7 lessons learned from building and scaling Bitcoin mining operations

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It began with mining Bitcoin (BTC) in a dorm room. What began as a pastime with just a few mining rigs scaled into twenty industry-scale mining farms throughout the globe. As a result of we scaled our operations in a brand new {industry}, we needed to uncover what labored and what didn’t by means of trial and error — as a result of there’s no handbook for this.

Constructing a multi-site, scaled operation like ours isn’t simple, however should you’re trying to begin your mining operations, scale what you’ve, or put money into a mining firm, listed below are the seven largest classes we discovered that can assist you navigate your subsequent strikes.

Associated: How to mine Bitcoin: A beginners guide to mine BTC

Lesson 1: It takes (plenty of) cash to become profitable

There was a time when you possibly can mine Bitcoin from a laptop computer, or arrange some mining rigs in your room and mine, profitably. However as soon as extra miners created extra competitors and people who wished to remain worthwhile needed to scale their operations.

Quickly a pastime miner could not sustain with mining in a dorm room however wanted a warehouse — or warehouses — stuffed with mining rigs working day and night time to remain worthwhile. We scaled with the {industry} and bootstrapped our progress as we went, however these wanting to hitch immediately now not have the choice of beginning on the backside and dealing their method up. Meaning investing in capital-intensive initiatives from the get-go.

7 lessons learned from building and scaling Bitcoin mining operations

Lesson 2: Set up long-term relationships

Whereas the Bitcoin mining {industry} has been rising shortly, it is nonetheless very a lot consolidated with only some key gamers holding the ability. For instance, a large-scale mining operation can’t merely simply order new {hardware} from no matter vendor they need.

There are only some distributors supplying {hardware} at this level, and their manufacturing cycles are based mostly on just some chip producers who’re tightly controlling the provision — to not point out that we’re at the moment in a world chip scarcity. Which means that success depends not simply on environment friendly and well-run operations however on constructing relationships within the {industry}, lots of which shall be for the long run.

Lesson 3: Obsess over operational effectivity

Talking of operational effectivity, large-scale miners keep worthwhile after they have the sting over their opponents. This implies optimizing electrical energy, having probably the most up-to-date {hardware}, and never having any downtime or points that will trigger a lack of computing energy.

Make operational effectivity a precedence. For instance, in March 2020, when Bitcoin dropped beneath $4,000, many miners could not survive the uncertainty and volatility, and had been compelled out — but we survived because of our operational effectivity.

Lesson 4: By no means cease innovating

The adage is “innovate or die.” In Bitcoin mining, the place knowledge facilities have to remain highly effective and quick to remain worthwhile, there isn’t any possibility however to maintain innovating. Most significantly, this implies holding your gear up to date and never letting it get out of date. Mining operations have to plan forward to switch gear and time it accurately as {hardware} could also be on backorder for some time. Keep in mind that any kind of downtime will price you.

Innovation additionally means creating higher, extra environment friendly methods to your firm to run, like creating software program packages particularly designed for mining operations administration. On this {industry}, expertise offers you the sting, and even the smallest enchancment will maintain you forward of your competitors.

Lesson 5: Select your location properly

“Location, location, location,” they are saying. Though Bitcoin will be mined wherever, large-scale mining operations want to think about their location when organising store for quite a lot of causes. Not all places will provide the identical sources of electrical energy for a similar costs, so miners want to seek out places that not solely have plentiful, low cost electrical energy however to make sure that that electrical energy is inexperienced and sustainable as nicely.

Associated: Clearing the air: Renewably sourced Bitcoin may ensure a clean energy future

Lastly, go to a location that is encouraging of Bitcoin miners, where you know political winds won’t shift overnight and shut down all operations shall be shut down, like they had been just lately in China and Iran.

7 lessons learned from building and scaling Bitcoin mining operations

Lesson 6: Time is cash

I’ve stated it already, however time actually is cash, and any downtime or lag in computing energy will be expensive. This implies having nice operational management over {hardware} upgrades, a plan for serving mining rigs, and software program that may handle operations effectively. It additionally means getting inventive: In 2015, we knew that having to attend months for mining {hardware} shipments was going to chop into our income. So we rented 747s to get the machines to us faster, which allowed us to generate thousands and thousands in additional income that will’ve been misplaced because of commonplace delivery.

These are the sorts of calculated strikes it’s important to not solely be keen to take however be educated sufficient about your operations to know to take.

Lesson 7: Scale is every thing

Lastly, scale is every thing. I stated earlier than which you can now not begin on the backside and work your method up. The race as an alternative is to be as large as you’ll be able to as a result of scale is immediately correlated with income: The bigger you might be, the extra revenue you make.

Constructing ahead

The time period “larger, higher, quicker” actually does apply to Bitcoin mining, so should you’re not able to strategize, make investments money and time, downside clear up, and take dangers, then one other {industry} could also be for you.

There are various extra classes that we have discovered, and loads of classes that we’ll be taught within the years to return. Right this moment, we’ll proceed to construct this new {industry} that’s already making a way forward for decentralized foreign money and new methods to alternate worth all through the world.

This text doesn’t comprise funding recommendation or suggestions. Each funding and buying and selling transfer includes threat, and readers ought to conduct their very own analysis when making a choice.

The views, ideas and opinions expressed listed below are the creator’s alone and don’t essentially replicate or characterize the views and opinions of Cointelegraph.

Marco Streng is the CEO and a co-founder of Genesis Group and Genesis Mining — one of many largest crypto mining firms on this planet. Previous to co-founding Genesis in 2013 and changing into an impassioned advocate for blockchain expertise and cryptocurrencies, Marco studied arithmetic on the Ludwig-Maximilian College of Munich.