The majority of crypto market participants are engaged in two general money-making activities: trading and mining. While everything is more or less clear with trading, mining is still enigmatic. There are a lot of questions: if mining is still profitable in 2019 if there is any space for new miners, what does it actually takes to start a mining business and how it will change your life.
We had the luck to find a miner who agreed to share details about his business, view, and ideas. He preferred to remain anonymous so we decided to give him an alias. Welcome, MiningHero and his mining insights in our fresh and crispy interview!
ChangeHero: Hi! Please tell about yourself a bit.
MiningHero: Hi! I would prefer not to reveal my real name and homeland for security reasons but I can tell you that I am a miner and co-founder of a quite large mining farm. We produce Bitcoin there.
ChangeHero: How did you come to this business? What motivated you to start mining?
MiningHero: Actually I have been running different projects as an entrepreneur with my partners for some time before mining. It was spring 2017 when all the internet started boiling about cryptocurrencies, mining and especially BTC and ETH. We knew about mining long before but never considered it as a serious business. But in 2017, the crypto market started growing extensively and we realized that there were opportunities we could use. So we decided to create the mining enterprise.
ChangeHero: Where is your farm located and why there?
MiningHero: Our farm is placed in Norway. The reason is simple: my partners and I already run another enterprise there so we have experience of running a business in that country.
The government is absolutely neutral about mining. No one bothers the business and no one supports it. But we were lucky to meet the state program of supporting building Data Centers. All data facilities with the power of more than 2MW gain concessions for electricity tariffs. The government removes its tax fees from bills. Since our farm is positioned as a Data Center this works for us as well, so the enterprise entered the program at the end of 2017.
Apart from that, the energy industry in Norway is quite unique. 98% of energy in the country is produced by hydroelectric power stations. Since this kind of station doesn’t need any fuel, electrical energy is the cheapest in Europe.
ChangeHero: Has your business changed a lot from the start?
MiningHero: The business is not changing significantly. We have built the farm and we just keep on working. Mining is a stable process, you just need to provide technical support and pay the bills.
ChangeHero: What problems are you facing today?
MiningHero: The only serious problem we have is that Norwegian banks refuse to process incoming payments from crypto exchanges. Selling crypto is impossible if you are a Norwegian company with an account in a Norwegian bank. But my partners and I are ideological hodlers: we don’t sell our Bitcoin, just accumulate it instead and wait for the right moment to sell and gain extra-high profit. So it’s totally okay for us.
ChangeHero: If you do not withdraw funds from crypto, what makes your business profitable?
MiningHero: I can’t tell how profitable this business is. Mining can’t be separated from trading and investing. Also, it depends on how to count. Let’s say, if we had produced crypto and sold it every day, then yes, it would be very profitable, especially in the first half of 2019. Electricity expenses for mining Bitcoin are paid off several times. Moreover, it’s production price is directly dependent on the market rate. The less it costs the easier to mine it — and the better it’s to us as miners and hodlers. Bitcoin will go extremely high one day and we will gain an outstanding profit from selling our storages.
ChangeHero: Do I get it right that “crypto winter” even gave you favours?
MiningHero: Yes, you are right. We work more efficiently during the winter. The lower the rates are, the fewer miners work, and the more each of them earns. It’s the basics of mining.
ChangeHero: Did mining change your life?
MiningHero: Actually I have several businesses. Mining is not the largest one among them so I can’t say it changed my life abruptly. But it’s still bringing new experiences, fun, people, and knowledge. Since the opening of the farm, I haven’t been taking too much part in the operational management.
But, for example, one of my friends had his life changed in a moment. We have opened our farm in Norway and invited him to work as a technical chief. So he moved to Norway from his origin country with wife and two daughters. They are happy and grateful for such an opportunity.
ChangeHero: What do you think about POS algorithms and do you plan to work with them?
Proof of stake (PoS) is a type of consensus algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus. In PoS-based cryptocurrencies, the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e., the stake). In contrast, the algorithm of proof-of-work-based cryptocurrencies such as bitcoin uses mining; that is, the solving of computationally intensive puzzles to validate transactions and create new blocks.
MiningHero: POS does not directly refer to hardware mining since it requires tokens to confirm not computing power. But I had experience with it in my other business. Honestly, I don’t see too much potential in POS.
ChangeHero: Is there still space for new players on the market like a common person with some private savings?
MiningHero: The space on the market is infinite. New people join every day. There are no limits. Come and mine if we are talking about the mining market.
But, I do not recommend entering mining for an average person. I’d prefer buying Bitcoin with some common algorithms: with fiat money or on exchanges. The Data Center must be big and powerful to be really profitable. I have described this in one of my previous answers. The fewer miners the easier to mine — this will work backwards as well, so the more miners are in the game the more powerful farm you need to gain profit. And a big farm will require very serious technical care: hardware service, electricity, cooling system. I’m not mentioning law regulations because it depends on the country but it may be a serious problem, too. Small farms don’t generate that much revenue to care about.
For example, my farm has 4MW power. It’s the power output of an average factory. It produces 88db of noise which is equal to a jet plane taking off. It also generates a lot of heat that must be absorbed. Holding such a facility is not easy at all.
ChangeHero: How do you see the crypto market today? Are there free niches currently?
MiningHero: Crypto is not a market actually. It’s an ecosystem. Adoption among people is not very high at the moment. When cryptocurrency becomes more popular, adopted and used in everyday life there will be niches. In fact, this system contains only two niches at the moment: trading and mining.
I often talk to financial experts. Many of them say that the financial world is currently living awaiting for the new black swan. It’s highly possible that in our lives we will face a very serious financial crisis. It may be even a fall of all the fiat system. So it doesn’t really matter if Bitcoin will cost $50,000 or $50,000,000 if it will be impossible to buy anything with the dollar. Probably, I will diversify my assets into different forms to save the cost of assets. Crypto is one way of protecting assets. This is how I see the market.
ChangeHero: Who do you look up to among crypto enthusiasts, bloggers, experts, etc?
MiningHero: I think that an enthusiast is a person who dedicates himself and his work to some ideas in order to move it forward. The only person who I can call a true enthusiast is Andreas Antonopoulos (a blogger, entrepreneur, programmer, author of several books about crypto).
I’m not actually a pro and don’t dive into the crypto world too much. I don’t surf a lot and read different people’s blogs and columns. I can’t even tell you a few names and I don’t consider myself a person worth asking questions about outstanding crypto persons.
ChangeHero: A traditional question: how much will BTC and ETH cost in a year?
MiningHero: I don’t make forecasts, but we have the idea that crypto will cost much higher in the future. We take it as a basis. How much higher and when — we can’t say and we don’t really care much. We run our business based on cold calculations and calmness. We don’t rush as the farm is not the project we run to earn for living. So we will just wait for the right moment when the price will be much higher. What exactly price it will be and when will we see it on market caps — honestly, I don’t know.
ChangeHero: It would be really interesting to come back to this matter in about 6 months and have a look, which of your forecasts came true. We wish you success in all your businesses and hope for future cooperation.
Thank you very much for the interview!