Matt Odell | Citadel Dispatch E31: Getting Started with Bitcoin Mining with @diverter_nokyc, @econoalchemist, @roninminer

Link to the YouTube (the timestamps are based on this): https://youtu.be/SLjnfBEkpk0

I. Introduction/Why Mine Bitcoin at Home?

II. Acquiring a Miner [53:18]

III. Setting up Power/Infrastructure [1:06:36]

IV. Solving Wi-Fi [1:21:15]

V. Dealing with Noise [1:23:58]

VI. Dealing with Heat [1:29:01]

VII. Immersion Mining at Home [1:32:16]

VIII. Price Per Terahash [1:34:32]

IX. Extra Benefits of Mining at a Small Scale [1:36:57]

X. Two Different Types of Immersion [1:40:40]

XI. Mining Pools [1:45:48]

XII. Unsustainable Fee Market in the Future? [2:05:00]

XIII. Hosted Mining Services [2:12:24]

XIV. Mining Shitcoins for Bitcoin [2:34:45]

XV. Profitability [2:42:03]

Matt Odell [6:53]: We have some very special guests today for a conversation that I have really been looking forward to. Today’s topic is Getting Started with Bitcoin Mining. I think it’s kind of fitting since most of the corporate miners are at a big conference in Miami right now called Mining Disrupt — it’s got a little bit of a shitcoin tilt to it because it’s got Disrupt in the headline. So I have three of the most outspoken pleb miners — miners who have been focused on making it easier for the average person to get into Bitcoin mining, and all that that takes. We have Diverter_noKYC, who’s joining the show again — I believe this is his second time. How’s it going, Diverter?

Diverter_nokyc: Yeah, second time. Glad to be here — can’t wait to get started on this.

Matt Odell: We have Econoalchemist, who’s also joining for a second time. How’s it going Econoalchemist?

Econoalchemist: Going great! Thanks for having me.

Matt Odell: Dude, thank you for joining. And we have first time guest, Roninminer. His government name is apparently Neil, and that’s what he’s titled on here. How’s it going, Neil?

Roninminer: I’m doing great, yeah. What’s up, freaks?

Matt Odell [8:29]: So guys: historically, the best time to get into mining is in downturns. I think you guys probably all agree that the best time to get into mining is all the time, but I think now more than ever — especially with this recent crackdown in China, and we see all these ASICs’ prices are going down significantly more than Bitcoin, it seems — it could be a good time for the average self-sovereign Bitcoiner to get into Bitcoin mining. It’s a great way to stack. If you do it right, there’s no KYC. It’s probably one of the most private ways to accumulate Bitcoin, and I think even if it’s at a slight loss, those two benefits can outweigh any loss of income there. But you guys seem to have been doing it pretty profitably, so maybe we get the best of all worlds. So I’m thinking here with this conversation: it’s going to be a general Getting Started with Bitcoin mining, acquiring ASICs, setting up the ASICs, power costs and other things people need to keep in mind. We’ll have a conversation about KYC and how to limit it — limit your personal information. We’ll talk about Compass hosting and other hosting providers that’ll host your ASICs for you, and the trade-offs present there. We’ll talk about cloud mining, which I personally think no one should use, but I guess we’ll get into that. And we’re just going to talk about the state of mempools like we always do and we’ll see where this conversation takes us. Like I said, freaks: if you have any questions, feel free to throw them in the audience chat — if we don’t get to them right away, I am jotting down questions as I see them as well, so hopefully we will get to all of them as we go on. Where should we start? Neil, to the average freak — maybe they’ve been listening to Citadel Dispatch this whole time, they’re trying to improve their setup — why should they be interested in mining Bitcoin?

Roninminer [10:36]: Well, simply: it’s KYC-free sats like you were saying, and then it’s income. S9s were worth nothing — Fartface2000 and Nick Foster [Kaboomracks] just gave me miners — they just sent me a couple each and I was mining at a loss last July, so a year ago. Just to do it — just wrap my head around it, figure out what it was all about. And so I’m paying a little bit of premium — I’m not sure if that premium was even more than CoinJoin implementations. You might be paying the same fee — I never looked into it that closely. And then you hear Michael Saylor say some things and it kind of just dawned on me and I was like, Well what are my personal options in the future for yield? How am I going to ever execute on these Bitcoin that I’ve been sitting on? Your only options are: 1) sell your Bitcoin or 2) lend it out to one of these third-party lending services that I’ve never trusted — I’ve never supported — there’s no reason for me to ever do that, but it seemed like the only other option, and 3) maybe spending a little bit of your Bitcoin to get some machines was a better idea, and then you have a solid yield coming in regularly. At least, if you have to spend the Bitcoin, it’s not your stack — at least you’re making Bitcoin that you could be spending.

Matt Odell [12:09]: That’s some great insight. Diverter, Eco: you have anything to add there?

Diverter_nokyc [12:16]: Well for me personally, I got into mining originally solely because I saw that — for the on and off ramps that Bitcoin was on — KYC is creeping in everywhere. No matter where you look, you have to put an identification in. So I’m trying to figure out ways that I can continue to acquire Bitcoin without having to do KYC. Now this was a while back, maybe the end of 2018–2019, and I started thinking about mining. But then when I came on to Bitcoin forums — places where you would go like Reddit, Twitter, places like that — it was completely and totally discouraged that you should not even worry about mining! Just buy and hold, just buy and hold, just buy and hold. But that’s not accomplishing my goal. The whole point is: I want to get Bitcoin, but I’m afraid of the KYC part. So after a little research — I look into it — and I can’t figure out why I wouldn’t do it if I understand that I might very well lose a little bit of money here. Generally speaking, though, if you go to a BISQ or a HodlHodl or one of those platforms, most of the time you’re going to be paying a little bit of a premium over regular spot market value. So what’s the difference? That’s the way I see it. So there are plenty of reasons to do it if you are concerned about ways that you can acquire Bitcoin and keep your identity more hidden, but it’s not for everyone. It’s a very personalized thing. It’s why these blanket statements of either Everybody should mine or Nobody should mine — they don’t help anything.

Matt Odell [14:26]: Yeah, that’s a really strong point about the privacy premium you pay regardless. Neil touched on that, but whether or not you get it on BISQ or HodlHodl or a local ATM — a lot of these local ATMs, some of them only require a phone number and you can use a burner phone number — they often come at a premium and you’re often reduced in the amount you can purchase at a given time. Or cash trades, or selling for goods and services, or as Neil mentioned: if you do KYC and you go through KYC — in my opinion, if you’re using a KYC service it’s completely unsafe, but if you use it with CoinJoin, at least you get some forward privacy and it’s reckless not to use it with CoinJoin, in my opinion. And when you use CoinJoin, then you’re gonna take additional fees: you’re gonna be paying miner fees, you’re gonna be paying CoinJoin fees as well. So in general — and I think this is probably bigger than just the Bitcoin world — I think, in general, privacy usually comes with a convenience and an additional monetary cost every time you want to do something that’s more privacy-conscious. So Diverter was the first one to really release a full write-up on how someone could get started with doing this. I think he called it, Mining for the Streets. Is that guide still out there, Diverter?

Diverter_nokyc [15:57]: Yeah the link is in my Twitter profile: diverter.hostyourown.tools and then Mining for the Streets is the name of the article. And the fact that we’re even sitting here having this conversation right now — not to sound like an asshole or an arrogant jerk or anything, but — it makes me feel fulfilled in a certain way, because the whole point of me trying to put out Mining for the Streets was exactly this: to try to change the narrative. Because — at that time — it absolutely was not advised for anyone to get into mining! Nowhere you went would you see anyone that would encourage you if you said, Hey I’m thinking about getting a miner — it was immediately shot down. So the fact that this conversation is even taking place — whether it had anything to do with me releasing this or not — I still feel an amount of fulfillment from it.

Roninminer [17:00]: Oh it has definitely had something to do with it, man! I read that article so many times, and it was so instrumental in me thinking, Okay maybe I should start doing this now. It’s still one of the number one articles I share with people when they’re talking about, Well where do I even get started? I’m like, Well here you go! I send that article to so many people.

Matt Odell [17:20]: It’s been a narrative that’s been around. I remember even in 2013 on Reddit and Bitcointalk, people would say like — because for whatever it’s worth, for some reason: normies, a first inclination if you’re a newcoiner or a precoiner, your first inclination is, I want to mine Bitcoin! It’s just the natural path that people usually take — you even see it with the institutional guys or the CNBC people — immediately, the first thing they say is: I want to mine this thing with my computer! And then people come into Reddit, they come into Bitcointalk — this was back in 2013–2014 — and the first thing that people say is, You’re gonna lose more money if you mine! Don’t fuck around with it! Mining is only for the professionals! And to this day, we still see it on Twitter. So Diverter, I think you made a very big impact. I mean, we have Econoalchemist here, and he came out with his own guide — a very very good guide — and Nico, you credit Diverter with part of that inspiration, right?

Econoalchemist [18:25]: Yeah 100% — Diverter’s article was a huge breakthrough for me. If we back up: eight months ago, I had made the decision that I was never gonna KYC again — I was all out of dry powder but I still wanted to accumulate Bitcoin, and so I was just kicking rocks trying to figure out how I was going to get more Bitcoin, and I just kept coming back to mining. But as you guys have highlighted, the narratives were just: Don’t do it! You’re gonna waste money! You can’t mine unless you’ve got your own hydro plant! Leave it to the big guys! So I was just searching for some way to get more Bitcoin, and Diverter’s guide — I found that and read it, and that was just the light bulb moment for me that made me look at the whole situation not so much in the sense that I was going to be competing with the rest of the network, but that I was going to be dollar cost averaging through my electric bill. And so that instantly solved the issue of privacy, KYC, third-party risk — it was a no-brainer for me. And, like Diverter said: even if I was mining at a little bit of a loss, I was going to be paying that premium on BISQ anyways! So that was a huge moment for me, and it just opened up this whole new frontier.

Roninminer: [19:56]: Yeah and I still have people up in my comments telling me — I just had a guy the other day that was vehemently arguing with me on whether a single person could mine profitably or not. And I was like, I don’t care that you failed at it. I’m sorry you mined through a bear market or whatever you did wrong — overallocated or something. And it’s like, No — it’s been very lucrative for me, so I have no problem in telling people: as long as you do it right. It’s the same rules that apply to Bitcoin: you DCA miners, you get a little extra cash — you buy another miner, you see a dip like we just saw — you buy the dip. The same rules apply. And then you plug them in and you let them run. Every unprofitable sat that I’ve ever mined is deeply profitable right now — I just hung onto it! If you’re not selling, you’re not losing money.

