Mining as a business??

[ssnova]

I did some searches and couldn't find anything directly related to what I was looking for...

But any how, anyone set up their mining activities to be a business?  I'm coming from the US perspective... like, buying the equipment, renting an office, running the machines, registering as a business, etc.

It was just an idea, but basically the difference between a hobby miner and someone who actually wants to turn it into a small business, etc.

Any thoughts?  Any experience?

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[tobacco123]

At the moment, it is not a viable business opportunity, unless you have millions of dollars to start big. However, as the most advanced technologies are being used to manufacture the ASIC miners, the jumps in hashing power (for a given power consumption) is starting to slow down.

For example, in 2013-2014, for the same amount of energy spent, you can have 5-10x more hashing power if you wait a little longer, because more efficient miners are being made. That was the time when the ASIC manufacturer will "delay" the delivery of their products as they can use them to generate bitcoin for themselves.

[n0ne]

Mining can be made as an good business profiting big, but it needs a very big investment even for a small scale mining farm. Profitability depends upon the electricity consumption charge provided by the government​. In the past Venezuela served as a good region to profit big, but now the economic fall has caused a severe fall in mining process.

[gwestcot]

At the moment, it is not a viable business opportunity, unless you have millions of dollars to start big. However, as the most advanced technologies are being used to manufacture the ASIC miners, the jumps in hashing power (for a given power consumption) is starting to slow down.

For example, in 2013-2014, for the same amount of energy spent, you can have 5-10x more hashing power if you wait a little longer, because more efficient miners are being made. That was the time when the ASIC manufacturer will "delay" the delivery of their products as they can use them to generate bitcoin for themselves.

This is why GPU mining is so much better than ASIC! 

[mattermaster]

Mining bitcoins as a business can be very expensive at initial. Before involving yourself in this field, you should calculate how much electricity does your farm or miner consume.
This helps you to comprehend, collate your provisions of profits from your miner.

[nydiacaskey01]

If you have access to free electricity or at least low electricity then that's a good start already. The problem that everyone in the mining business is the cost of electricity, next is man power of course you can't man your business alone 24/7 and going back to electricity cost its not only the mining rigs that will need electricity, you also need to cool down your mining rigs unless you live in a place with cold weather.

[Bitweasil]

There are several important questions to ask at this point in time, for this question:

1. Are you a chip foundry, or do you have close ties to a chip foundry such that you can get ASICs at ~fabrication cost?  And do you have access to smart people who can design a more efficient SHA256 engine?  The first is much more important than the second.

2. Do you have access to megawatts of power at industrial pricing?  You're a perfect customer for megawatts of power - you have a totally constant demand, and can sign up for all the load shifting/peak shaving programs, as long as they're more profitable than your hardware, because there is literally no harm in reducing power consumption on demand.

3. Do you have access to some way of dumping a few megawatts of heat without paying anything (or pretty close) for cooling?  Ambient air exchange in a cold area with cheap power is probably the best option, though the throttling of ASICs in hotter temperatures (100+C ambient) is probably cheaper than paying cooling for that hardware.

If you can safely answer "Yes" to all 3, absolutely.  Go at it.  But you wouldn't be asking here.

If not?  Well, good luck.  You probably won't make money, but the tax writeoffs from the losses could be useful.

[Amph]

one huge difference is probably that with a business you are obliged to declare your income to the IRS if you are in the USA, with casual mining not so much

i don't think they will ever check a random dude running a single antminer s9 in his mommy basement...

the other is releated to the cost and a proper place to run the miner with proper cooling solution, there is a huge investment to do with the business way

[Taylorw]

I believe that very simple but accurate calculations are realy necessary to answer the profitability question   

[coolcoinz]

It's not worth your time. All the paperwork, hiring staff, security, converting a location into a data center...
If you go completely legal with it, business style, you won't make much. Profits from mining aren't that high if the price stays in the same range, most of the profits usually come from the increased value of your coins. That's why in 2014 miners got in trouble, because the price was much lower than the cost of mining. If you have a small operation in your backyard you can sit and wait, but if you have to pay your employees and the price stays low for a year or 2, then you're in trouble.

[gwestcot]

It's not worth your time. All the paperwork, hiring staff, security, converting a location into a data center...
If you go completely legal with it, business style, you won't make much. Profits from mining aren't that high if the price stays in the same range, most of the profits usually come from the increased value of your coins. That's why in 2014 miners got in trouble, because the price was much lower than the cost of mining. If you have a small operation in your backyard you can sit and wait, but if you have to pay your employees and the price stays low for a year or 2, then you're in trouble.

