adam gitzes reached a point in his life where he finally had enough surplus savings to invest in a passive income stream. he was ready to put about $50,000 into a laundromat when he came across remote bitcoin mining.
As a large bitcoin bull, Gitzes had been investing in the asset since 2017. He had wanted to be involved in the network mining process for years, but always found it difficult to establish himself in a home environment.
Reading: Adam gitzes bitcoin mining
“I started shifting all my investments into bitcoin around 2018,” said gitzes. “I lowered the dip and went back up, and it was pretty good.”
gitzes half-heartedly tried to build a mining setup in 2017 and 2018 with little success. he tried again earlier this year following an online tutorial from econoalchemist, but the noise and excessive heat of the facility were too much for his family.
adam gitzes, product manager at compass mining compass mining
Remote bitcoin mining solves many of these issues, as the client’s mining hardware is hosted and maintained at verified external facilities. so instead of investing in a laundromat, gitzes opted for remote compass mining services.
“I was a little scared, to be honest, but it all worked out,” gitzes said.
in fact, it worked very well.
In addition to receiving excess bitcoins, gitzes also secured a career change from director of data scientists and analysts at amazon’s adtech organization to director of product at compass a few months into his career. mining route.
what is bitcoin mining?
Bitcoin mining involves the use of powerful computers to keep the network secure and up-to-date. in return, the miners are paid in bitcoins.
bitcoin operates the proof-of-work algorithm, a process for validating transactions and mining new tokens that is slow and uses large amounts of energy. this mechanism is peer-to-peer, which ensures that the currency is fully decentralized without a single authority verifying transactions.
however, since there is a limit to the number of bitcoins that can be mined, mining becomes more difficult and requires more energy over time.
energy intensity, excess heat and the technology required for mining make it difficult to install in the home.
remote mining with rigs like compass removes some of these obstacles.
2 reasons to start mining
The industrialization of the crypto mining industry in recent years has deterred many from entering the space. gitzes, however, now believe there are opportunities. decided to enter when the price of bitcoin rose from September 2020 to January this year.
“Bitcoin price appreciated [about] 500%,” gitzes said. but the difficulty of mining bitcoins only changed significantly by 30%, which meant that there was a very good opportunity to get into mining. “
Gitzes bought two bitcoin machines to begin with 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 life of the machine. their 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 became even more comfortable with their ability to obtain excess bitcoin, as estimates suggest that Chinese miners made up around 75% of the world’s mining power.
“It was very clear that I would get excess bitcoin buying these miners only if I had just bought bitcoin and it was very good,” said gitzes.
Now is a good 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, said gitzes.
“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,” said gitzes.
what are the average earnings?
gitzes now operates six machines while continuing to work as an employee at compass. rates his success with mining in terms of total bitcoin rather than monthly earnings.
spent 1.1 bitcoins to the six miners, or approximately $60,000, and they are currently generating up to 0.0048 bitcoins ($220) per day after deducting mining fees, according to screenshots of the pools . mining sites viewed by insiders. the average daily power cost across the six machines is $30, leaving the gitzes with a profit of $190.
The amount of bitcoins earned daily will be adjusted based on changes in difficulty. Assuming little fluctuation in energy costs and bitcoin prices, gitzes will earn around $5,890 this month. expect to break even in about 250 days, maybe even less.
“I bought almost 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 is going to be very, very valuable and I thought that would be a good way to get more bitcoin, which seems about right.”
When gitzes buy their machines in bitcoin, they try to buy when bitcoin prices rise, but before the dollar value of the machine changes. it’s a way to reduce your cost in bitcoins, he added.
The only other cost you need to think about is energy. There is “virtually no” day-to-day work for remote miners, as the compass support team generally handles any maintenance or failures that occur on-premises.
For the most part, miners will want to focus on bitcoin difficulty, 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 hitting an asymptote of efficiency gains, so the next machines that come out will be more efficient and better than the existing high-end machines, but it won’t be like they’re sweeping the water. .” , said gitzes. I expect my machines to be online and profitable until at least the next halving. “
gitzes not only sees remote mining as a good investment strategy, but also as a way to combat the centralization of mining and strengthen the network.
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