Diverter_nokyc: [20:59]: Yeah, it really is a mindset type of thing. And if you think about it — one of the things I talk about in Mining for the Streets was the entire ethos around Bitcoin: everything centers around Don’t Trust, Verify — except in this one area! This is the one place where everybody was actually encouraged to just trust that somebody else is going to mine: You don’t have to worry about it — the big guys got it! And that just struck me as all kinds of wrong in many different ways. So the difference — really, it comes down to a mindset of, Okay am I going into this as an actual profitable business? Or as, Am I going into this as a way to accumulate Bitcoin in a way that’s more private where I can attempt to keep my identity more hidden? And the upside — as we’ve seen recently — is: you actually don’t know whether just buy and hold will be more profitable. Blockware Solutions put out a report — which I linked to in the guide from a previous cycle — talking about whether people that just bought and held or those that mined and actually sold just to pay their electricity bill: who came out the best at the end of the bull market? And it was the miners! It was the people that were mining and just selling enough to pay their income. And the reason is probably just because of situations like we’re in right now. So things can change, even if you go into it mining at a loss — like I did! I was mining at a loss when I first started — and I think you said you were too, Neil. But things can change so quickly! The difficulty adjustment has the ability to stabilize this market. And if some outside influences come in — you never know! You may end up extremely profitable like we are right now.

Roninminer [23:07]: Yeah, and this recent event is actually super fascinating because even three months ago, miners were twice or three times the price — and the price of Bitcoin was higher, the network hashrate was higher — but then you saw your physical equipment has been devalued because all these miners came on to the market for sale. But at the same time, the network hashrate dropped, so then it became ultra profitable to be a miner! It’s almost like its own self-fulfilling hedge against — I didn’t really think that idea through before I started it, but — maybe your miners go down in price but now you’re making more Bitcoin so it’s a win-win either way.

Matt Odell [23:58]: An interesting aspect here is: a lot of people — when they think about getting into mining — they always go to those revenue calculators. And Bitcoin is such a crazy beast that you have two aspects that the calculator can’t really predict, which is: 1) what happens with the difficulty adjustment — how much hash is on the network how much hash leaves the network — and 2) what the Bitcoin price is. And in a way — if you’re mining — it’s even more of a long-term game than if you’re doing buy and hold or stacking.

Diverter_nokyc [24:36]: That’s exactly right. I made the argument that especially a home miner is actually the most bullish person on Bitcoin. You think you’re bullish? Well, do you have a miner running in your garage? Because what that means is: you can’t just suddenly lose faith one day and decide to hop on Coinbase or Kraken or wherever and just sell all your Bitcoin and walk away — it doesn’t work like that! If you’re going to mine Bitcoin, you’re going to put in time, energy, money, into setting up your infrastructure. What are you going to do — just turn the miner off and leave it sitting in your garage? Now you’ve got thousands of dollars worth of equipment! So it’s absolutely a long-term bet on Bitcoin. So get your mind right before you think about it.

Roninminer [25:33]: Yeah, and it’s not easy money — it’s not like you just go and plug in a miner and you start printing your own money — it’s a lot of work! Especially if you want to scale up an operation. For example: 400 amp is about the most power you can get going into a residential without really having to pull some strings and do some stuff. So 400 amp — that’ll do 20 new generation miners and then you’re tapped out. You can’t increase that operation by very much more, so you have to start looking elsewhere to figure out where to go. That’s why I call myself a power pirate: you gotta go wherever you can go to find more power. So for example: what I’ve been looking into right now is there’s somewhere around 1,500 Subways [sandwhich shops] locations that closed in the last couple years. They have bread ovens in there, they have other machines, lighting — they use a decent amount of power — they’re probably somewhere between 400–600 amps for a location like that. And they’re all sitting empty right now! And there’s nothing more that strip mall owner wants than to lease that out, so they’re going to give you a pretty decent deal on the lease itself. And then your only issue is dealing with airflow — dealing with heat and noise — and there you go: you got another petahash location just handed to you! You didn’t have to build out the infrastructure for it or anything like that. And where I’m going with this is: you want to keep it small and you want to spread it out, so if the power in the town goes out or you lose Internet access or something like that, you don’t have 100 machines going offline at once. You’re better off distributing that out to smaller locations — yeah, it’s a little more man-hours going around to each one, but once you’re up and running, you could do that in a day — you can hit five locations in a day and there you have 5 petahash online and you’re doing just fine.

Diverter_nokyc [27:53]: As you guys can tell, Neil has really taken off in the last year! Here, me and Nico are: we’ve got a miner or two spun up somewhere in the back room — this dude’s renting out Subways, okay? So this thing is a serious bug when you get into it — believe me.

Econoalchemist: Oh, it’s definitely addicting!

Roninminer [28:16]: Yeah it goes the same as I was saying for miners is you DCA the miners and then you buy the miner dip — it’s the same thing with hashpower. You never look at your bottom line hashpower number and say, That’s good, I’m satisfied with that — No! You never look at your Bitcoin stack and say, All right, I’m gonna stop stacking now — No! You always want more hash! It is probably more addictive than stacking coins themselves, actually.

Econoalchemist [28:49]: Yeah and it is a commitment like Diverter was saying, because in relative Bitcoin terms, it’s gonna take you eight months to a year to earn back the amount of Bitcoin in mining that you would have had to have spent to get the hardware. So you gotta be in it for the long run. And then there’s just not a lot of other business models out there that will give you a return on investment in a year or less! So once you get into it and you figure out how it works and you get over that infrastructure hurdle and then you start seeing that you’re getting really close to return on investment — well, then you want to take some off the top and reinvest and expand your operation. And that’s why I’m saying it’s addicting, because that’s what happened to me.

Roninminer [29:47]: Yeah and when you start scaling up you start seeing, Okay ROI might be increasing because of additional costs — like okay, you owned the first 400 amps at your own private property or something like that. Okay, the next 400 amps is gonna cost you more because you have to lease it out — so you start looking at increased costs like that and it kicks your ROI down the road a little bit, but then you also have to remember: on ROI, it’s not just an initial capital investment that you’re looking to get returned on. The machines themselves — if the price is going up — the price of the machines is going up, and then with this recent shutdown of MicroBT where they’re not even manufacturing new generation machines till September, and Bitmain sounds like they might still be producing but they put a hold on selling, so the glut in the market may completely flip on its head where all of a sudden there’s a shortage because you have a company like MicroBT that’s no longer even producing them! So then now you’re looking at: Okay so you ROI’ed at your cost — your machines are paid off — and if you needed to shut down one of these small 20-unit operations you have going on or something, those machines, even though they’re used, may have appreciated in value 3x! So the world’s your oyster at that point! And I personally know a guy — he just got a million dollar loan collateralized by his machines. Okay, so you get a million dollar loan collateralized by your machines, so what are you gonna do with that million dollars? You’re gonna go out and buy a million dollars’ worth of more machines. So then now you have that many less machines out on the market, and if people start doing that regularly then I could see a definite run up in the price of machines themselves.

Matt Odell [32:02]: So I’m gonna just jump in here real quick. First of all: Neil, I fucking love the hustle! I’ve never considered Subway location — there’s obviously a massive retail vacuum because of the lockdowns — the response to Covid — so that is definitely a major opportunity. I just want to say to the freaks: if you do use leverage, be responsible with it. Interest rates are low, so people are happy to give you a shit-ton of debt. Historically, the horror stories you hear about Bitcoin mining are pretty similar to the horror stories you hear about purchasing Bitcoin, which is that: people go in way too heavy at the top — they don’t know when the top is, none of us know when this cyclical top is going to be — and with Bitcoin mining, specifically, you end up having fixed costs, especially if it’s a larger operation. And those fixed costs — could be labor, they could be rent, they could be electricity — and those fixed costs, if you’re not set up to deal with them, you end up selling the bottom, whether that’s your ASICs or whether that’s the Bitcoin stash you built up. I’m completely down to go deeper down this rabbit hole, but before we do, I think we should pull it back a little bit and talk about this idea of having one or two miners in your home or your office — a place you already have electricity. Maybe you live in a colder environment and it can also offset some heat costs, so you don’t have to really deal with cooling. It’s definitely way more accessible if it’s only one or two machines, especially to get your toe in the door — which is what I think the focus of this show probably should be. I’m curious — I think part of the reason I’ve always been interested in Bitcoin mining is for ideological reasons: I think what we want to see as stakeholders in this network is this idea of Bitcoin mining distributing out to more people and more small operations that are ideologically-minded as well, that believe in the idea of freedom money, that believe in the idea of censorship resistant Bitcoin. Does that factor at all into your guys’ mining? Or is that just an afterthought after stacking as much as possible?

Roninminer [34:17]: Let me back up to what you were just saying — and I didn’t include it in what I was saying, but — no: leveraging your miners, using them as collateral towards anything is like the worst idea ever! You want to be doing the opposite: you want to be having some capital on hand that weathers the storm. The last thing you want to be doing is selling your Bitcoin at this point. So if you have two-thirds of your capital in miners, you want a third of that — at least — in reserves, so that you don’t have to sell. The name of the game is not selling — if you’re selling coins to support yourself, you’re probably in a rough way and it’s not going to last very long for you. So yeah: don’t leverage!

Matt Odell [35:03]: And just to be clear: that’s not just a mining PSA! There’s a lot of people that took collateralized loans out on their Bitcoin right now that are feeling pinches because of this price decrease. And in my mind — if you don’t manage that risk correctly — it could be very reckless if the goal is, long-term: accumulate as much Bitcoin as possible.