Well I don't exactly agree with this in the largest sense. You can run a small warehouse by yourself very easily since the average ratio in a data center is 1 employee per about 100 servers. If you take this ratio and convert it to miners then you can run about 100 gpu rigs without needing any help at all. Cooling costs are about 50% of the electricity that the miners use and even when you add liability insurance, property insurance, water, rent, etc. At my electricity rates, which is .11 kwh, mining with 100 gtx 1070 rigs would net you around 40k a month mining Zcash before having to pay back a business loan. The loan payment, by my estimation, would be around 10k for a 5 year business loan. Obviously you would still have to pay taxes and any capital gains but the margins are definitely still there to support all the expenses. This is all extremely speculative but there is still a huge profit to be made but just not in anything that is mined with ASICS. I am basing my numbers here around my plan to open up my own small mining operation which will initially consist of 20 rigs. I did extensive research on how true data center infrastructure is configured and not simply a bunch of fans moving hot air around. I will say it is ideal to do this in a place like Canada or the state of Washington/Idaho because of the ease of cooling and the low electricity rates.

[QuintLeo]

At the moment, it is not a viable business opportunity, unless you have millions of dollars to start big.

 It's ENTIRELY practical to set it up as a profitable business on a LOT less than "millions" - just not HUGE scale, and you have to mind the costs a bit closer than the big-scale folks can get away with.

 $100k would be PLENTY to start up a small professional mining farm BUSINESS - I'm pretty sure I've got less than HALF that invested INCLUDING reinvestment of a lot of my mining income for the 4 years or so I mined "as a hobby".


 Cooling costs had better be a LOT less than 50% of your electric use - you can do mechanical air conditioning for less than that, and THAT makes costs quite a bit too high to be truely competative.
 If you're putting much more than 10% of your electric usage into cooling, you need to rethink your cooling setup.

 Don't count on getting a business loan though, Cryptocoin mining is a LOT too speculative for most banks to even think about dealing with.


 For a small farm, you don't NEED staff.

 Water usage should be very small, unless you are using evaporative cooling - then it's STILL pretty small.

 Idaho electric rates aren't all THAT low - for low electric rates in the USA, you're looking at 3 specific counties in Central Washington state.
 Idaho might be a good bit less than 11 cents/KWH in areas it's got hydropower access though - but it's certainly not in the 3 cent ballpark.

[gwestcot]

At the moment, it is not a viable business opportunity, unless you have millions of dollars to start big.

 It's ENTIRELY practical to set it up as a profitable business on a LOT less than "millions" - just not HUGE scale, and you have to mind the costs a bit closer than the big-scale folks can get away with.

 $100k would be PLENTY to start up a small professional mining farm BUSINESS - I'm pretty sure I've got less than HALF that invested INCLUDING reinvestment of a lot of my mining income for the 4 years or so I mined "as a hobby".


 Cooling costs had better be a LOT less than 50% of your electric use - you can do mechanical air conditioning for less than that, and THAT makes costs quite a bit too high to be truely competative.
 If you're putting much more than 10% of your electric usage into cooling, you need to rethink your cooling setup.

 Don't count on getting a business loan though, Cryptocoin mining is a LOT too speculative for most banks to even think about dealing with.


 For a small farm, you don't NEED staff.

 Water usage should be very small, unless you are using evaporative cooling - then it's STILL pretty small.

 Idaho electric rates aren't all THAT low - for low electric rates in the USA, you're looking at 3 specific counties in Central Washington state.
 Idaho might be a good bit less than 11 cents/KWH in areas it's got hydropower access though - but it's certainly not in the 3 cent ballpark.

1. No, For true cooling costs it will be around 50% and that is for CRAC units that are specifically designed to maintain temperature and humidity for data centers. Sure you can set up some fans and try to cool with ambient temperature but I don't think this is sustainable for long term growth of the mine. (This of course depends on if you live in Iceland or Canada)

2. I will generally agree with this point other than people have gotten financing from both government backed loans and also banks. It will be difficult but it is not impossible. In addition, there are other funding sources besides traditional banks.

3. I definitely agree! You only need 1 per 100 rigs on average or maybe if you are stretching yourself maybe double that.

