Investing in crypto mining is one way to make money from the industry. However, from other users’ experience, is it a profitable venture? We all know the crypto industry is very lucrative. But it would be naïve to think everyone who invested in the industry made a profit. As such, if you are considering getting into crypto mining, it helps to go into it with the right expectation. In this guide, we will share with you some things to expect based on a 5-year experience investing in a crypto mining farm for Bitcoin, Ethereum, Cardano, Hedera Hashgraph, Litecoin, Dogecoin, Rivian, Hive, Bitfarms, and Cleanspark.
One of the first things you need to have figured out when you want to venture into crypto mining is the facilities. The facilities we’re talking about here are the space and gadgets you need for mining. You need an expert to help build the mining machines as the prices are not cheap and you would want to experiment your way around it. You will have to make many difficult choices along the way, and without the help of an expert, you’d make many mistakes.
For example, in the spring of 2017, investing in 200 S9 miners can generate about $35 per day, which equates to $210k per month, while 200 D3 miners generate $200 per day, which equates to $1.3m per month. While you may think the choice is as easy as going for the one with the most profit, the choice is not that straightforward. But by the summer/fall of 2017, 200 S9 miners were producing $13 per day, which equates to $78k per month, and the 220 D3 miners were producing $5 per day, which equates to $33k per month, a substantial price drop.
Also, it would be best if you were deliberate about the location you use for crypto mining. It’s recommendable to go for a location within the industrial zone, especially if you are going hardcore into mining. For those miners described above, a $200k unit would suffice to house them. While getting a space in such an area might be pricey, it best suits your needs, particularly installing several items you’d need, like fans, transformers, etc. The electricity supply to the facility and aeration are essential factors when investing in a crypto-mining farm.
When investing in crypto mining, be aware that it requires a lot of electricity. While people often think that the amount of electricity a crypto farm needs is often over-emphasized, it’s not. Crypto needs a lot of electricity. And if you are not cautious about how you optimize the crypto farm, the electrical bill can quickly run into thousands. There are cases where due to the amount of electricity a crypto farm needs, their electrical unit got so hot they began to melt things.
For the number of miners above, you need to have a budget of about $300k for electricity. When budgeting for the electrical units, remember that electricity is integral to the farm, and quality is most important. Nothing hurts a business more than investing in a low-quality item only to replace it in less time than expected. So, to ensure you don’t spend twice, you should seek professional help regarding how much electricity is needed to power your crypto farm and what units are ideal for the farm.
Noise is another thing to expect from a crypto farm. Mining machines produce a lot of noise. So, if you want to ensure you don’t get into issues with your neighbors, considering you have one, you should take steps to insulate your building. Leaving no outlet on your building to dampen the noise from the mining machine is not ideal because of the heat. So, as you soundproof the facility, keep in mind you will need to install vents to help optimize the room temperature to what’s ideal for the mining machine.
Soundproofing the building doesn’t necessarily need to be something high-end. A budget of approximately $10k should suffice for the space that will house so many miners. You are not trying to make the building a music studio, so, except you have the budget, you don’t have to have such a high budget. Moreover, you can overall skip this concern depending on your location. But in all, it is an excellent practice to soundproof your crypto mining farm.
Temperature is a significant concern when it comes to crypto farms. Due to the complex computation the machines perform every second; it is bound to generate heat. And considering the farm will have several mining machines working together, the temperature of the building can quickly rise. So, it is essential to have a sound heat management system. If you fail to optimize the building to the right temperature, the mining computers will either be forced to shut down operations pending when their temperature is back to normal, or the excessive heat could damage the computers.
Budget about $100k for ventilation. What most users do to keep the temperature down is install cooling fans. But as you install fans, beware of the type you install as some may be effective at keeping the temperature down, but it could cause your electricity bill to skyrocket. So, you have to be cautious of many things when you want to venture into crypto mining farms.
Finally, the cost is the primary consideration when investing in any business. Aside from the cost of starting a crypto mining farm, you must set aside the proper budget for operation. Examples of the operational cost of running a crypto mining farm include electricity bills, rent if you don’t own the property, repair if anything goes bad, and so on. Automating processes can help to keep down the cost.
Aside from the cost of getting things up and running in a crypto mining farm, you also need to factor in that cryptocurrencies are volatile. As such, it helps to sell daily rather than mine and sell at the end of the month or year. Also, you should be ready to reinvest every 3 or 4 years. So, building a farm is not a one-time thing but a continuous process.
Overall, investing in crypto mining is a profitable venture. With a total investment of about $1.6m, you can build a crypto mining farm to mine the above-mentioned cryptocurrency. But it is only profitable if you do it the right way. Many investors have gone into the crypto mining business, and along the way, they made many mistakes. But as a newbie venturing into this business model, you can learn from their mistakes. For example, do not build out in a bear market; instead, do it in a bull market. Also, you should prepare for the bear market and build out during that time frame. And finally, always make decisions based on data. Data will help set you on the right path, avoid mistakes or second-guess yourself.