Diverter_nokyc [35:28]: To your question about the ideological reasons for mining — for me personally, originally: no, I didn’t. I wasn’t thinking, How can I help this network? I was thinking, How can I personally acquire more Bitcoin without doing KYC? So the beauty of Bitcoin is the incentive model — so, the incentive model for Bitcoin is: if each individual acts in their individual best interest, that that collectively helps the network. So it works perfectly! Now I personally don’t believe that anyone should rely on altruism as any sort of business model. So if you’re dependent on people being “good” people, you’re not going to make it. So what I like about this individual — or what I’ve termed garage band — mining, what I like about that is that it helps the incentive model for Bitcoin even in the situation where the block subsidy is gone. Of course, we’re talking a long time down the road here, but the point being: if a day were to come where it’s not so profitable for these big huge mining farms to be running — and they shut off — is the network still secure? There’s a lot of things that go into this, though. And like I said: even though I don’t believe we should rely on altruism, there are some things especially developing now where it aligns really good — like for example this flared gas mining that Marty and Great American Mining and places like that are doing. That right there — that’s actually helping these oil and gas operators! So even if that operation were technically losing money, it could still come out as a benefit to them if they were saving money in another area. So, point being: the incentive models really align perfectly in Bitcoin! It’s very very well done as a system — but as an individual, I highly suggest that everyone that’s looking to get into mining get into mining as an individual. This is not one of those, Hey I’m just going to run a miner to help the network situations, because it’s not going to work out for you and you’re going to end up losing real money, potentially. So: help yourself — and by helping yourself, you will help the network.

Roninminer [38:18]: Yeah I totally agree with that! And start small — and by small I mean like a single S9 or something like that because: they look cool, it’s fun, but the number of things you have to deal with once you have one when it comes to either heat or noise — I mean, you can hear these everywhere in the house! There’s very few places you can put it — even an S9 — and you don’t have some sort of background noise from it, always. And if you can find a way of quieting it down or something like that — to Matt’s question earlier: it was incredibly profitable for me this winter! I just had a few S9s running in the crawl space under a condo and I called my local power provider — my utility company — and I negotiated down a rate that, if I was using electric heat for my home and not heating my home with natural gas, they would give me a deeply discounted rate here in Minnesota. And I mean — I had my electric rate down to six cents a kilowatt-hour! So, even running S9s — high network hashrate at the time — they were still profitable. I was paying off the place — my mortgage, my HOA, and my electric bill — with three S9s and an M32, and I was heating my house for free all winter from May until October was what they negotiated the deal with me, and that’s just me as a person: I just called my electric company and told them I was using electric space heat and they dropped my rate. And that’s better than any tenant you could have renting your place, screwing up all your stuff and clogging your toilet! I mean, there were a couple noise complaints about how loud my tenants were, but otherwise — free money.

Matt Odell [40:24]: I agree. One of the reasons I’ve always been bullish on Bitcoin is because of the incentives — because we can’t expect altruism. We should expect greed from people, and Bitcoins one of the few systems — if not the only in our world — where it actually channels that greed to make the network more robust. Among the Bitcoin enthusiast community — among the people that are obsessed with Bitcoin, the audience of this show, the industry at large — I think there’s an incentive there where a push to make Bitcoin mining more accessible for the average person benefits us all, because the network will be more robust and more secure. And logic follows that, as a result, the value of the network should increase and our holdings should increase. There’s a major difference — and we saw that on an extreme during the 2017 scaling wars — where Bitmain was keeping their miners for themselves and they were mining first before they were releasing it. And they were the main hardware producer of the whole system! And there’s definitely this existential risk to having these large corporate miners — having mining controlled by a very few groups of individuals — that are easy to knock on their door, easy to pressure them, easy to get them to bend the knee. So, in general, I commend you guys for just pushing for making Bitcoin mining more accessible to the masses, if you get what I mean.

Econoalchemist [42:14]: Yeah when I was first getting started, I didn’t really think I could have a whole lot of impact on the network just running one ASIC, so it wasn’t so much for the ideological reason of running it. But then when Marathon started censoring transactions, that’s when I took more of a sense of pride in claiming, No one’s going to be able to use these 80 terahashes per second to censor transactions because I’m in control of them! So now I want to get as much hashpower as I can so that I can ensure that no one else is using that hashpower to censor transactions or use the network in a way that I disagree with ideologically.

Roninminer [43:01]: Yeah, and if there’s nobody that’s gonna mine those transactions — Fuck you! I’m gonna mine them!

Matt Odell [43:11]: And that brings the incentives back in line, too, because if the majority of the hash isn’t mining a certain transaction, those fees on those transactions will go up and you’ll make more money than a miner that isn’t mining them.

Diverter_nokyc [43:24]: Yep, right. And the power usage is not easy to disguise or hide. You’re not gonna hide a large ASIC farm! But, as I’ve seen Marty mention a few times: he believes the future of mining is off-grid, and I tend to agree with that. I just believe there’s a little bit of an asterisk there because, in my opinion, the single garage band-type miners are essentially off-grid — if we’ve got 10,000 households running an ASIC or two rather than one mining farm running 10,000 ASICs, that completely changes everything.

Econoalchemist: 100%.

Roninminer [44:13]: Yeah I absolutely agree with that too, and that’s why me and my brother have started getting into this immersion thing, because the power company will come out and give you 400 amps — they’ll just do it. You hire an electrician, they’ll do your panel. My brother — a saint, by the way — I lucked out and had an awesome brother who knows how to do all that shit. So I stick to the mining side — he sticks to the actual rails, making it work side. But once you have immersion, then you’ve eliminated the two things that I found to be the biggest problem: the noise and the heat — the disturbance. Now you only have like an 8' x 4’ footprint in your garage. Most people — to have a petahash — would be willing to accommodate that loss of garage space. And then I see — there’s no reason why every Dairy Queen or every household wouldn’t do that! The network hashrate I see in the future is just going to explode with these small miners compared to the large mining farms.

Diverter_nokyc [45:27]: Yeah and the efficiency is what really increases this. I don’t know where you’re going to take this, Matt, but one of the most common things that I see people ask whenever they’re first starting to get into mining is: What should I get? Should I get just an old used S9 just to play around with? Or should I get a brand new S19 Pro? How should I start out here? I’m always of the opinion that: if you’re just going to be a single ASIC — maybe two — running in your home, you should go ahead and go with a good new generation, high efficiency miner, rather than go with the S9, if that’s possible. I don’t believe we will ever again see the same type of efficiency jump that we’ve seen from say the S9 to the S19, where we went from 13.5 terahash at almost 1500 watts, where we’re up now to 110 terahash at just barely double the electricity usage! So I don’t believe we’ll see that efficiency gain in the future. The race, to this point — for ASIC manufacturers — has been the race to efficiency: how much hashrate can be put out? I’m of the opinion that, in the future, these ASIC manufacturers will likely — the next race is now to longevity. It’s no longer a race to how much hash can we get — it’s a race to how long can these miners run. So there’s really a spot in the market, in my opinion, for an ASIC manufacturer to potentially use some of these higher efficiency chips in a smaller type miner. So rather than an S19 that gets you 110 terahash at whatever electricity usage, maybe they hit you with something a little smaller that’s more capable of being run in a home that is designed specifically for longevity. Because I really think that’s where the future of this game is, is in seeing how long these things can run rather than how fast can we get the hashing.

Roninminer [47:56]: Absolutely same thesis on my end! I think that this new generation may last upwards of 10 years, and again that goes back to the immersion thing that I’ve been looking at with my brother, is: a cool, clean computer is a happy computer. You want to keep it in a static environment — you don’t want the fans all kicking on higher because it’s a hot day out or something like that — no. You just want a nice, static environment to keep the machine as stable as possible for as long as possible. The least amount of particulate matter, the least amount of heat or humidity, or if you’re in a salty environment or anything like that. I totally agree with you — I think these may last a long time.

Econoalchemist: [49:00]: Just look at the S9s: those have been running and they’re still running profitably going on how many years now? I think these Whatsminers that are coming out now are going to be that next industry workhorse for the years to come, and I think it’ll last well into the next subsidy epoch.

Matt Odell: S9s were what? 2016–2017?

Econoalchemist: Yeah, something like that.

Matt Odell [49:24]: This has been a topic that we’ve talked a lot about on Rabbit Hole Recap over the years: this idea of ASIC life cycles increasing. And I think it’s particularly well suited for home miners and small miners, because: acquiring new ASICs can be difficult, getting rid of your old inventory can be difficult, and the big players — for a little bit there after ASICs got developed to begin with — they were just racing to the next generation to make some profit and then race to the next generation. Especially when you start talking about home mining and trying to recoup heat costs, you want hardware that’ll last you a bit. And I would go even further: I expect to see pretty much every hot water heater — especially in urban environments where they’re larger hot water heaters — mining Bitcoin on the side and reclaiming that heat through the hot water. And no one wants to replace their boiler every 2 years or 3 years, but if you get to the 7–10 year point, that all of a sudden becomes much more feasible.

Econoalchemist [50:45]: Yeah that’s exactly what WiseMining [Sato boiler] is working on right now — I think they’re out of France.

Roninminer [50:53]: Yeah, and you start getting in a whole other realm. So the reason why I always talk about 20 new generation miners — the reason why I keep bringing that one up — is because it’s all pretty static: you’re going to generate about the same amount of heat regardless of if you’re with the new generation Antminers is the new generation MicroBT Whatsminers. And the reason why I always say 20 is because that’s 400 amps — that’s about the maximum you’re going to be bringing into a residential area, if your wires can handle it coming in off the street. But you’re talking about producing 210,000 BTUs that you have to disperse, and that’s right along the lines of a heating a 10,000 square foot dome, so you’re talking a lot of heat being generated! And you can start running in floor heating, hot tubs, your water heater is probably going to be heated up no problem — that’s just not that much.

Matt Odell: I remember seeing a pool water heater — someone made a guide for that, or at least a walk through.

Econoalchemist: It’s a SPA-256!

Roninminer [52:12]: Exactly! And we actually even looked into running some, because in Iceland their streets and their sidewalks have essentially the same thing as in-floor heat — because they just have so much geothermal that they can do that — and we looked into doing that in some sidewalks in St. Paul just to get rid of our heat, but then you run into the problem of how are you going to get rid of the heat in the Summer? Now you need a separate system. And if you’re going to build out that separate system to get rid of the heat, then why are you heating the sidewalks other than laziness? Just go out and shovel!

Matt Odell [52:46]: Okay guys, so first of all to the listeners I’m gonna put both Diverter and Econoalchemist guides in the podcast show notes and also on citadeldispatch.com and those show notes, so you should definitely go and give those a proper read through — they’re very very detailed. Neil, I don’t think you have any proper write-ups right?

Roninminer [53:11]: No! Hell no! Anyone who wants to talk to me, my DMs are always open. I help anyone who wants any questions.

II. Acquiring a Miner

Matt Odell [53:18]: Awesome. Well, so both those guides will be in the show notes. But let’s go through this! So the first step is acquiring some miners. How should freaks go about that? What’s the best ways to do it? What are some gotchas? What should they be concerned about? Etc.

