There is a lot of speculation in the cryptocurrency world today, which is why Bitcoin and other coins have been going up and down in price. Bitcoin alone has risen from $6,594.05 a Bitcoin (BTC) to $16,800 in the few days I have been writing this article a 255% increase in about 2 weeks! This article is designed to help you get into mining cryptocoins, and show you how you can make nearly $150,000 dollars in 5 years for $3500 investment! This guide will walk you through how to make profit mining cryptocurrency.
There are massive amounts of currencies out there trying to make a stake for top position to overthrow Bitcoin as the leader of cryptocurrency. If you are unaware of what Bitcoin or other cryptocurrencies are, I suggest checking out Bitcoin 101, they have an excellent infographic on the subject.
For every transaction that happens on the blockchain a miner needs to be there to verify and process the transaction, mining is a key requirement to the success of a good currency and can either make or break a currency. We are going to focus in this article on what it takes to mine a coin of various coins in the market, including Bitcoin.
WHAT EFFECTS MINING PROFITABILITY?
There are three main variables to mine a coin; difficulty, price and reward per block. This is what generates a coin. All of the cryptocurrencies are based off a beautifully simple equation:
This one equation makes or breaks your dreams of setting up that solar powered server farm and generating massive amounts of passive income so you can build that sustainable homestead you’ve been dreaming of.
So how it works is let’s say you want to mine a Bitcoin and you setup your computer to do CPU mining at get a whopping 6 KH/s, we are making money! So let’s see how long it will take for us to generate an entire bitcoin.
30 days/month * 12.5 reward for the block * 6 Kilohases/sec * 86400 (seconds in a day) / 1364422081125 difficulty of Bitcoin today * 2^32 = 0.000000000033 Bitcoins/month or 0.00000000099 Bitcoins a year (1,010,101,010 YEARS TO GET A FULL COIN!). So you realize two things. You need a ton of power to mash numbers and you also need to work with other people so you can benefit from other people discovering other pieces of the coin. This is called a pool and you will want to get in one unless the pools are unavailable or the difficulty is so low that you can crunch it. Word of advice, get in a pool.
So how powerful would my computer need to be to generate one Bitcoin a month? You would need 210 TH/sec (at the time of this writing). The best ASIC miner (the Antminer S9) does about 13 TH/s, so you would need 16 Antminer S9’s that utilizes 1.35 kW (which is the MOST EFFICIENT DEVICE ON THE MARKET) each when fully utilized or 518.4 kWh/day! In a year you would of utilized 165.56 (189.216) MWh/yr and if not powered by renewable energy cost the world 306,201.4 lbs of CO2, around 153 tons of CO2/yr. According to the EPA, that is equivalent to driving 829 cars in a year!
But how much did I make? If you lived where I do, electricity after all the taxes is roughly $0.10/kwh, so this yielded you $201,634.86 in that year! That is some serious bank, and even as I write this Bitcoin has risen by $10,000 in a few weeks, so it is even more profitable. How much did it cost you for this ASIC hardware? Depending on availability, about $90,000 so you are fully paid off and making money!
But there is more to factor. Will the difficulty or the price be the same forever? No it is changing always. As the price gets better, that means there are more transactions which makes the difficulty go up. Bitcoin’s difficulty has risen by an average of 5.26% a month, which means that it gets less profitable at the same price point. As long as the price continues to go up to cover this difference then it isn’t a problem, if it has a reduction then it starts making less profit. Based off some rough calculations you will lose 47.7% each year, but since the machine is paid off in 6-8 months, you will still make back your investment and more. In this calculation 5 years from today this same machine would make $2834.98, but you would make $291,002 during its five year life from a $90,000 investment.
|December 17||$ 141,584.66|
|December 18||$ 74,031.54|
|December 19||$ 38,709.48|
|December 20||$ 20,240.35|
|December 21||$ 10,583.24|
|December 22||$ 5,852.73|
|Total 5 YR||$ 291,002.00|
The trend shows that this should be able to stay steady, as Bitcoin has risen quite a bit, but with all of the speculation going on, it is hard to tell if a pump and dump could happen which would decimate the value of the Bitcoin or other currencies.
SO HOW DO I PICK A GOOD POOL?
