fact that the rate of a profitable cryptocurrency for mining - Ether, jumped from $12 to $300. And those who have been mining it for a long time and have not “leaked” it have replenished their budget on long-term storage quite well, but those who started mining before its jump also benefited. Now the payback of farms on video cards is a little over a year, many forecasters are angling that Ethereum will jump to $500 in 2018. And if by this moment you have mined at least some amount of coins, then the payback period will automatically decrease for you.

Many people make mistakes with the number of video cards they buy for a farm, without thinking in advance how it will be more profitable. They buy 4 video cards for 25,000 rubles with an overpayment for a brand or some specifications that can be neglected. Although you can buy 5 or 6 video cards at a price of 15,000 to 18,000 rubles, each of which can give either a little less or the same mining speed.

Example: 6 video cards 1060 will be more profitable than 4 rx 580 8 GB, while 1060 gives on the air from 22 to 24 MH / s, and a flashed and overclocked RX 580 8 GB - from 25 to 31 MH / s. And now the Equihash algorithm is very well mined on the Nvidia 1060, which also approximately works out for mining on Dagger Hashimoto (Ethereum) for the RX 580.

Or buy to buy 1070 instead of 1060 - it also turns out to be unprofitable, for the purchase, because the price of 1070 is too high. 32,000 against 18,000 rubles. Dy and 1060 are more profitable in terms of power consumption, which means savings on power supplies and benefits in terms of price-power ratio (or earnings).

But in general, an experienced miner has both ASICs and farms on video cards from different video chip manufacturers, and cryptocurrency is mined with a long-term expectation. And constantly think about the payback period is unnecessary. If you periodically buy one new video card, increasing the total processing power, for a part of the earned funds, then you will forget about what the payback is.

Here is a screenshot of my profitability calculator in Hashflyer with an investment of 50,000 rubles.

Mining prospects for the year.

For the next 2018, we continue to purchase video cards so that Zcash (or whatever is now profitable on the same algorithm, you can find out in the Hicehash service) on Nvida. We save Ether and wait for its pump up to $500-600, if you mine other cryptocurrencies that are profitable for your equipment, then exchange and store most of it in Ethers. Ethereum and Bitcoin are best kept on the exchange in half, let's say you mined different cryptocurrencies in the amount of 100,000 rubles, the amount of 10,000 remains scattered over different crypts, 90,000 is split in two: 45,000 rubles in BTC, 45,000 rubles in ETH. This method of long-term storage is less risky in terms of varying the rates of different coins. But Ethereum and Bitcoin are definitely growing and will continue to gain momentum.

If you can’t decide which mining algorithm to invest in on Hashflaer, then buy Sha-256 (Bitcoin) hashrate, it is now the most profitable, and after entering the exchange, exchange part of Bitcoins for Ether and wait for growth. But also buy some power on the ETHASH mining algorithm to mine Ethereum, suddenly the situation in the mining world will change dramatically, the network difficulty in the Dagger Hashimoto blockchain will drop, and you have rented power! It will be very nice, and just mining the ether is already nice than not mining anything, even if we are talking about cloud mining.

Follow the news, join the public, so as not to miss new articles.

Comments

2 Vyacheslav Admin 04.01.2018 14:10

Quoting Vyacheslav:

Vyacheslav, good day! I have read several of your articles and am a bit confused, ie. Is working with cryptocurrencies a work for the future with a payback period of at least 1 year? Is there any scheme that would allow at least the current expenses to be covered in the process? Because if you devote all your time to working on the Internet (as they say in other articles for 10 hours a day) - there will simply be nothing to live))))

I mine, I write articles, sometimes more than 10 hours a day, sometimes less than an hour.
Every business in which you invest money or effort will always have a payback period.
If you are a trader with experience, you will be able to win back 100k rubles and 1000,000 on the exchange in a week.
I describe all the schemes constantly in different articles, and everywhere there will be a payback for about a year.