Roninminer [53:34]: So, if you’re looking to just start with an S9, just wait: Joe Rodgers is gonna throw up another shop here. As soon as we get these current S9s out that we have coming on — those ones we sold all at cost — now we decided that we got to make 20 bucks a miner or something like that, so they’re going to be a little bit more than literal at cost because I have to buy a plane ticket to fly down there and help him ship them all out. But other than that, if you’re looking for an S9 you can buy as many as you want from that shop — that store will be going up soon. I’ll be posting it everywhere — I’m sure these other gentlemen will be too. And that’s just trying to get as many miners in the hands of plebs as possible. We need to arm the cyber hornets so that everyone at least knows what’s going on. If you don’t like it, sell it off to someone else. Whatever — it’s not going to work for you. Just try it!

Matt Odell: The S9s are pretty cheap, right? What are they going for right now? Like $300 or something like that?

Roninminer [54:37]: Yeah they were 300 bucks when we were selling them before. When we put up the next store they might be close to $400 — all depending on what the market does! If there’s another million miners coming from overseas, that’s going to totally change the price! So I don’t know — that’s why we’re waiting. We just want to deal with the first however many we sold. And those are at cost — we literally didn’t make a dollar from that. And if there is anything left over from shipping we’re just either going to open a bar tab down at Bit Block Boom or we’re going to donate it to Bitcoin Beach or something like that. We’re just doing it because we want people to know how to use miners. And I’m just going to shill this guy because he’s become a friend of mine because he’s just been such a good such a good supplier for me and I’ve never had issues or anything and if I have problems I just call him directly is Nick Foster at Kaboomracks. There’s a Telegram marketplace @kaboomracks and you can just go and watch. A lot of times there’s large minimum order quantities. So you might want a single M31s but minimum order quantity is 20 — just hit me up: I can pile some people together and we’ll go all in on it together. That’s not a big deal. I know Econoalchemist has a couple places that he likes too though.

Matt Odell [56:18]: Before we move to Eco just real quick: how does that process with Kaboomracks work? It’s a Telegram channel and then it’s like an OTC deal I guess? You have to like DM Nick and then process the deal separately?

Roninminer [56:31]: Yeah it’s a marketplace where only Kaboomracks puts listings up, and if you want to do it yourself there’s a link right there in the listing. I just call them when I want something or whatever and we hook something up — we hook up a deal.

Matt Odell: Awesome. Okay Eco.

Econoalchemist [56:56]: I was just going to add the Telegram channel Hardware Market Verified Listings [@HardwareMarketChannel], and that’s where Nick from Kaboomracks will post some stuff. So Nick’s got a really good reputation in the community, so does Blockware Solutions, and so does MineFarmBuy. And all those guys post in that channel. When people ask me I recommend going to that channel and searching there. Anyone posting in that channel to sell has verified themselves with the admin — they’ve provided identification documents so the admin knows who they are. That’s not a silver bullet and there still can be scammers, so you always want to proceed with caution. I myself almost got scammed out of a quarter of a Bitcoin 6–8 months ago when I started down this path — not from that channel, but venturing out to doing online searches to buy miners looking at Amazon ads or eBay ads or going to whatever website I found that had anything to do with Whatsminer. There’s a lot of really elaborate scams out there — there’s people standing by that will respond to your e-mails: they’ll convince you that they’ve got what you want in stock and they’re ready to ship and you just need to send them a payment. So just be careful! And there’s also a Telegram channel for blacklisted scammers, so you can always hop in that channel too and just ping that group and say, Hey has anyone worked with this person? Do you have any background on them? Is this a scam? Does this sound fishy? And there’s people out there that’ll back you up and let what’s going on.

Roninminer [58:49]: Absolutely! You’re so right about that. And you’re talking about a lot of money: if you’re buying even one miner new generation, you could get a car for that [much]. So always run it by someone! I still do before I make any type of purchases or anything — I still run it by someone and be like, Hey will you just take a second look at this? A little bit of that has been alleviated now that I just deal with Nick at Kaboomracks but I mean — I can’t tell you not to do it because you could do whatever you want, but I just have not seen anything that seems legit on like eBay or sure as shit not Alibaba. So just talk to somebody before you go out on a limb and do something. Talk to somebody else. All of us are always here to talk about it! Just hit us up — do not make a big purchase on something that you think is not 100% verified. So that’s all I can say to that.

Matt Odell 59:53]: A lot of it is almost like an art, right? I’ve always had a dream — and I guess it’ll happen eventually — where big cities could have a location where you could just like walk in and buy a miner for cash, but we’re not there yet.

Roninminer [1:00:11]: We’re already talking about it! So then you’ve got to pick where your cities are going to be, and you own brick and mortar, etc.

Matt Odell [1:00:18]: Just put it in a Subway location and you mine in the back!

Roninminer [1:00:22]: And then put a big Bitcoin sign up instead of the Subway sign and everyone knows you’re mining in the back?

Matt Odell: Yeah that’s not great — I didn’t think that one through.

Roninminer [1:00:30]: If you have immersion, though, they won’t know that you’re mining in the back! They’ll just see us as a miner storefront and you rip all the guts out of them like in the cell phone stores so nobody’s got any incentive to come in and steal anything.

Econoalchemist: Diverter’s got an eBay story, right?

Diverter_nokyc [1:00:42]: Yeah I covered this in Mining for the Streets for anybody that’s going to read it, because — as these guys have alluded to — the scams in this particular area, for acquiring ASICs: they are very elaborate! They’re very well done! And they will follow through all these things. As you said: they’ll answer your e-mails, they’ll put up great looking websites. They’re very very well done, because — as Neil said — this is a lot of money. It’s not a joke. And additionally, generally speaking, you’re paying in Bitcoin — they want Bitcoin. You’re not paying in fiat. So once you send that Bitcoin transaction, there is no customer service to get that returned to you. So this is a very very very important point. It’s covered in there, but my original story — when I first wanted to get started — was: Yes, I hit eBay. A couple of these ads you’ll be able to instantly know that they’re a scam because what they’re selling is just not physically possible — it defies physics, all right? They’ll put out a miner that gets 410 terahashes at 900 watts or whatever — I mean it’s ridiculous! So you can know, Okay that’s that’s stupid — that’s a scam. But now let me move on to this other one: so I bought the miner. It was listed as brand new. It was a brand new A1 Aisen miner, which is a little bit older — 25 terahashes. So I buy it brand new — I wait — I’m all excited when it gets here. I unbox it, open it up, and it looks as if it has been sitting at the bottom of a landfill for about three years, and then somebody just dug it out of the landfill, stuck in a box and shipped it to me. It was horrendous! Terrible terrible. Filled with dust — just a very very bad experience. And so moving on from that is where I found the Telegram group — just by happenstance I found the telegram group, and it is also linked in Mining for the Streets, that’s linked in there. There’s actually an example ad specifically from Kaboomracks — I talked to them before I published a guide asked them if it was cool if I went ahead and put one of their ads in. And it’s a cool little time capsule because you can actually go back and look then and see what an S17 Pro 50 terahash was going for — it’s like 1200 bucks I think. Now they’re much more. But the very important part is to make sure — on this Telegram channel — that you’re dealing with verified listings. Make sure not only that they’re verified, but that they also have a good reputation in that community. Everybody that’s there is willing to help you. They’re not gonna spoon feed you so don’t go in there acting all entitled like, Somebody tell me where I can do whatever. But go in there, ask your questions, be a regular person — not an asshole — and everyone will help you out and they’ll guide you and they’ll get you on to a good miner.

Roninminer [1:04:07]: Going back to your 410 terahash whatever machine that they were selling: you also have to be careful because my understanding is that MicroBT themselves does not sell miners to retail — they only sell through wholesalers. So you can either have a broker like Kaboomracks or other other reputable brokers in the industry, or you can buy from these retail sites. But there’s no distinguishing one from the other — other than what they’re offering — because they’ll have maybe some real miners on there but then they have these other products that are completely insane. And a normal person looking at that would not know that a 410 terahash machine is not possible! They would just say, Okay well why wouldn’t I spend $10,000 on a 410 terahash machine when my only other option is spending $5,000 on a 100 terahash machine? So the numbers aren’t crazy to somebody that doesn’t know any better, but it’s a scam! So you don’t know which ones actually have a relationship with these larger manufacturers, and you can really get hurt doing stuff like that.

Econoalchemist [1:05:42]: Yeah and that goes back to just reaching out to someone in the community and just trying to get a second set of eyes on what you’re doing.

Roninminer [1:05:51]: Yeah! It takes 30 seconds to DM one of us and say, Hey does this look legit to you or not? And typically any of us could just glance at it or anyone in the mining community could just glance at it and be like, No — the numbers aren’t even close to what’s even possible in this world.

Matt Odell [1:06:17]: Okay so I think we nailed acquiring a miner, acquiring some hardware. So the next process is setting up your miner. Where do we start there?

III. Setting up Power/Infrastructure

Econoalchemist [1:06:36]: Yeah I think infrastructure is the biggest consideration. You’re going to need 240 volt power supply and then you’re going to have a lot of hot air that you need to deal with. My particular miner was nearly 150 degrees at the output fan, so you’re gonna have to do something with that hot air. And then you’ve got all the noise! You’re gonna have a machine that’s running close to 90 decibels, which is about the same as standing 10 feet away from a freight train as it rolls by. So what are you going to do about the sound? Do you have a family? Is your wife gonna leave you because you she can’t stand the sound of this thing running in the basement? Do you have a garage you can put it in? So there’s just a lot of considerations. I’ll start with electrical: if you do need to do electrical work and you’re not comfortable handling that yourself, hire a licensed professional and be aware that there are scammers everywhere. I had a bad experience — even though I’m sufficient at doing electrical work myself and comfortable enough to do it, I didn’t really have the time to do it so I reached out and hired somebody — they were not licensed, and that digressed very quickly: they did some damage to my house, they put my family in danger because of the way they left the electrical panel, and so that was really eye-opening. That relationship didn’t end well and I ended up going back and fixing everything they did wrong and doing it the way I wanted it to be done. But yeah I lost some money and was put at risk doing that. So: definitely vet your electricians but get a licensed one if you’re not comfortable doing that work. And for one miner it’s going to pull nearly 15 amps at 240 volts, so depending on where you put this machine — it may be easy to run it into your garage, or you may have a shed out in your backyard that you’re going to run a line out to, or it may be in your basement — so just be thinking about that stuff leading up to ordering an ASIC. And then after you place your order it’s going to take a few weeks to get your machine in, and I think that’s really the time when you want to start gearing up and building out your infrastructure. Is it is there anything else you guys want to add on electrical?