You need a good pool to mine your coins as mining is like the lottery, you may have the winning ticket, but if you are in a consortium of people who have a winning ticket then you can split the profit and increase your odds! The pools you are looking for are ones that have low fees so you get more of your coins and ones that let you take a share of the transaction fee. As the computational power for mining goes up, the transaction fees may be the saving grace. Since transactions have to be verified by the miners, they get a share. If you go solo, you could get everything if you are LUCKY.
CryptoCompare.com has a great section on how to choose a good pool, here you go!
BITCOIN & LITECOIN HARDWARE
If you have SHA-256 or CPU dependent hashing you are going to need to get an ASIC, such as the Antminer s7, Antminer s9, etc. They have created a product so good, that it made everything else unusable, this also means they (bitmain.com, the manufacture) are having growing pains (or fraud) and people are getting their units months to years later after they take your money. Since the difficulty goes up, it may be worthless when you get it and there are no returns. They do offer a 180 day warranty and it sounds like their service department is working. Until things settle down, better buy one off Amazon (for 3x the cost!) or search craigslist and verify it works prior. There is also an issue with a lack of power supplies, so make sure you get one with the power supply or you’ll be out of luck.
If you have GPU dependent hashing such as Scrypt or X11 currencies you can either buy the Antminer L3+ that does 504MH/s or the Antminer D3 (X11)! Or alternatively you can build a GPU hashing machine. This is really easy to do as it is like building a gaming computer on steroids.
This guide was the most helpful on actually picking the correct hardware and configuring your miner, this is for ethereum, which was one of the lowest profitability’s, but the same machine can be used to process any coin. à https://motherboard.vice.com/en_us/article/59zdjq/an-idiots-guide-to-building-an-ethereum-mining-rig
If you have an IT background you could always make your own miner with an FPGA (Field Gate Programable Array) as shown below. I am attempting this, and will be posting more about this soon!
ENERGY CONSERVATION AND HEAT UTILIZATION
These machines as stated earlier use a lot of energy. Most are around 1500 Watts/hour for a basic miner that will do around 200MH/s. or 36 KWh/day, to put his in perspective the average home in the United States uses 25kWh/day.
This energy will produce a lot of heat, around 122,832 BTU/day (5,118 BTU’s/hr), so what are you going to do with this heat?
Let’s analyze how much heat we can utilize. Let’s say you are here in Portland OR. We have a Winter design temp for heating at 21F and we want to keep our home at a cozy 70F during the winter. How much could this “heater” heat our 1500ft2 (30ft x 50ft) home?
We utilize the ASHRAE heating load calculation below:
U x A x delta T = q/hr
U = Total U value of the walls of the home
A = Total Surface area of the space you are heating (ft2)
T = Desired temp – winter design temp of your area
q/hr = BTU’s/hr needed to heat this space
How to calculate the effective U value of your walls
|Baseline Wall U-factor and R-vale Calculations|
|Numbered Wall Component||R-Framing||R-Insulation|
|Outside Air Film||0.17||0.017|
|Lapped Wood Siding||0.81||0.81|
|OSB Sheating (1/2″)||0.62||0.62|
|Framing or Insulation||6.88||19|
|Gypsum Wall Board (1/2″)||0.45||0.45|
|Inside Air Film||0.68||0.68|
|Percentage of Wall Area||0.25||0.75|
|Calculations: Area-Weighted Average U-Factor|
|U = (% of Framing * Framing U-factor) + (% of Insulation * Insulation U-factor)
Heat Load Calculation:
0.0608 * ((50’ walls * 2 sides * 8’ ceilings) + (30’ walls * 2 sides * 8’ ceilings) + 3000 for roof and floor)) * 70F – 21 F = q/hr
.0608 * 4280 ft2 * 49 = q/hr, 12,750.98 BTU/hr
We then need to realize that not all of the energy will be transferred into the air, because we live in a home that isn’t sealed tight so we can breathe along with our house, we have holes purposely drilled into our home to allow a certain amount of air exchanges per hour for safe living. We now need to calculate the energy lost due to these holes, this is called the Air Exchange Heat load, and it is calculated below:
Air Heat Capacity * Air Flow Rate (CFM50) * Temp Difference = Air Leakage Load/Loss (BTU/hr, q)
.018 * 1500 (based off a blower door, general rule of thumb here) * 49 = 1,323 BTUS/hr
Total Heat Load for this building is the two together
12,750.98 BTUs/hr + 1,323 BTUs/hr = 14,073.98/hr of heating.