Do you want to make money on mining? Then you will need certain investments and a business plan on how to organize the process. And if we take into account that with the growth of the market value of cryptocurrencies, prices have also been raised by manufacturers of computing equipment for their production, it becomes obvious that all investments need to be thoroughly protected. As a result, the organization of mining farms has become a completely trivial investment process, the funds for which may well be borrowed. And the process itself should start like this: draw up a business plan for a mining farm.

Investments in cryptocurrency mining

Mining has long been a type of entrepreneurial activity. Still, because here:

• revenue prospects with volatile, but quite predictable factors;
• costs with a completely understandable structure, as well as the possibility of their reduction;
• there is growth potential and a tendency to increase the value of the mined product - cryptocurrency block headers.

Like any project that potentially brings money, a mining farm startup will require an initial investment. Before throwing yourself into the pool with your head and hitting piggy banks, extracting the last savings from the bins, it seems reasonable to make a calculation, draw up a business plan for a mining farm, in order to at least theoretically verify the return on investment, and most importantly, to determine those terms after which can be focused on payback and net profit.

To maintain the required level of mining, project organizers have to acquire more and more computing power. The size of investments is growing by leaps and bounds. Mining farms that generate serious revenues become large-scale projects, more reminiscent in appearance of high-tech factories than the exploration centers of the first enthusiasts.

However, this is only the case with the very first cryptocurrencies. And new altcoins, for the most part, have not yet become so complicated as to require significant scaling or high-performance computing centers (which are ASICs) for their own production. Some tickers can even be mined on the CPU; some require video cards (GPU graphics processors). But the main thing is that the road to mining is open even for small entrepreneurs who, with their farms, create the very decentralized cryptocurrency system, the pioneer in the implementation of which was Bitcoin.

All the more in demand is a preliminary calculation of profitability and break-even point, because with a decrease in the scale of production, any change in external parameters can lead to a catastrophic drop not even in profit, but in revenue for a rather significant period, which can make the project unprofitable.

Due to the significance of these factors, it seems reasonable to consider them in more detail, so that those who wish to invest in creating their own farm have an idea of ​​what they are dealing with, what should be feared.

Mining as a business

Any business depends on various conditions and factors. The mining business is no exception. Let's try to list the most significant parameters.

Complexity

This capricious indicator has already been mentioned above. All of us, when we were schoolchildren, had to solve, perhaps not even particularly requiring ingenuity, but cumbersome mathematical equations, where you just need to sequentially execute standard algorithms. Computing devices do something similar in the process of mining, whether they are CPUs, GPUs or ASICs. What is any unit of cryptocurrency? This is one of the results of solving a giant system of equations. The number of solutions is limited and countable, but finding each subsequent root of such an equation is more difficult than finding the previous one.

The cryptocurrency system is created in such a way that the intensity of production only decreases over time. This is due to economic reasons: after all, it is assumed that an increasing amount of computing power will be drawn into the mining process, and a large-scale increase in productivity (in the absence of complication) can lead to a temporary inflation of virtual money. So from the point of view of the developers of the cryptocurrency system, this principle, embedded in the program code of the cryptocurrency, looks quite natural and justified.

But for those who seek to enter the industry by organizing their own mining farm, this feature is an extremely unpleasant obstacle. Not only does difficulty play against you – constantly reduces the productivity of your mining center, – and this complexity grows exponentially. That is, not evenly, but in sharp jerks and up without falling.

Recommendation: you should start mining those cryptocurrencies, the complexity of which is on the flat part of the mining difficulty curve. That is, the angle of inclination of the tangent to the curve at a given point (this is characterized by the tangent of the slope of the tangent) should be less than 45 degrees to the abscissa axis (the tangent should be less than 1). The profitability of mining and its performance directly depend on the complexity. For example, for Bitcoin on a modern date (01/15/2018), the yield of 1 Th/s is ideally a little over $2.0.

Market rate of the virtual coin

The second most important factor that affects the profitability of cryptocurrency mining. In 99% of cases, computing equipment is purchased for fiat money, to be even more specific, for US dollars. And when mining a cryptocurrency, an entrepreneur in most cases will most likely sell it for traditional money, because. for example, it is customary to pay for electricity in the currency of the country where the farm is located. The growth of the cryptocurrency exchange rate literally opens up a second wind to mining.