Roninminer [1:09:12]: I don’t know if there’s anything to add to that — you nailed it. I mean, if you’re gonna start building bigger then you’re probably better off having a licensed professional do it, because if you want to bring in new power — say you’ve exceeded your typical 100–200 amp residential power and you want to increase that — you need to show that somebody actually did that, that was licensed to do so! You’re going to run into those issues then depending on how how you’re scaling up. But like you were saying: for a couple miners, you’re probably fine — slap a new breaker in — you’re probably not maxed out on your current panel’s capacity. Run two — three maybe, even — but you always want to leave extra. So if you’re running a miner — 15 amp draw like you were saying — you want that on a 20 amp breaker and you want to just cut that 20 amps straight off of whatever your service available is. Because if you don’t give it that extra 20%-25%, you start blowing shit up like crazy. Like we were doing! We were blowing cords, we were blowing breakers — and that was because we were running it a little higher but close to what the miner’s top draw is, but you don’t know extenuating circumstances. Like, it starts to draw for some reason because they’ll just rev up at one point and then it’ll start drawing more than [expected]. The surge of draw can screw you, especially if more than one miner surges at once — you’re just literally exploding things. I had to leave work — I thought I was burning a barn down one day. It was bad!

Diverter_nokyc [1:11:17]: Yeah. Me personally, I’m not an electrician — I know just enough about electricity to get myself killed, so I just hired a licensed electrician. If I remember correctly it cost me around 300 bucks to get it in because — depending on where you’re at — like in the United States, your residential, especially if you’re living in an apartment or a rental or whatever, most of the time what you’re gonna have is gonna be 110–120 outlets: your normal regular outlets. These newer generation miners, they won’t run on that! Now depending on the firmware, you can run some S9s on 110, so it is possible to have 110 if you’re running say an S9 with Braiins or whatever — you can actually get a functioning miner that way. But for any of the newer generation miners, you’re going to need to go ahead and upgrade your electricity and make sure that you have adequate actual outlets themselves. And again — I keep going back to the guide, but I tried to put as much as I can in there and I’ve got links and stuff in there to all the equipment that I use to actually plug in both of the cords — there’s two cords on the S17. So yeah it’s definitely something to look into and understand before you buy the miner — we actually should have probably done this step one. Because step one is actually to understand: this is what I’m gonna need before I get this miner, because if you get it in your house and then you realize, Oh wait I don’t have 240 outlets — I don’t have all this stuff — then you’re playing catch-up.

Roninminer [1:13:06]: Yeah you did definitely say that originally, too: you said step one was infrastructure and we all just skipped right over the most important part — infrastructure! But S9s are all dual voltage: you can run them on 110 or 120 — I think all of them will do that. You’ll run into a problem with your actual power cord if it’s not rated for 220 — on an S9 — but otherwise you can plug it in on your countertop like a toaster if you want to! That’ll run on any regular outlet as long as you don’t have too much other draw in. Like, you can’t run your microwave and your S9 on the same receptacle or the same breaker, but anything larger than that — you are correct — is 220. So you’re talking the type of draw that’s going to come from your air conditioner or if you have an electric stove — that’s going to be 220. Electric dryer — things like that. So you may have those outlets available to you in your home, but you can’t run anything else on it because there’s no way that any of those breakers are rated for more than 20 amps, and you should probably even check the breaker to make sure it’s not 15 amps, because if it’s 15 amps then you’re gonna have a bad time.

Econoalchemist [1:14:29]: Yeah it’s definitely ideal to have a dedicated circuit for your miner.

Roninminer [1:14:38]: Yeah absolutely. And then so what we when we’re running 10 on our bread rack is we actually run two sub panels right on the rack which is 200 amps [total]. So obviously leave that room: you’ve got the 150 amps from the miners themselves that you’re pulling off of each of the panels, a dedicated breaker for each individual miner, and then you have the extra 50 amps in case something happens — you’re not in trouble. But we were running it off a dedicated circuit for arc welding and we melted the thing right off the wall! It absolutely exploded and melted right off the wall because it just wasn’t rated high enough — you got to be so careful about that. And that’s — going back to the original point — why you want a licensed professional to be doing this stuff. You can legally do it on your own but that doesn’t mean you can safely do it on your own. And it’ll kill you — that’s another big point! Don’t do anything that you’re not comfortable with that you think might kill you.

Matt Odell [1:15:53]: Yeah, electric’s a bitch. Also, as Diverter mentioned: it’s not as expensive as you think it would be, especially if you’re buying one of these new gen miners for like $4,000-$5,000. It’s also a cost that will bear fruition in the future if you own the place. I know we have all American miners here, but I think in Europe, 220 is the standard. I don’t know how that changes the conversation — I assume they still can’t handle the amperage. Regardless: you want to get it all checked out before you jump right in.

Econoalchemist [1:16:37]: Yeah definitely. I think as long as you got a dedicated circuit that’s just for that miner — even if you are in Europe, you’ve got standard 220 outlets — you should have individual circuits throughout the house and you just want to make sure one of those is dedicated for your mining.

Matt Odell [1:16:54]: Once again — the disclaimers throughout this whole episode are: you should make sure of everything on your own with a licensed electrician. But I think a lot of new construction in the United States — especially in hot places — the AC outlets have a dedicated 220 circuit a lot of times. Like right under the window.

Roninminer [1:17:30]: Oh okay, I thought you were talking about like an outdoor AC unit. A lot of times they’ll actually even have a dedicated sub panel where they pull off of the main panel and then you have your own breaker in a different panel — especially for smaller places like the condos here: this only has 100 amps. So when I was running three S9s and an M32 here, I was maxing everything out! There was no turning on an air conditioner or running the dryer — I kept my refrigerator unplugged for a while because I didn’t know how much draw it was going to be on the overall system. But yeah an air conditioner is always going to be on its own breaker, your electric stove is always going to be on its own breaker — things like that.

Econoalchemist [1:18:19]: Another thing I did too when I was gearing up to receive my ASIC: I contacted my utility provider and they had a program called peak demand pricing. So I recommend anyone looking into this to contact their utility provider and see if they have peak demand pricing, which will reduce your overall electric cost by charging one rate during peak demand hours and then charging a lower rate during off-peak hours. And I was running at 12 cents a kilowatt-hour, but then the electric company came out, swapped my meter with this peak demand pricing meter, and it reduced my average electric cost over 24 hours to 8 cents a kilowatt hour. So I saved a third right off the top by doing that.

Roninminer [1:19:22]: And see for me it was similar, but rather doing it on a daily basis — because where I live, a majority of the year it’s a cold climate here in Minnesota — so nobody’s running their air conditioners in the winter so they’re not using as much electricity, but they still have the capacity to produce it. Instead, they wanted to conserve on their natural gas usage on the residential level so they would give you a break between October-May — they would give you a reduced rate just on electricity usage. So it’s kind of like what you’re talking about because it’s off-peak, but rather than being daily off-peak, it is seasonal off-peak.

Matt Odell: Usually off-peak is either Winter — if you’re not in a place where most people are using electric heat, which is a lot of Europe — or night time. Night time, usually, electric usage goes down — people don’t have their TVs on. Their ACs are turned to a higher temperature.

Roninminer [1:20:43]: Here in Minnesota your AC unit uses electric, so the overall electric consumption in the Summer is way higher. Whereas in the Winter, nobody’s running the air conditioning units — they’re instead burning natural gas in their furnaces. So they want to try to balance that a little bit so they’ll give you an incredible rate — all you have to do is call them if you live in a cold climate.

IV. Solving Wi-Fi

Matt Odell [1:21:15]: Awesome. So we nailed down power. Power is the most notable both infrastructure thing you have to deal with and also cost-wise when you’re trying to figure out what your bottom line is when you’re running these miners — what your power cost is. The other two things you have with setup are managing heat and Internet connection. The Internet connection is fairly simple: you just need an ethernet. Obviously if it’s a lower latency connection, that’s better, but it’s not like a video game thing — you don’t have to have the best Internet in the world, right? There’s these guys running off-grid with bullshit cell Internet.

Roninminer [1:21:56]: I have an Orbi — I think it’s a Netgear product. All of my miners run wirelessly: there is no Wi-Fi unit in the miner itself so it does still need to be plugged in with an ethernet cord. But you just send those to a splitter and then the splitter is connected to this wireless — they call it a mesh network but it’s not — it’s just a really powerful Wi-Fi system. I think the furthest mine goes is close to a quarter mile I still have Wi-Fi on my phone when I’m driving. And the latency is not an issue — I run security cameras, I run 20 miners — it all runs fine off of this one Orbi unit. I can take a picture of it later and send it out to people, but that’s how I did it everywhere. So I only pay for Internet in one condo but it broadcasts Internet signal out to all the condos! And then at the other sites — same deal: we weren’t gonna trench a new ethernet cord through the yards and through wherever, so you just run it off of the same [Wi-Fi access point]. As you’re as long as you’re plugging in ethernet cords into this.

Matt Odell [1:23:48]: So it basically just turns Wi-Fi into ethernet. So Internet should be relatively easy especially, if it’s a home miner. The last two things are heat and noise. How should people go about managing that?

V. Dealing with Noise

Econoalchemist [1:23:58]: My approach with the sound was to — I kind of took Diverter’s idea: he had a Coleman cooler that he had the ASIC in, so I took the idea of that enclosure but I made mine out of MDF and plywood and then I put six inch duct work on either end so that I could still get adequate airflow through the enclosure. It didn’t come out as good as I wanted, but I did attenuate the sound by decibels which actually — perceived by the human ear — sounds about half as loud as it would without the enclosure, so that came out pretty well. If I were gonna do it again I would recommend using fire-rated materials just in case the ASIC catches on fire — you don’t wanna just have it sitting inside a kindling box! But that was my approach to the sound.