4. https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a
Idaho, as of Feb 2017, is literally one of the cheapest states in the entire country in regards to commercial electricity rates. I simply was talking generally about a state but yes if there is a hydroelectric dam then the rates could be around .03-.05 per kwh. The thing I found funny and surprising was Virginia is very cheap for commercial electricity rates.   

[Bitweasil]

1. No, For true cooling costs it will be around 50% and that is for CRAC units that are specifically designed to maintain temperature and humidity for data centers. Sure you can set up some fans and try to cool with ambient temperature but I don't think this is sustainable for long term growth of the mine. (This of course depends on if you live in Iceland or Canada)

There's no reason to use mechanical cooling for something that can be throttled by error rate and be radically cheaper to cool with ambient air exchange.  Just filter the incoming air.

4. https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a
Idaho, as of Feb 2017, is literally one of the cheapest states in the entire country in regards to commercial electricity rates. I simply was talking generally about a state but yes if there is a hydroelectric dam then the rates could be around .03-.05 per kwh. The thing I found funny and surprising was Virginia is very cheap for commercial electricity rates.   

State level granularity doesn't cover the nuance needed.  Idaho, as a state, has cheap power.

Several counties in central Washington have the cheapest power in the nation.  Washington State, as a whole, has expensive power over in the Seattle metro area.

And if you're serious about a mining business, you already know what those counties are.

[gwestcot]

I do know which counties these are of course since I have done a ridiculous amount of research but I also know that these areas are now trying to raise their commercial rates because of the influx of data centers and mining farms that have gone there. Idaho is pretty darn cheap in certain areas and Nevada also has places with .04 kwh commercial rates. There is most definitely other places with cheap electricity but I supposed Washington is far easier to cool. In regards to Bitcoin mining you are largely correct but GPU mining is far more profitable these days so higher electricity costs are not a big deal. I will also say that many GPU rigs have a lower wattage pull than the S9's that most people mine BTC with. Basically, my GPU rigs mine for double the profit and require about 25% less electricity per rig while maybe costing only a few hundred dollars more. ROI on GPU rigs is far better than any ASIC and you can always convert to BTC later if you trust the currency more. GPU's>ASICS any day of the week.

[Sweminer777]

bitcoin train has already left. chuuu chuuuu

[QuintLeo]

Several counties in central Washington have the cheapest power in the nation.  Washington State, as a whole, has expensive power over in the Seattle metro area.

And if you're serious about a mining business, you already know what those counties are.

 3 counties, to be specific - but only 2 for smaller mining setups, the third you have to get to the 200 KWH level to get to a competative rate with the SMALL BUSINESS rate for the other 2.

 And as it happens, I relocated to one of those counties last summer....

[philipma1957]

As I type GPU is beter then BTC mining  if you are usa located.

I pushed this concept for about 13 months  and it has come to full bloom at the moment.

So  yes 100 zotac  mini nvidia 1070 cards will do  40000 sols of zcash 

gross net of 8125 usd per month

100 cards can be had for 35000 usd

six card rigs 
would mean 17 of them   roughly 4000

some racks and you are  setup with 40000 usd in

you would use  14 kwatts  about 10500 kwatts per month.

so at 10 cent power 1050 power bill.

net  8125 - 1050 = 7075  which means all gear should  be paid off in six months  if you have warehouse/barn/free space.

not many businesses  that good.  of course renting a space   means $$$  but   a  commercial space   means better power cost.

no btc deal on earth offers this anymore.

[Qartersa]

I did some searches and couldn't find anything directly related to what I was looking for...

But any how, anyone set up their mining activities to be a business?  I'm coming from the US perspective... like, buying the equipment, renting an office, running the machines, registering as a business, etc.

It was just an idea, but basically the difference between a hobby miner and someone who actually wants to turn it into a small business, etc.

Any thoughts?  Any experience?

Hi!

I did read a lot of Bitcoin mining too. Well, it is a lucrative business for now because a lot of people are going into the Bitcoin world. However, the situation remains volatile as there might be new developments coming. So my advise is to not open an office yet and just remain steadfast in learning and practicing Bitcoin mining in the comfort of your own home until you are quite certain about where it will lead you. That way, you are able to save capital and operating expenses, and as well as overhead costs. 

I hope it helps!

[gwestcot]

I think that you could diversify by maybe getting a few S9's, a few L3+'s, and of course some AMD and Nvidia miners. This would allow you to diversify your mining efforts which would overall increase the safety of your operations since you arent overly reliant on any one particular coin. This kind of method would be conservative and potentially very lucrative depending on the setup.