In many ways, the growth of bitcoin for miners was comparable to the beginning of the rise in oil prices in zero for the whole of ... Russia. At a price of $80 per barrel, it immediately becomes possible and profitable what until recently seemed utopian, namely, the development of the northern shelves. For the extraction of Bitcoins, high-performance computing centers began to be massively purchased - ASICs and (“concentrated” GPU processors), which were previously too expensive for mining.

The growth of the market rate of the mined cryptocurrency is really capable of giving impetus to the development of a mining farm. But its fall can lead to project stagnation and even loss-making. The reason for this is as follows: along with the growth of stock quotes of altcoins, everything related to the infrastructure of its production is growing, first of all, this is computing equipment. With a decrease in the cost of cryptocurrency, it just won’t become cheaper. Let’s say you won’t buy new mining components, but the old capacities bought at high prices will greatly lengthen their payback.

Recommendation: when making a decision to purchase computing power, pay attention to whether the exchange rate of the cryptocurrency is “overheated” and whether it will inevitably fall. If the answer is yes, then when buying equipment… bargain!

Electricity cost

The most influential variable that affects the cost of mined altcoins is the cost per kilowatt hour of electricity. Back in mid-2016, this was almost the determining factor for the entire mining procedure in general. However, since then, the cost of virtual coins of all kinds has grown significantly and the price of a kilowatt has lost its backbone value.

But as it grows up, it can fall. Therefore, it is highly recommended to take care of access to cheap energy at the stage of business planning. Possible measures:

• in the case of placing a farm in an apartment or in a country house, you should take care to purchase a home battery (produced by Tesla, for example) in order to be able to include a nightly energy consumption rate, where the cost of a kilowatt hour is several times less. At the same time, it will be possible to solve the problem of interruptions in energy supply;
• sometimes it makes sense to consider the possibility of placing a mining farm (including medium and mini-format) on the territory of some research institute or other enterprise that has electricity benefits. At the same time, it will be possible to solve the problem of cooler noise.

Recently, a project of miner-heaters saw the light, which propose not to throw away heat from microcircuits, but to use it for heating apartments. It is a completely profitable project that contributes to the decentralization of cryptocurrency mining in principle. What is not a real way out?

General attitude towards mining of state authorities in the country

Despite the fact that this item is placed at the very end of the list, it is the most important, fundamental and key. If cryptocurrencies are actually being persecuted, then it is quite possible that a reasonable solution would be not to create a farm within this jurisdiction at all, but to try to do it in countries with a more loyal legal climate.

And if there is no desire to go anywhere, then take care of security measures, namely, make sure that no one knows about your farm. But remember: the speed of "knocking" exceeds the speed of sound!

room

Room requirements start when the truss reaches the size of several racks. In terms of ASICs, this is at least 36 pcs. It should be based on the standard that 1 such mining unit should account for at least 2.2 m 3 of the volume of the room. Of course, this is not a dogma, and the standard is very conditional.

We need an air supply in order to ensure its normal circulation, and most importantly, so that it has time to cool down after it removes heat from the microcircuits. The operating temperature of the cards themselves is between 70 and 80°C. It is necessary to ensure that the air temperature does not rise above 40 ° C (but preferably not higher than 30). Otherwise, the farm is threatened with overheating and failure (for a long time).

Naturally, to maintain a “comfortable” operating temperature, the room must be constantly cooled. It is considered normal if up to 45% of all energy costs are spent on cooling.

Some miners place their farms at home, but on balconies. In winter, it is possible to achieve significant energy savings due to the lack of the need to cool something (it’s already cold on the balcony, the main thing is that it be glazed). In addition, it automatically turns out to solve the problem with noise, which, in the case of a farm of 12 ASICs, exceeds 65 decibels.

Equipment

The required mining equipment depends entirely on which mining algorithm is supposed to be used. And this is directly dependent on the chosen altcoin (for mining).

SHA-256 and Scrypt

It is proposed to consider the most popular algorithms with reference to the virtual coins mined with their help and the equipment used.