Diverter_nokyc [1:25:04]: Yeah so the sound — if you’re not doing immersion mining, which we could talk about, and Neil can get into a little bit more later since he’s looking into it — your sound is coming from your fans. When these fans on your miner — depending on your design: the Whatsminers are a single tube ASIC so they have a single intake fan and a single exhaust fan, the new generation Bitmain Antminers are a dual tube ASIC so they have two intake fans and two exhaust fans — but these fans are what create your noise. And the entire purpose of those fans is to cool down the chips — is to keep your miner cool. So what I did — and everybody that I talked to about it said I was crazy or stupid or I was going to mess a miner up or whatever but I’m sitting here nearly two years on, on this exact setup, and I haven’t had a single problem — what I figure is: if these fans kick on to keep the miner cool, and that’s where my noise comes from, well then if I can just keep this miner as cool as possible then those fans don’t have to run very hard. The fans don’t run very hard — the noise goes down! So I focus on getting cool air intake into my miner. The way I solve that — very very simply and very very crudely, as with everything to do with my setup it’s extremely trailer park, my setup is — is: I just shoot cool air from a window air conditioning unit through duct work, as Econoalchemist talked about, and I shoot it into the miner. It keeps the miner extremely cool — a lot of times, actually, the window air conditioning unit is a little bit louder than the miner itself just because those fans are only running at about 3,000 RPM, or even lower than that. So the point I’m getting at here is: the cooler that you can keep your environment where your miner is at, the lower the sound output should be.

Roninminer [1:27:24]: Yeah and then the cooler you can keep it, the more static of an environment the miner itself is in, so then therefore you have the added benefit of — like I was talking about earlier, computers like a static environment, so you’re keeping the airflow going through it at a pretty reasonable rate.

Diverter_nokyc [1:27:53]: Right and there are 3D printed — I’m blanking on the word —

Econoalchemist: It’s like a bezel.

Diverter_nokyc: Yeah, that’s absolutely not the word I was going to say!

Roninminer [1:28:17]: I know what you’re talking about! The ones that [inaudible] sent me already had them on — they were not a baffle, but it connected directly into that tubing. It was the exact size.

Diverter_nokyc [1:28:27]: And they used the screws right from the ASIC itself so there’s no extra screws, there’s no extra things you have to do. You can order these off eBay — I link to them in Mining for the Streets for anybody interested. They’re linked in there though so you can look in there and see — very cheap, just a few dollars you can buy them and you just take the screws out of the fans put those on and then throw your screws right back in there. And you can set up your ducting so that it makes it much easier to get everything set up. Yeah, so look into those.

VI. Dealing with Heat

Roninminer [1:29:01]: But yeah when you’re talking about heat — so I was saying about this condo: it’s a 1,000 square foot condo. It had three S9s and an M32 running in the basement. The dead of Winter it was probably 0 degrees fahrenheit — maybe it was close to -10 at times. I’d have windows open because it was just heating the place up so much — that’s how much heat it was putting off! So just take that into account when you’re thinking about like, Okay I’m gonna mine this in my garage in Arizona — one S9 is going to make your Arizona garage unbearable, depending on the ambient temperature outside.

Diverter_nokyc [1:29:50]: You’ve got to get the hot air out! Like I said, it’s a very simple concept — the concept itself is extremely simple: cool air in, hot air out.

Roninminer [1:29:59]: I haven’t really made up my made up my mind yet on what’s more important. Because the cool air in will keep the miner quieter, but the warm air out — it’s almost like a dichotomy between the two — you don’t know which one’s more important. I guess it’s an individual thing: your specific situation determines that. But then that’s why, again, me and my brother are working on this immersion thing! We’ve looked into all the immersion setups there are — and been screwed over on a few of them — and so we’re just gonna build our own now. We just figure that, Okay, nobody’s gonna work with us in the way that we would work with them — they’re not making good on their end — so we’re just going to build our own. And it goes back to what I was talking about earlier: you can have 20 miners in your garage in Arizona then if you have one of these immersion setups! And you put in the power to maintain said setup. But it gets rid of everything: it preserves the miner, it increases the longevity of the miner, you are eliminating noise because you’re taking all the fans off, you’re actually increasing its efficiency because the fans themselves are a drain — I think you increase the efficiency of the miner by 15%-20% just by taking the fans off, and then you dissipate the heat. You’re gonna you’re gonna lose a little bit of that efficiency on the other end because you have to now cool down that liquid. So if you have a dry cooler outside, that’s gonna cost you something to run, but those dry coolers were manufactured to be as efficient as possible for businesses and things like that. So: you’re still saving on the efficiency, you’re making your family sane again, and you can increase the size of your operation because you would never be able to do that otherwise given the constraints of everything else.

VII. Immersion Mining at Home

Diverter_nokyc [1:32:16]: Yeah there’s one guy that I recall talking about this concept of individuals at home doing immersion mining. Of course, there’s a little bit more to the immersion side of it than there is just buying a Coleman cooler and cutting a couple holes in it, which is what I literally did. But on Twitter you guys can check out there’s a good thread and information by a guy @evenutstrand [@buildimmersion] and he put out a really good thread showing how he had taken a miner and set up an immersion setup in his home. So that might be worth checking out for you.

Roninminer [1:33:02]: Yeah you start to run into economies of scale though. The larger you can make your operation — if you’re running an immersion — the better off you are, just because of the capital expenditure that you have to front load. Because you have to buy all the equipment to do it: the cooler, the plumbing, the heat exchangers, the tanks, everything like that. You don’t necessarily want to do that for one or two miners because it’s all the cost with really none of the benefit.

Diverter_nokyc [1:33:46]: I agree. I think immersion for individual miners is probably a little much, personally. I don’t think that it’s that necessary. And as you said: for the added cost and energy expenditure, time expenditure that you’d have to put into it, I personally feel like if you put even just a part of that energy and time and money into dealing with a simple air intake and exhaust, you could probably come out with a really good setup. So yeah I tend to agree. But having said that, there’s a guy on Twitter you can check out — he has done it: maybe ask him some questions. I’m sure he’d probably be willing to talk to you about it.

VIII. Price Per Terahash

Roninminer [1:34:32]: Yeah and I remember what I was going to say earlier now! It’s kind of the same concept as: if you’re a small miner — and I’m talking, You’re not an industrial mining farm — efficiency of a miner to me isn’t necessarily as productive of a metric as price per terahash. Because when you’re paying a lower price per terahash for the miner itself, you’re front loading your savings. So you have a less efficient machine but you save $2,000 dollars on the machine. The efficiency itself is going to take you years to recoup at a couple cents a day to earn back that $2,000 that you saved initially, and then you just throw that $2,000 that you saved initially into a little side account and you just wait it out in case something bad happens. So you buy miners cheap, and that’s where you get your money to float yourself through any bad times or anything like that. Rather than, Okay every day I make three cents more out of efficiency than I would have otherwise. I skipped topics — I went way back. Sorry about that. Back to the immersion thing.

Matt Odell [1:36:13]: You mentioned on immersion that there’s some economies of scale there: there are a lot of economies of scale with mining in general, between negotiating power contracts and negotiating large hardware purchases — we talked about Kaboomracks earlier about how they require bulk buys a lot of the time. That’s even more so if you’re trying to go completely wholesale. But one aspect of a diseconomy of scale with mining is capturing that waste heat. So if you’re a miner in a cold environment — if you can find some use for that heat — all of a sudden you have an advantage that a larger miner doesn’t have, right?

IX. Extra Benefits of Mining at a Small Scale

Roninminer [1:36:57]: Yeah absolutely. And even on the most minute scale — like I was saying with the condos: I didn’t have any heating bills for an entire Winter because you’re capturing that heat. And that was just increasing the ambient air temperature of a 1,000 square foot condo! So you can use that in any way you want. And then with the immersion you actually capture all of the heat. There is no dispersed heat from it — it’s all in the liquid, and then you use a plate exchanger to swap that out. And in our design, we’re literally just swapping that out for a glycol mixture which we then dissipate outdoors during a cold or hot season, but you could use that same plate exchanger to swap that heat out into any type of mixture! The reason why we use glycol is because it gets 0 degrees here or -20 degrees here so we need the glycol to not freeze on us — otherwise, we’d be running the dielectric fluid itself out to the pump. But if you actually have a use for the heat, then instead of using the plate exchanger to swap the dielectric fluid heat into a glycol that’s going outdoors, you swap that in anything you want, like in-floor heating or your water heater, like you mentioned — anything you need heat for. But the problem is you still need to use that heat! If you have a water heater and you’re swapping the heat out, that water heater is going to get hot and then you better be using a hell of a lot of hot water, because otherwise that hot water heater is going to keep getting hotter. You need some sort of way to continue to dissipate it. So like heating your backyard pool in the middle of Winter — that might work because there might be enough volume of water there and there might be enough surface area to dissipate that, but you’d have to do the calculations on that to see if you could even get rid of that amount of heat.

Matt Odell [1:39:26]: And that’s why I specifically really like the idea of landlords getting into mining in 5 years or something, because then if you have a full building, that hot water is just constantly getting used!

Roninminer [1:39:41]: Yeah exactly. And then for you particularly in New York — boilers! A boiler is a far better use because it’s a constant heat and it’s circulating through radiators, and the majority of New York apartments still have radiators. Yeah those are some things you can do with hot water — you could steam water, even, if you wanted to. You could keep pushing the same heat into the same boiler.

Matt Odell [1:40:18]: Well that’s how a radiator or boiler heat works: you just create steam, the steam rises through the pipes — it’s actually magically simple in the way that Bitcoin’s magically simple! The steam goes up and then it collects and goes right back down the same pipe — it’s just a single pipe that goes up to your apartment. That’s why you hear that clanking.

X. Two Different Types of Immersion

Roninminer [1:40:40]: Real quick — so there’s two definite, different versions of immersion cooling: there is 1) the one that I’ve been explaining that we’re doing because it’s simple, it’s easy, you heat up the dielectric fluid, you swap the heat out of that fluid into a different fluid which you can then utilize or disperse somewhere else, but then 2) you have two phase dielectric fluid which is, in my opinion, not a great solution for multiple reasons. Let me first explain what two-phase dielectric fluid is and then I’ll tell you why I don’t think it’s a very good idea. You’ve seen those videos of the boards themselves submerged in some liquid and each chip is constantly boiling off a gas — and it’s a fluid and it’s cooling the chips on the board but it’s turning into a gas. So you need, first of all, a closed system: you need to actually lock that down because you don’t want to lose that gas — that’s a very expensive gas because it’s your dielectric fluid — but then you also need a condenser to condense it back down. So those are those are two bad problems just to begin with! And then thirdly: I’ve heard, and it is my opinion as such but I haven’t looked into it so I don’t know, but every single time one of those bubbles forms on the chip and closes down to boil off the liquid — that’s a vacuum. So what I’ve been preaching this whole time about keeping your miner in a static environment — that’s not a static environment! Over the life of the miner, who knows how many times that it had a vacuum bubble around each chip and then it closes back down on the chip — there’s force to that. It might not seem like a big deal, but if you’re trying to extend the longevity of one of these things for 10 years, you don’t want that extra trauma on it constantly, and you don’t want it to go a split second without any cooling whatsoever. Because as soon as that bubble forms, it has no cooling actually touching the chip itself. That’s just a theory of mine — I haven’t looked into it — it’s just something that I’ve thought about. So there’s two definite, different types of immersion cooling, and I think the one that we’re going with is probably going to be the successor.