So based on this calculation, your miner should be able to preheat your home through the electricity you are wasting by 36.3% (5,118BTU’s/hr/14,073.98 BTUS/hr) if you heated your home for 24 hours a day, which isn’t usually the case as we set our temp to be cooler at night, so this number would be higher.
What else could we do?
Let’s water cool these GPU’s, add a pump and use it to heat up some water:
Your 50 gallon new .90 EF energy star water heater uses about 13.37 kWh/day to heat your water, and if we watercooled our miners GPUs, we could preheat our hot water tank. But how much would that save you?
Our GPU miner uses 36 KWh/day, so we could fully use up all of the energy the tank needs, 36 kWh/day / 13.37kWh/day = 2.69 times more energy than your tank needs, so you could easily upgrade your tank, how big could you go?
50 gallons / 13.37 kWh = 3.74 gallons/kWh, so 36 kWh would give us the ability to heat a large 135 gallon tank to 120F.
This would save you around $500/yr for the 50 gallon and about $1,318/yr for the larger tank @ 100% efficiency, so more like $400 and $1,054 respectively.
Would this pay off? Let’s check the math.
GPU coolers @ $50/ea = $300
PEX pipe and Copper at heat exchanger = $300
Flat plate heat exchanger = $150
Ball valves = $20
4 GPM grunfos pump = $200
Tank optional = $600
Total cost = $970 – $1500
So this investment would pay off in about 1.5-2.5 years, but if you have bigger machines, this would be well worth the investment because of the next item on the list.
Thermal Adsorption Cooling or Heat Pump Augmentation:
Did you know that you can cool your home with heat? Yup, you sure can, you just need a lot of heat and the investment in adsorption can be fairly expensive and large tank or water, or you can boost your existing heat pump system to increase the COP. This is done by taking the heat that is generated from the miners, heating up the hot water and storing it in a storage tank, from the storage tank water would be recirculated to an evaporator that would cook a low temperature boiling fluid such as methanol, ammonia or a commercial coolant to cause expansion of the fluid, it would then be compressed and then rapidly decompressed to cool the air around the expansion chambers heat exchanger.
For more information on these, check out how solar thermal systems utilize this as it would be nearly the same temperature of the water. Cites below:
SO HOW CAN I INCREASE BITCOIN PROFITABILITY AND DECREASE MY CARBON FOOTPRINT
Renewable Energy baby! Solar in particular would be helpful as many of you can install solar relatively cheap and easy. All of this analysis can be done with any renewable energy, but I will stick with Solar PV as it is the easiest to implement.
How this would work is you would have your Solar PV system mounted to your roof or garage and it would transmit the power to your breaker box and into the circuits of your home. 98% of the installation would be grid tied, so the power company would provide a credit to you for any over production you would be using at your home with the solar energy.
So for our example 6 GPU miner, how much energy would we need? This is a bigger question that I will answer later in the “How do I design my solar system” article and video series, but here in Portland, OR, a big one. Let’s do the math!
You have a unit that uses 36kWh/day, there are 4 peak sun hours that makes up 1000kWh/day of solar energy irradiance, so that breaks down to a 9 kW solar system just for your miner. This miner has an install cost of $3-5 a watt, so let’s split the difference at $4, so that would be $36,000 for the solar, utilizing our Federal ITC tax credit and two incentives that we have from Oregon and the Energy trust we see the following:
Energy Trust of Oregon – $6000
Oregon Dept of Energy – $6000 ($1500 over 4 years)
$36,000 – $12,000 = $24,000 then we get to apply our 30% ITC, which would give you another $7,200, so the total cost to you is $16,800.
To find out when you would pay your system off you would take your electricity savings that year and divide it into the price you have to pay. For this example it would be $16,800 total / $1,314 of electricity savings = 12.78 yrs based off the electricity, but this is silly, you would just use your profits to pay this off right? Based on the increase in difficulty you should do this the first year.
This is the best of both worlds for a former IT guy like me, I can geek out on my tech, make some passive income and do it sustainably with my solar system and the economics just get better by me doing my part. Personally I think that if you are going to do this kind of mining it is the only responsible way to do it. I understand that you may not have the money to front at the beginning, but with your profit, you should be able to stock away for this sweet system and if you implement your heating co-generation, you can save money and optimize your units (possibly overclocking them) with thermal cooling options.
I have created a spreadsheet to help you navigate the different types of coins and made it easy to see the winners and the losers. It is posted below.
I hope that this guide was helpful to you my friends, and as always we hope that you are learning to live free each and every day!