Characteristics	Algorithm
General info	The most common algorithm used in 90% of cases. It is on it that ASICs work. In addition to Bitcoin, it is used to mine: namecoin; Zetacoin; peercoin	It is used to get: Dogecoin; bottlecaps; digitalcoin; Franco
Performance leader among ASICs	Bitmain antminer s9	ASIC Miner BW-L21 Litecoin
Hashrate size	13.5TH/s	550 MHS (megahash)
Chip type	BM1387	28nm LTC ASIC chip
Number of chips, pcs.	189	144
Operating frequency, MHz	600	684
Network connection interface	ethernet	ethernet
Cooling characteristics	2 fans 12038	2 x 120mm x 38mm fans, 3000 rpm
Energy consumption value, kW	1,32	0,95
Power Supply	Bitmain APW3 1.6 kW	ATX at 1500W
Power interface	Ten 6-pin PCI-E connectors

Ethash algorithm

This algorithm was specifically designed for mining the Ethereum cryptocurrency, which has become a kind of potential substitute for Bitcoin. Ether is mined by GPU processors - video cards produced by two world leaders - NVidia and AMD. Here is their performance ranking:

• AMD Radeon R9 295X2 1018MHz/1250MHz 57.68 Mh/s;
• NVidia GeForce GTX 1080 Ti Founders 1582MHz 32.04 Mh/s;
• XFX Radeon R9 390 Black Edition OC 1050MHz/1500MHz 29.89 Mh/s;
• AMD Radeon R9 Fury X 1050MHz/1500MHz 29.71 Mh/s;
• NVidia GeForce GTX 1070 Ti Founders 1506MHz 27.35 Mh/s;
• AMD Radeon R9 Nano 1000MHz/500MHz 27.11 Mh/s;
• Sapphire Radeon RX 580 LE Nitro 1411MHz/2000MHz 26.45 Mh/s;
• AMD Radeon RX 480 1266MHz/2000MHz 24.86 Mh/s;
• EVGA GeForce GTX 1080 FTW2 iCX 1860MHz 23.50 Mh/s;
• PowerColor Radeon RX 570 Red Devil 1320MHz/1750MHz 22.50 Mh/s;
• Sapphire Radeon R9 380X Nitro 1040MHz/1500MHz 21.38 Mh/s;
• XFX Radeon RX 470 1256MHz/1750MHz 20.35 Mh/s;
• EVGA GeForce GTX 1060 FTW+ 1860MHz/2002MHz 19.16 Mh/s;
• ASUS GeForce GTX 1050 Ti STRIX OC 1493MHz/1752MHz 12.03 Mh/s;
• XFX Radeon RX 460 1220MHz/1750MHz 11.93 Mh/s.

Collection of equipment

No need to think that you only need ASICs (or video cards for Ethereum) in order to mine Bitcoins. You will need full-fledged computers, just a graphics function
The processor in it will be incredibly bloated. It can be compared with a bodybuilder who pumps muscles, but not much “pumping” his head ... Nevertheless, he still has it.

So for mining, instead of a video card, a distributor for 7 or more sockets is connected to the motherboard, into which GPU processors are already inserted. In addition, the processor, RAM and all other components are also inserted into the motherboard. The distributor has a limited number of connections, so if more GPUs need to be connected, then this means that you will need more motherboards (in other words, you need another computer, albeit without a monitor).

Assemblies from such quants represent a full-fledged scaling when designing a mining farm.

What to do with income

No need to think that with the launch of the mining process, your life will become raspberry. It will, of course, improve significantly, but in order not to be fooled, the process must be managed. We are not talking about technical service (this goes without saying), first of all, financial management is meant.

In no case should we forget about the growing complexity of mining. It must always be monitored and sensitively responded to. How? Through the purchase of new computing devices and components. The optimal increase in mining capacity is 5% per month, if you count not by hashrate, but by actually mined virtual coins! (where can the Russian economy compete with you with its growth by a record ... 1.2% at the end of 2017). How much power you need to buy for this is determined empirically, given the increase in the complexity of mining.