Econoalchemist [1:43:30]: I didn’t realize there was that much to immersion cooling! I thought it was just like heating up some liquid, running it through a radiator and then putting it back in the tank. But it’s interesting to hear all the details.

Roninminer [1:43:45]: Oh yeah it’s super fascinating! Every facet of it is incredibly interesting. And so going back to my brother — that’s why he’s been so instrumental to what we’ve been trying to do — is: he gets that type of stuff. He understands flow rates and temperature swaps and things like that, so I was in a privileged position to begin with to even have a brother like that, that’s like, Yep! Let’s do it! This is what we’re doing now! And what it really comes down to is: it’s crazy how bad the supply lines have become! The only reason why we don’t have a working prototype right now is because supply lines have completely gone to hell. We can’t even source a dry cooler. I’ve been looking everywhere — and thank God for the plebs! People have been reaching out to me saying, Hey my brother might have a line on something like that. My brother works with something like this. Or, How about this guy? And the best lead I have so far is: a motorsports manufacturing company is like, Yeah we’ll just design one for you — give us the specs. So that’s pretty crazy!

Matt Odell [1:45:14]: Wow. I love that we have Bitcoiners everywhere in every single industry. Okay so this has been very insightful so far. Unless Eco and Diverter have more questions for Neil on immersion, the next question that most freaks would ask is choosing your mining pool. How do they go about that? What are your thoughts there?

XI. Mining Pools

Econoalchemist: I think all three of us are mining with SLUSH Pool, right?

Roninminer [1:45:48]: Yeah I don’t really see a reason why not to! I started for different reasons than what are my reasons now: originally when I started, I was actually under the impression that — because I didn’t know anything about mining when I started — I thought that they were the only public mining pool that wasn’t located in China. So I was like, Well that’s an easy decision! And then now my reason has completely changed: I don’t see any other mining pools doing anything for the community or coming out with new firmware. Flashing new firmware on your miners? I would never ever do that before SLUSH Pool came out with the Braiins OS because nothing could be trusted — it was all foreign firmware that hasn’t been tested enough or the people that had been using it, you don’t know whether or not they’re lying and they just work for the firmware people. And firmware is a dangerous thing — you don’t just put firmware on a piece of equipment that means a lot to you — you don’t just put random firmware on it because you’re going to get an extra 2 terahashes out of it. So that was my take on that. And now, for me, they’ve done more to give back to the Bitcoin community than any pool — I don’t think any [other] pool has done anything!

Econoalchemist [1:47:38]: I found it from Diverter and Crazyk: they had made the suggestion to try out SLUSH Pool and I really liked it. They had a mobile app so I could monitor my ASICs’ performance while I was out of the house. And it was just really easy to set up and I just stuck with it — I haven’t had any reason to change.

Diverter_nokyc [1:48:04]: So when you’re talking about mining pools, basically the payout structure is a little bit different [for each one]. I am on SLUSH Pool now, but there have been plenty of times where I was mining with Poolin. SLUSH Pool — the way that they’re designed is basically to incentivize you to stay on SLUSH Pool, to not hop back and forth between different mining pools, because you get paid for the last number of shares since they found a block. I’m not going to get into the whole payout structure that much, but the point is: they try to keep you staying there instead of hopping around to different pools, because as a miner — to change what mining pool you’re on — is literally a single click, which is why you see people talk about, There’s x amount of percentage of mining being done in China, but what they were actually talking about was these mining pools! That’s not necessarily mining in China — the machines aren’t in China — those were Chinese mining pools that people were pointing hash at. That can be changed with a click! The thing about SLUSH Pool is: in general, when we’re talking about Bitcoin history, SLUSH Pool in general, in my opinion, has been on what I would call the right side of Bitcoin history throughout the different events in Bitcoin. So they’ve garnered a very high reputation in the community for being that. Now, it may be that for your specific setup you would rather have a payout where you are guaranteed to get a set amount depending on the number of hashes that you provide, not depending on whether the pool actually finds a block. That’s how SLUSH Pool is set up: you get paid when they find a block. What I’ll say to that, though, is: over a long enough time scale, I found in my personal experience — over a time scale of like a week or two, or even a difficulty epoch — generally speaking, you’re usually going to come out about the same. You’ll make about the same amount of money — a little bit of variation. The one thing I’ll say about about pools before we’re going on is: this is a region that I think regulators haven’t yet gotten to, but I believe they’re coming for probably in fairly short order. I’m of the opinion that what we will see in the future is: we will see regulators attempt to treat mining pools as money transmitters. And the reason for that is: if you set up mining on SLUSH Pool, what happens whenever you’re mining and you’re earning Bitcoin, that Bitcoin is actually going to SLUSH Pool — that’s not going directly into your wallet, all right? And then once you hit a certain payout threshold whatever you set that threshold at — whether it’s 0.01 or whatever the case may be — once you hit that threshold, then SLUSH Pool transfers to you the amount of Bitcoin that you’ve earned. So what I believe is regulators will make a move on that front — they will attempt to classify mining pools as money transmitters. And then what they will attempt to do is force mining pools to institute KYC for anybody hooking up to their pool. Because as it stands right now, you don’t have to do anything! You can just create an account with an e-mail or whatever — sometimes you don’t even need that, you can just do it in an anonymous mode like Luxor Pool anonymously, all that — so it’s very simple. But I believe KYC is coming to mining pools — in my opinion. Could be wrong! So one pool that doesn’t get talked about very much but that I think their payout structure in the future will become more and more important is Laurentia Pool. It’s MineFarmBuy — it’s the pool that he is involved with. And the reason that that’s different is they pay out direct from the coinbase: it’s a direct from coinbase payout. So there is no custody — when you’re mining, you don’t mind to Laurentia Pool and then they transfer it to you — this is: when you get a payout from a block reward, the coinbase payout itself actually pays the miners. So I think that’s going to be very important. Right now I’m not mining with them for a few reasons: one of those being that the miner that I use — I run S17 Pro 50 terahash models, those are the miners that I run — I can’t hook up to that mining pool just because of a technical hookup situation. But the point I’m getting at is: I feel like this is a payout structure that I think we’ll see more pools either be forced to move to or implement KYC on their miners — I believe that’s coming.

Roninminer [1:53:25]: So my take on that — I agree with you 100%, of course — but the Stratum V2, I haven’t looked into it enough to speak on it fully, but my understanding of it is that it allows individual miners to construct their own blocks. And that’s something SLUSH Pool is working on right now, so why would I pay my miner fees to a pool that is actively working to basically make themselves obsolete? They must have some sort of business plan for the future whereas they see a different way to financialize the mining pool market. Because once that happens, then all transactions get paid out [directly] — my understanding of it, correct me if I’m wrong.

Matt Odell [1:54:21]: Let me just jump in here real quick. First of all Laurentia Pool is a really cool concept. A major negative with Laurentia Pool is that no one knows how to pronounce it — I love you MineFarmBuy but work on an easier name! I will put the link in the show notes. The two main trade-offs of Laurentia Pool right now is: first of all the hash is low so if you have lower hash, the payout is less, you have more variance. So on a long-term basis: when you’re talking about a smaller hash pool — and you’ve got to start somewhere, obviously — you have more variance, so your payouts are a longer time between payouts but on a long time scale it should even out. And then the second issue with coinbase payouts is obviously you’re paying more in miner fees because you’re going to get a lot of small payouts instead of one large payout. I also share the fears with Diverter — the one thing we have going for us is that it is easier to operate a mining pool in some jurisdiction somewhere that is not enforcing it at minimal switching costs as compared to actually moving miners around, moving hardware around. So hopefully we’ll have some kind of regulatory arbitrage. Meanwhile, right now with most pools, what you give them is an e-mail address which obviously can be a burner, and they know your IP address if you don’t use a VPN. So I think if privacy is your concern, you probably should be running everything through a VPN. To Neil’s comment about Stratum V2: Stratum V2 doesn’t solve this specific concern. Stratum V2, the idea is: right now, mining pool operators construct the blocks — they decide what transactions go into block. With Stratum V2, the individual miners decide what transactions get included in the block. So it gives us some censorship resistance in terms of taking away power from five or six large mining pool operators, but the payouts are still a custodial payout — it still goes to the mining pool operator and then it goes out separately. I mean, they could obviously do a coinbase payout just like Laurentia does but that’s not necessarily in the spec — that’s separate.

Diverter_nokyc [1:56:57]: Yeah I really do think this is something that’s going to matter later. And as you alluded to there, a lot of this is going to be dependent on whether or not pool operators are willing to be defiant, which is the case with so much of Bitcoin. Right now we’re in a very permissive environment even with the things we’re seeing in China and stuff like that — overall, we are not anywhere near an adversarial environment yet! The fight is just beginning, and it’s going to take people that are willing to disobey, willing to not comply, willing to use things like regulatory arbitrage, or willing to implement different payout structures — all these things are a necessity. It’s a necessary part, in my opinion, of Bitcoin and of being a Bitcoiner. So it’s something to think about. It’s not a problem today — probably won’t be a problem for a little bit of time to come. But yeah, I believe every pool should be working on a payout structure where this can be avoided, because what I don’t want to see is KYC to hook up to a pool — that is a death note.

Roninminer [1:58:15]: So another reason why with this most recent upgrade to SLUSH Pool is: so you can do the same payout threshold that you’re talking about where you get to a million sats and it’ll pay out to a wallet. The newest upgrade that they just did, you can have several people, several Bitcoin addresses and you can pay out over time. So our electric bills show up at the exact same time, but instead: now anyone who’s involved with anything I have going on, I get to allocate to them whatever percentage they’ve earned from whatever it is that I’m doing. And then the onus is on them to pay me the fiat bill to pay that electric. So it works out so great for me and what I have going on! They don’t have any concerns anymore! It’s paying Bitcoin directly to them and then they will owe me for the fiat bill — whether they need to sell their Bitcoin to cover that fiat bill or not is up to them — I don’t have to know about it. It’s not me juggling, Okay well we made this amount of Bitcoin at this price at this time but on the 15th our electric bill is due so I have to calculate your percentage of this bill — it eliminates a lot of the volatility for them. They’re just getting the Bitcoin that we earned and they’re paying the bill however they want to pay the bill. Whereas before, when it was just a denominated, Okay every million sats it pays out to this address and then now I have to divide that and figure out what the price of Bitcoin is today and the price of your electric in Bitcoin terms is, subtract that from that and then pay that — nobody wants that! They’re mining because they want the Bitcoin. They’ll pay the cash for the Bitcoin — they don’t care. Does that make sense?

