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A guide to help you decide if you should start mining Bitcoin and what you need to do to get started.

What Do You Need To Start Crypto Mining

What Do You Need To Start Crypto Mining

Competition in the mining industry is fierce and there are many variables to consider when choosing mining equipment and setting up your facility.

How To Start Mining Bitcoin: A Step By Step Guide.

This guide is for anyone new to mining. Whether you’re looking for me from home to make some money or as a hobby, we’ll tell you everything you need to know so you can start mining bitcoin as soon as possible.

Profit is the biggest incentive to engage in mining. Simply put, if your cost of mining 1 BTC is lower than the current BTC price, mining allows you to accumulate BTC at a discount. In other words, if the current Bitcoin price is $20,000 and you mine 1 Bitcoin for a total of $15,000, you have a 25% profit margin. This is actually equivalent to buying Bitcoin at 25% below market value.

Of course, you have to make money in this industry. As of this writing, daily earnings for miners have exceeded $18.8 million, making it approximately $6.87 billion annually. The industry is incredibly competitive, and it can be difficult to cut a portion of your income.

Why is this important? Buying cryptocurrencies through an exchange usually requires you to provide your identity in accordance with Know Your Customer rules. This exposes your Bitcoin to tax liabilities, confiscation if held in a custody service, and being barred from using other regulated services. If you mine BTC directly, it has nothing to do with your identity.

What Is Crypto Mining? How Cryptocurrency Mining Works

Also, if you are an engineer or want to better understand this important aspect of Bitcoin, another reason to get into cryptocurrency mining is as a hobby. As we will discuss later, there are many variables that create interesting challenges in any mining operation.

Mining, however small, has a noble cause. By mining, you contribute to the decentralization of Bitcoin – the fundamental tenant that revolutionizes BTC.

Whether you’re mining for money, a new hobby, or contributing to Bitcoin’s decentralization, mining isn’t easy. Whatever your reason, this guide will walk you through the entire process.

What Do You Need To Start Crypto Mining

Don’t think you can make a business out of just downloading some software and mining. Those days are over.

How To Start Bitcoin Mining?

However, that doesn’t mean you can’t make money. Conversely, this means that without something competitive, such as access to very cheap electricity or a way to buy ASICs (computers made specifically for mining) cheaply, it will be very difficult to create a sustainable business.

As you can see, electricity price and hardware (ASIC) costs are the two main variables of mining profitability. Buying an ASIC is a capital expenditure (CAPEX), which means you pay the price

You start mining and use your profits to earn a return on that investment over time. When looking at the daily profitability of mining, it is important to consider how long it will take to pay off the CAPEX of setting up that operation. This is commonly referred to as “Purification Day”. For example, if you buy an ASIC for $1000 and earn an average of $10 per day, your profit is divided by 1000, which is 100 days.

Meanwhile, your main operating expense (OPEX) is the electricity to run the ASICs. The cheaper your electricity, the faster you can pay off CAPEX and make real profit. Today, most miners pay between $0.03 – $0.06/kWh (kiloWh) for electricity, with some exceptions on both sides of the spectrum. If you can’t find electricity in this price range, it’s hard for me to make a profit in the long run.

Free Btc Mining Websites Of 2023 You Can’t Miss

Before we continue, there is one more nuance to clarify about electricity prices. They can be given in one of two ways:

If you host your ASICs in a third mining facility (more on that in the next section), you’ll pay more than $0.06/kWh in total. Because as a miner, you don’t have to pay for the infrastructure and basic management of the mining facility, so these externalities are factored into your plan.

Anticipating how much profit you can make from mining before investing time and money can dramatically change your experience. As we mentioned above, home mining is mainly done as a hobby and some money should be made as a small bonus.

What Do You Need To Start Crypto Mining

That said, let’s discuss how to start making the most money from mining.

Earn Crypto From Cloud Mining With Binance Pool

Before deciding which ASIC miner to buy, you need to determine if you have the environment for mining. It includes 4 main requirements:

In fact, running miners at home is a challenge and requires a lot of setup for most people. It’s not as simple as plug and play. So, if you want to start mining, you should keep these factors in mind.

Another option is to buy your miners and find an industrial place for them to live. There are many hosting places around the world where you can get better price electricity than regular hosting. If you need more than 1 or 2 ASICs, we recommend considering this as an option. A good resource for finding a hosting provider in your area is Compass Mining: https://compass.hashr8.com/. Or, if you decide to buy Bitcoin instead of mining, we recommend that you do some research before doing that either.

Once you decide to become a miner, the first decision you need to make is whether to mine with ASIC or ASIC. We will analyze all the factors that need to be taken into account to make this decision.

How To Start Investing In Crypto, Bitcoin Or Ethereum By Mining At Nicehash?

As with most things, you can save a lot of money here by buying used ASICs rather than new. For example, 2020 generation miners typically sell for between $3,000 and $4,000 each – a great investment if you’re mining on a small scale, whether from home or a hosted facility.

Fortunately, there is a growing market for used miners. However, they are not easily found online. Instead, they often take place in Telegram groups or other social media. You should also be aware that these secondary markets for miners may contain scammers, so it is recommended to buy only from strictly verified sellers.

You should look for machines that depend on your risk appetite and environmental factors.

What Do You Need To Start Crypto Mining

Ultimately, these factors add up to determine the cost of production. We have a calculator that shows this cost per my 1 BTC for every popular ASIC on the market with current BTC price and difficulty. For example, here is the cost of mining 1 Bitcoin in 2020 with the very popular ASIC Whatsminer M20S.

The Cost Of Mining Bitcoin In 198 Different Countries

You can see that the price ($19k) and difficulty (18.67T) at the time of writing this article requires the electricity price to be below $0.118/kWh to make a daily profit from mining. At an electricity price of $0.06/kWh, you can make more than $9.5k in margin for each BTC mined! This equates to buying Bitcoin at a ~50% discount. But be careful! You should also consider the purchase price of the treasure.

For example, if you pay $800 for Whatsminer M20S with $4.8 daily earnings, it will take you 167 days. If your margin shrinks during that time, it will take longer. And, of course, if there is no profit after you pay the electricity bills, the residual value of the ASIC will be a loss.

Currently, the miners produced by Bitmain and MicroBT outperform other competitors in terms of hash speed, efficiency and reliability. Bitmain’s Antminer S9 is the most reliable ASIC to date, and many are still working after the original version was released in 2016. However, the lead engineer who developed the S9 later worked for MicroBT and helped develop the Whatsminer M20S. Widely recognized as the next most reliable ASIC model in the long run.

There are other manufacturers like Canaan, Innosilicon and Ebang. However, they are considered lower quality than Bitmain and MicroBT, so if you see these devices being sold cheaply on the secondary market, keep your hopes in check.

How To Start Mining Cryptocurrency: A Beginner’s Guide

Many other models are available and may be more suitable for your operations. See this chart to compare miners on the market.

Mining pools are an important part of the modern cryptocurrency mining business. That is why they are called “pools”.

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