The procedure for distributing borrowed funds is as follows:

• first we pay "for the light";
• then we postpone for the purchase of equipment, based on the above "standard";
• everything that remains after that can be used as profit (that is, used to calculate the loan taken to finance the business plan, for current consumption, etc.).

If you do not follow this “budget rule”, then very soon your farm will begin to stagnate first, and then completely degrade, which is by no means what you want.

03/13/2018 at 18:46

1824 0

When bitcoin was introduced in 2009, this world's first virtual currency was fairly easy to mine. A home computer was required, perhaps not the weakest, but it could be enough. The current threshold for entering the bitcoin mining market has become much higher.

If you want to earn at least some profit, you have to invest. This does not mean that it is impossible to earn money there. It's just that this is no longer a home industry that is being developed by lone enthusiasts. This is a market of big players with good investments.

However, if you decide to mine bitcoins, there are several options for how a private miner can make a profit. Financial risks, investments will be different, as well as potential benefits.

The same applies to the purchase of altcoins: there are no guarantees in the world of cryptocurrencies. Any investment can be lost. Realize this before reaching for a credit card to pay anything in this area.

Mining or investment

Before discussing bitcoin mining itself, it is important to note that although there is uncertainty in everything related to cryptocurrencies, mining is one of the most volatile forms of income.

Prices for equipment began to fluctuate greatly, there is no guarantee of payments in the process of performing calculations. Investing in mining is a riskier investment than buying Bitcoin directly.

No one can say if bitcoin will be worth more tomorrow than it is today. And there is no specific answer to the question of whether you will make a profit by setting everything up for mining.

Investing in bitcoins has an advantage: you immediately get something in your hands for your money. In a mining situation, it will take a long time to set up, reconfigure, wait.

cloud mining

Cloud mining is the practice of renting equipment ( or parts of the hash power) for mining. Someone else carries out mining, receives a reward from which you receive interest in accordance with the money invested.

There are many unscrupulous providers of such services on the market, you need to be vigilant when choosing them. They just collect funds supposedly for mining, and then you don't get anything for months. Before you realize that no one is actually mining cryptocurrencies, you can pay more than one monthly rent.

And yet, cloud mining is popular and in demand, because it requires much less investment than creating your turnkey node. As in all cases with investing funds, it is necessary to conduct market research. There are many reliable, good companies, but even they have their critics and detractors.

Step 1. Choose a mining company

Company Genesis Mining is perhaps the largest and most established player in the field of cloud mining. Representatives of the HashFlare company recently told the press that every single one of their cloud mining clients is making a profit, every single one of them.

In general, there is a CryptoCompare company that maintains a rating of mining companies, which takes into account customer reviews. True, most of the responses contain referral links, that is, they cannot be considered true information. But it provides food for thought, useful at this stage.

Step 2 Choose a mining package

After choosing a cloud mining service provider, you need to choose the right package. This usually involves considering options with different amounts of hash power. The more power, the more expensive the package. Very often there is a linear relationship between the cost of the package and the potential return, but this is not always the case.

Many companies that provide this kind of service are able to provide preliminary calculations. They are based on the current market value of bitcoin, the difficulty of mining, the number of cross-references, and the hash power you rent. If you make calculations, keep in mind that the market is changing rapidly, study price trends, try to calculate the pessimistic and optimistic scenarios.

Do this for different packages to understand what are the risks, how much investment is required, what will be the return in the worst and best case. Those packages that are profitable now may turn out to be meaningless, unprofitable if bitcoin falls in price.

Step 3 Choosing a mining pool

After you decide on a mining package, you will have to choose a mining pool. This means that you will need to join a certain team of virtual coin miners, choosing any of them, regardless of geographic location.

Working in the pool will increase the chances of earning. Each of them has its pros and cons, the consideration of which is beyond the scope of this article. However, if you are a beginner, joining a large pool with a good reputation may be the best solution.

After the selection of the pool is completed, the connection to it is set up, you can start cloud mining, the first receipts of money can be seen in a few weeks.

