- Adam Gitzes started mining bitcoin remotely this year and is making around $ 190 a day.
- His passion for bitcoin and remote mining helped him land a full time position at Compass Mining.
- He shares why now is the time to start mining bitcoin and his tips for success.
- See more stories on the Insider business page.
Adam gitzes reached a point in his life where he finally got enough excess savings to invest in a passive income stream. He was ready to put around $ 50,000 in a laundromat when he came across remote bitcoin mining.
As a major bitcoin bull, Gitzes had been investing in the asset since 2017. He had wanted to participate in the process of mining the network for years, but always found it difficult to settle in a domestic environment.
“I started to shift all of my bitcoin investments around 2018,” Gitzes said. “I went down the dive and all the way back up, and it was pretty great.”
Gitzes half-heartedly tried to build a mining setup in 2017 and 2018 with little success. He tried again earlier this year by taking an online tutorial from Econoalchemist, but the noise and excessive heat from the facility was too much for his family.
Remote bitcoin mining solves many of these issues, as a customer’s mining hardware is hosted and maintained in verified external facilities. So instead of investing in a laundromat, Gitzes bet on Compass Mining’s remote services.
“I was a little scared, to be honest, but everything went well,” Gitzes said.
In fact, it more than worked.
In addition to receiving excess bitcoin, Gitzes also got a career change as a manager of analysts and data scientists within Amazon’s adtech organization to become a product manager at Compass a few months after the beginning of its mining journey.
What is bitcoin mining?
Bitcoin mining involves using powerful computers to keep the network secure and up to date. In return, the miners are paid in bitcoin.
Bitcoin operates the Proof of Work algorithm, a process for validating transactions and extracting new tokens that is slow and uses huge amounts of energy. This mechanism is peer-to-peer, which ensures that the currency is fully decentralized with no single authority verifying the transactions.
However, since there is a cap on the number of Bitcoin that can be mined, mining becomes more difficult and requires more energy over time.
The energy intensity, excess heat and technology required for mining make home installation difficult.
Remote mining with rigs like Compass removes some of these obstacles.
2 reasons to get started in mining
The industrialization of the crypto mining industry in recent years has deterred many from entering space. Gitzes, however, now believes there are opportunities. He decided to enter when the price of bitcoin rose from September 2020 to January of this year.
“The price of bitcoin appreciated [around] 500%, “Gitzes said.” But the difficulty of mining bitcoin only changed significantly by 30%, which meant there was a very good opportunity to get into mining. “
To begin with, Gitzes bought two bitcoin machines and slowly began to feel comfortable getting back at least the bitcoin he spent on the machines, as well as a slight increase in the amount over the lifetime of the machine. its minors.
When the Chinese government imposed stricter regulations on crypto miners in the region, most Chinese miners were forced to go offline. As a result, Gitzes felt even more comfortable in his ability to get excess bitcoin, as estimates suggest Chinese miners made up around 75% of the world’s mining power.
“It was very clear that I would get excess bitcoin by buying these miners only if I had just bought bitcoin and it was very good,” Gitzes said.
Now is a great time to work in mining, Gitzes said, for two reasons:
- Reduced difficulty rate with offline miners. As the difficulty rate increases, the amount of bitcoin mined will decrease.
- Chinese miners have to find new facilities, but there is already a shortage in the market, Gitzes said.
“In my opinion, it will take some time for the hash rate to return to its current level due to the lack of hosting around the world,” Gitzes said.
What are the average earnings?
Gitzes now operates six machines while still working as an employee at Compass. He rates his success with mining in terms of total bitcoin rather than monthly profits.
He spent 1.1 bitcoin on the six miners, or roughly $ 60,000, and they are currently generating up to 0.0048 bitcoin ($ 220) per day after mining fees are deducted, according to screenshots from the pools. mining sites viewed by Insider. The average daily energy cost across the six machines is $ 30, leaving Gitzes with a profit of $ 190.
The amount of bitcoins earned daily will adjust based on changes in difficulty. Assuming there are few fluctuations in energy costs and bitcoin prices, Gitzes will earn around $ 5,890 this month. He expects to reach equilibrium in about 250 days, maybe even less.
“I bought pretty much everything when bitcoin was at $ 60,000, which wasn’t great, but I was still using bitcoin, so it didn’t matter,” Gitzes said. “My investment thesis is that bitcoin will be very, very valuable and I thought that would be a good way to get more bitcoin, which seems correct.”
As Gitzes buys his machines in bitcoin, he tries to buy when bitcoin prices rise but before the machine’s dollar value changes. It is a way to reduce its cost in bitcoins, he added.
The only other cost he has to think about is energy. There is “virtually no” daily work for remote miners, as the Compass support team typically handles any maintenance or failure that occurs at the facilities.
For the most part, miners will want to focus on the difficulty of bitcoin, said Gitzes, which changes every two weeks. This is when the bitcoin network resets how hard it is for miners to mine. On August 13, the bitcoin network made it 7% harder to resolve a block, the first significant increase since Chinese miners went offline.
Gitzes recommended that Bitrawr follow the next expected difficulty change.
Another challenge for miners is the release of new technologies and their significant impact on existing machines.
“We’re reaching an efficiency gains asymptote, so the next machines that come out will be more efficient and better than the existing high-end machines, but they won’t be like they’re blowing anything out of the water. , “Gitzes said. “I expect my machines to be online and profitable at least until the next halving.”
Gitzes not only sees remote mining as a good investment strategy, but also as a way to combat centralization of mining and strengthen the network.