April 9, 2020
by Daniel Frumkin, Researcher and Technical Writer at Braiins/Slush Pool
If you started mining in Bitcoin in 2009 or 2010, all you had to do was download some software on your laptop or desktop and let it run. With 50 BTC being mined every 10 minutes and very little competition, early miners who managed to not lose or sell their coins became millionaires as Bitcoin’s price appreciated.
Running bitcoin
— halfin (@halfin) January 11, 2009
These days, mining Bitcoin is not so simple. In fact, it has become an ultra-competitive industry with thousands of participants spread across the globe. Whether you’re already mining or you’re thinking about how to get started, you’ll need to know the ins and outs of the business in order to stand a chance of being profitable long-term.
In this article, we’ll tell you the two most important factors to consider in determining whether mining is a viable business opportunity for you. Then we’ll share a couple of increasingly popular methods for boosting your profit margins that are accessible to just about everyone, regardless of location. And finally, we’ll leave you with a key insight about why mining is such an important and worthwhile pursuit.
Finding cheap electricity
Bitcoin mining is built on the concept of proof of work. If you understand this, then you know that the most important factor in your mining profitability is the price you pay for electricity. This is because mining is ultimately nothing more than performing trillions of simple computations, each of which consumes a little bit of electricity. When you add all the computations together, they end up consuming a substantial amount of power.
So, what is a good electricity price for mining Bitcoin? Well, obviously the cheaper the better. But when it comes to specific amounts, the average paid by profitable miners today is between $0.04 – $0.06 per kWh. However, large miners who run thousands of machines can typically get even cheaper prices — sometimes as low as $0.01 per kWh (although this is very rare).
It’s important for you to know how much electricity you can access and at what price. If you can find power for less than $0.06 per kWh, you may be in business.
Buying the right hardware (ASICs)
Along the same lines as electricity cost, the other critical factor you must consider is the efficiency of the mining machines themselves. In other words, how many computations can your machines perform for each Joule of power they consume? (Keep in mind, 1 Watt = 1 Joule per second).
This is where innovation in hardware comes into play. Since 2013, Bitcoin mining has been done by special machines called ASICs (application-specific integrated circuits), which are designed to do only one thing: hash computations. By designing hardware that has just one purpose, it’s possible to maximize the efficiency with which it can perform that purpose. As a result, mining Bitcoin with regular computers or even GPU’s is no longer competitive.
Nowadays, advances in ASIC manufacturing have led to a new generation of hardware with impressive efficiency:
- Whatsminer M30s with efficiency of 38 J/TH
- Bitmain S17 with efficiency of 40 J/TH
- Innosilicon T3+ with efficiency of 42 J/TH
For comparison, the most popular ASIC in history is the Antminer S9 by Bitmain, many of which are still mining profitably today. However, these machines consume about 98 J/TH, making them less than 50% as efficient as the new generation ASICs listed above. In other words, every computation costs more than twice as much with an S9 as with one of the new-generation machines.
Takeaway: You can make up for using less efficient hardware like S9s if you have super cheap electricity ($0.01 – $0.03 per kWh). Inversely, you can make up for more expensive electricity (> $0.05 per kWh) if you have the newest, most efficient hardware.
Maximizing performance with autotuning
Fortunately, cheap electricity and new hardware aren’t the only ways to gain an edge in the mining business. Another increasingly common area for optimization is with the software running on the mining machines.
Specifically, it’s possible to achieve a performance boost for ASICs using autotuning, increasing the hash rate produced per Watt of power consumption.
This is the process by which every hashing chip in the mining machine is individually calibrated to get the best performance. It’s possible because silicon is not perfectly uniform, so every chip is a bit different and some chips can perform better than the baseline settings they have when shipped out of the factory (because no hardware manufacturers support autotuning in their stock firmware).
Autotuning is especially useful for miners with older hardware such as S9s because it can extend their profitable lifespan by several months. For example, an autotuning firmware called Braiins OS+ can increase the hash rate of S9s up to 17+Th/s. Alternatively, miners who want to maximize efficiency can use the Braiins OS+ Low Power Mode to bring power consumption as low as 65 J/TH in ideal conditions.
This means that the margin on S9s can be improved by 20-30%, effectively keeping them competitive when they would otherwise be losing money.
Autotune S9s & get 50% ????? ???? ????
• ???????? ???????? up to 30%
• Low power mode = max efficiency
• Stratum V2 implementationhttps://t.co/u3o6aVHA8H— Slush Pool⛏(#BraiinsOS+)? (@slush_pool) March 31, 2020
Another key aspect of the Braiins OS+ offering is that it’s the first autotuning firmware to be released by a major mining pool, Slush Pool. Many know Slush Pool as the original mining pool founded in 2010, but it’s less common knowledge that the pool is run by Braiins, who also develop firmware. Slush Pool typically charges a 2% flat fee to miners, but Braiins OS+ users will get 50% lower pool fees if they mine with Slush Pool.
Perhaps most importantly of all, autotuning firmware typically has no up-front fees and only charges a percentage of the total hash rate over time. With that being the case, there’s no reason to not use autotuning firmware as long as the performance boost is greater than the fees.
Immersion cooling and airflow management
One more consideration that shouldn’t be overlooked is how to keep your mining machines cool. With so much power being consumed, miners output a significant amount of heat. In fact, ASICs are already being used to heat greenhouses, garages, and industrial buildings around the world.
The important point about this heat production is that silicon can’t operate at high temperatures, which means that ASICs need to be kept cool. This is the case even in regular data centers with servers that don’t mine Bitcoin, so you can imagine how critical it is in large Bitcoin mining farms where the power consumption is far greater than an ordinary data center.
A creative solution to the overheating problem is something known as immersion cooling. ASICs can be placed into containers full of mineral oil that doesn’t heat nearly as quickly as ambient air. By simply circulating this liquid, the machines can be kept cool without having to spend a small fortune on powerful air conditioning units and elaborate air flow management setups.
Not insignificantly, immersion cooling has the added bonus of muting the sound made by ASICs. Even running a couple machines is enough to produce 100 decibels of noise, which can cause hearing damage at more than 15 minutes of exposure, so keeping them quiet is a nice bonus. On top of that, combining immersion cooling with autotuning can produce even better results than advertised.
There are dozens of companies competing to offer immersion cooling containers, so this looks to be a viable solution for miners around the world in the years ahead.
Think Long-Term
Mining is one of the most valuable ways for anybody to participate in the Bitcoin ecosystem. Whether you’re running a single ASIC to heat your garage or operating a massive mining farm in some remote location, you contribute to Bitcoin’s consensus and help keep it decentralized.
At the same time, mining provides a steady income of BTC, so it’s a great way to “invest” with a strategy similar to just buying on a consistent basis. The key difference with mining being that you earn “virgin coins” — i.e. bitcoins that are newly mined and don’t have a history, making it possible to sell them for a premium as they won’t be associated with any crimes through chain analysis.
So if stacking some premium sats and contributing your part to Bitcoin’s consensus sounds good to you, then go find some blocks!