As bitcoins appear in wallets, they should be withdrawn and moved to safer storages - to flash cards or at least to an electronic computer wallet that is not connected to the network. Some companies allow you to reinvest the profits from cloud mining into increased hashing power.

Beware of "pre-sales"

Some firms that sell cloud mining offer pre-sale contracts. That is, they ask to pay upfront for processes that will not start in the coming weeks or even months. In most cases, this should be avoided, because there is no guarantee that the contracts will be profitable when they are worked out. And there is even a risk that they will not be completed at the appointed time at all.

Personal mining

Personal bitcoin mining is rare these days because it is expensive. Although some altcoins are still profitable to mine using a regular home computer. Bitcoin mining in 2018 requires specialized hardware designed specifically for this process, such as ASICs. They are not cheap, both when buying and in operation.

Since bitcoin mining hardware is expensive, it can now only be recommended to people who already have access to powerful hardware, cheap electricity, and a good network connection.

If all these resources are available, but not used to their full potential, you can try to mine virtual coins with their help. If you still want to invest in personal bitcoin mining equipment, take a calculator and recalculate everything several times.

Step 1. Equipment selection

If you are determined to mine bitcoin alone, you need to buy powerful schemes, for example ASIC equipment. They must be chosen wisely. Despite the fact that the same chips can be installed inside, the power supply system may differ, then their efficiency will not be the same.

Recently, many praise the model AntMiner S9 by Bitmain. It can be bought abroad for about $2,300. It happens that the order is processed for several weeks. Other sellers who deliver them faster are pushing their prices to the limit. Every time it makes sense to consider whether this faster delivery will pay off if you buy AntMiner S9 for, say, $6,000.

Another smart choice- purchase of equipment from the hands. It is suitable for those who are well versed in computer technology. If you do not have such skills, it will not be superfluous to consult an expert. Mining equipment often burns out. When buying it, you need to make sure that it is not refurbished, that it will work long enough to pay for itself.

Some enthusiasts are trying to mine bitcoin on their old equipment, collecting mining nodes from the leftover hardware.

Here you have to be a master of your craft, so that everything works and makes a profit. Some people are trying to use graphics cards to mine bitcoin. Since the complexity of calculations is constantly increasing, there are no guarantees that it will turn out to earn something.

Step 2. Choosing a mining pool

Once you have your mining equipment set up and ready to go, you need to decide whether you want to mine coins alone or as part of a pool. Working in a team usually promises a higher chance of receiving a reward, although it will have to be divided among everyone.

And if you do everything yourself, then if you are not lucky, you can mine bitcoins for several years without ever getting paid for it. In the presence of weak hashing power, this can easily happen.

If you become part of the pool, then the profit will come regularly, even if in minimal tranches. Joining a pool usually requires fees, sometimes you have to pay commissions from earnings to remain part of the team.

Pool selection- such a subtle and complex topic that it makes no sense to consider it briefly in this article. The network has a lot of recommendations and step-by-step instructions that allow you to understand who is in this market.

In a nutshell, the best solution is often to work with a well-known pool that has the lowest fees for access and payment processing. But if you have any specific needs, then you should study the topic thoroughly.

The final step on the road to private bitcoin mining is choosing and installing the right software. It is also important to link your hardware to a quality, well-secured wallet. There are many options, but they differ from each other not so much. Once again, proven players with a good set of customer reviews should be prioritized.

Connect the pool to your equipment, set up the program, log in to the pool, start mining.

Step 4. Checking invoices

Since mining becomes less and less profitable as network members grow, check the costs and profits made regularly. It is important to understand whether your bitcoin mining rig is profitable, or whether it consumes more energy than it produces coins.

You also need to control the temperature to control overheating, otherwise the "iron" can burn out. Sometimes it is worth making sure that the equipment is quiet enough so as not to disturb the neighbors.

If everything is in order with all these parameters, then it remains only to wait for the replenishment of the wallet with bitcoins. And then you can save, sell, transfer them into altcoins or paper banknotes. This will be completely your choice.

Video: how to start cryptocurrency mining