Econoalchemist [2:00:43]: Yeah it totally makes sense — SLUSH Pool’s new structure adds a lot of flexibility for mining operators, so I was really happy to see their upgrade. And just from a privacy standpoint, I personally have decided to and I recommend other people: don’t reuse addresses to receive mining rewards to, specifically for some of the reasons Diverter was alluding to. If that pool operator wallet becomes a choke point and they’re watching the funds that go out of that pool operator’s wallet to your personal wallet, that can be a problem. And one thing you can do to alleviate that is to take your mining rewards and run them through Whirlpool and then that CoinJoin will break that deterministic link from the pool operator’s wallet. And so if anyone’s watching the pool operator’s wallet and tracking those funds and it goes through a CoinJoin, then they’re not going to be able to trace it after that. And then on the other side of the CoinJoin, too: when you go to spend your mining rewards however you want, whoever you spend them with will not know that you’re mining Bitcoin, in case that’s something you wanted to keep private.

Matt Odell [2:02:17]: That’s a very good point — I assume most freaks listened to the last week’s Dispatch which was with one of the co-founders of Samourai Wallet, and we go deep into Whirlpool. I think Whirlpool should be in the standard toolkit of all Bitcoiners, including miners. I just wanted to make a quick clarification: so we were talking about Laurentia Pool earlier and they pay directly from the coinbase — that’s not the exchange [led by Brian Armstrong]! The exchange borrowed the term that was a Bitcoin term already: the coinbase is the first transaction in a block — it’s what the miners construct. It can only be created by the miners — it’s the miners paying themselves out. So when I talk about increased fee burden — you actually don’t have a fee for the payout, which is nice. But at some point you’re gonna have to consolidate those small transactions in the future, and then ideally run them through Whirlpool. At that point, you’re gonna pay a higher transaction fee because, in general, the more inputs you have in the transaction, the higher your transaction fee. Now I’ve been wrong about a sustained high fee environment happening: as you can see today there was a panic sell and even that barely moved the mempools — you can still get very low fee transactions. And so it’s more feasible in a low fee transaction environment. If we have a higher fee transaction environment, that could become an issue because it’s going to affect miners’ bottom lines.

Roninminer [2:03:51]: Yeah. Let me think if I can remember the idea that we were talking about the other day: I wanted to know what the percentage of Lightning closes as a fee percentage is on main chain. I was curious about that — I don’t know if anyone’s closing Lightning channels right now. But there was this theory — which I don’t subscribe to, given the trajectory of the iPhone I don’t think anyone could predict what Bitcoin is going to do in 10 years — but there is this theory of: when the block subsidy declines then the fee market may not have developed adequately enough to sustain miners. So a buddy of mine reached out to me — he showed me some numbers and stuff. I’ve just been too busy to look at it. But what do you guys think about that?

XII. Unsustainable Fee Market in the Future?

Diverter_nokyc [2:05:00]: Well this is one of the things I was talking about earlier that relying on altruism is not a business model. However, I think there are situations where — especially some of the things that are being explored right now — where it could be that people are mining not only just for the Bitcoin reward itself but for other purposes such as to handle flared gas, for example. So these oil and gas producers, they need to take care of this flared gas. Now right now it can be done and they can turn a profit and do all sorts of things. But even if that weren’t necessarily profitable, there still could be an incentive there for them to mine because it’s a very easy way for them to deal with this flared gas, and it could still eventually save them money. So the point that I’m getting at is: this network right now is probably over-secured — like we don’t need this much hash to actually secure the network. In a worst case scenario where there just no fee market has developed, I believe that users can just simply end up waiting for more confirmations. I believe there will be people mining out here that are mining for various reasons. The more that we can get it dispersed into individuals that are looking at this as a DCA mechanism or any sort of process like that where we further decentralize so that we’re not reliant on profit-driven huge farms, I think that’s a net win. I don’t see it as being an issue, personally, but even at looking at a worst-case scenario, I still feel like there’s areas where people will still be mining even if they weren’t necessarily profitable.

Matt Odell [2:07:00]: I’m also hopeful — besides Lightning open and closes — I think CoinJoin represents a base demand, like a reserve demand for fee space. So hopefully if we see CoinJoin usage go up and if every spend is a CoinJoin — when we say every spend is a CoinJoin it’s obviously an optimistic goal, but — or if a large amount of spends are a CoinJoin, it should increase fees as well.

Roninminer [2:07:26]: This goes back to what I was saying that nobody could predict anything that’s going to happen in 10 years because it’s just simply impossible, but: what if there is a main chain privacy improvement where CoinJoins are unnecessary? Then you’re not going to have that base layer fee protection. And I think Lightning is going to accelerate to the point that Lightning channel closes will be, at some point, the majority of the reward. The subsidy will decline — and I usually don’t try to speculate out that far in the future, but — we already saw nine Bitcoin block rewards and so you’re talking a little less than three Bitcoin of that was fees. And I just want to know what percentage of those fees was Lightning?

Matt Odell [2:08:38]: At the end of the day — first of all, one of the main advantages of using Lightning is reduced fees, because basically Lightning is a batch Bitcoin transaction: a large amount of small transactions that are batched into a single open and close. If fees are low, then there will be less demand for Lightning, so it’s more like a pressure valve — an escape valve is how I look at it. But regardless, look: at the end of the day, I think we’re all here because we want to see sovereign Bitcoin usage increase. And I think if adoption increases and demand for main chain Bitcoin doesn’t increase — whether that’s Lightning open and closes, whether that’s CoinJoins, whether that’s regular on chain transactions, whether it’s miner payouts itself or the transaction after the miner payout if they’re coming in through a coinbase transaction — then we have bigger problems on our hands. Block space is scarce — demand should increase. On top of all that — with adoption — price should go up as well, so 1 sat per vByte transactions, even if they are confirming at whatever point in the future, should have more purchasing power. It’s yet to be seen — this is all speculation, right?

Roninminer [2:09:57]: Absolutely. And it goes right back to my original point: you can’t predict what it’s going to look like because there’s just no way to know!

Econoalchemist: The last year’s been evidence of that! Like, when I pulled the trigger on deciding to mine, I was planning on losing 71 cents a day, and now here I am mining Bitcoin for 80% below spot price! It’s just been a wild year and you never know what the road ahead looks like.

Matt Odell [2:10:34]: And none of us could have seen that coming. And if you look at the block subsidy — the part of the reward that’s not transaction fees — that obviously halves every four years. But where we stand today it’s significantly more than in the last epoch just because the Bitcoin price has increased significantly — the purchasing power of Bitcoin. We say Bitcoin price because we measure it against USD but really what you’re measuring it against is: labor costs, bread costs, meat costs, real costs — actual purchasing power. That purchasing power of that subsidy has increased even though the actual Bitcoin denominated subsidy has decreased. We’ve gotten a little bit sidetracked, even though I love this conversation — the freaks have heard a lot of mempool talk especially since I completely took cake to my face in terms of our current mempool environment, and I will own that probably every Dispatch until it changes. That’s one of the reasons why we stream the live view of the mempools in Dispatch is because I think it’s a very good timeline of where we’re at. I want to talk about — and I think this is what a lot of freaks are going to be asking at this point: we’re two hours in, maybe they’re feeling a little bit overwhelmed, maybe they think their power cost is incredibly expensive. There’s a new crop of Bitcoin mining in this hosted mining — this idea that another company has custody of your miner and hosts it at some kind of hosting facility for you at a lower power cost and pays you out, the most famous and successful one being Compass Mining. I’m curious what your guys opinion is on those trade-offs? And is that something that people should consider?

XIII. Hosted Mining Services

Diverter_nokyc [2:12:24]: Yeah, so I alluded to this very briefly in Mining for the Streets because the fact of the matter is not everyone has an electricity rate that would allow them to mine Bitcoin. Even if you are willing to take a certain amount of loss, there comes a point where it’s just not feasible. Or, your infrastructure is just not feasible. So, in the past, what we talked about or what’s been advertised around is cloud mining, which in my opinion is basically a complete and total scam — don’t do cloud mining, it sucks! What hosted mining really is — it’s not cloud mining it’s a different thing — okay? So you buy a machine — it is yours, you own the machine — now you have nowhere to actually run that machine so you send it to a company or you can buy it from them, whatever. They actually physically host the machine but yet it mines Bitcoin and the payout comes to you. Now obviously the very first trade-off is: Not your Miner, Not your Hash. You don’t have the mining machine, so what’s to stop them from just leaving, taking your machine, not paying you — all these things come into play and they’re absolutely 100% valid concerns. What I talked about in Mining for the Streets was — and a guy I relied on a little bit of anecdotal personal experience with and a guy that I deal with — Crazyk. He’s one of the Ronin guys. He actually won a Whatsminer — I believe it was an M30 — he won it in a Twitter giveaway. They just gave it to him. But he couldn’t mine — he didn’t have anywhere to be able to put it in his home to where he wouldn’t have to trade in his wife. So he chose the wife — we all make bad decisions, I guess (don’t trade in your wife for miners, don’t do that) — but his whole thing was he wanted to mine! He wanted to mine Bitcoin. He wanted to earn Bitcoin without having to do KYC. So he went with a hosting solution. Now the one that he went with is one that’s been around for a little while — Compass, I don’t know them, they’re a little bit newer than Blockware — I believe what he went with was Blockware Solutions. They had a facility that was hosted in Kentucky. They offered him sub-7 cents electricity rate. Now the way that worked is: Whenever he sent them a machine, he in turn received a full legal contract. So when he filled out this full legal contract with this company to where they essentially relieve themselves of all liability as far as problems with the machine and things of that nature, but he also was receiving legal protection from them actually just running off with his machine. So, of course — if you don’t own the miner, if you’re putting the miner in somebody else’s facility — obviously that’s a massive trade-off and it may be one that you’re not willing to make, fine. But if you’re in a situation where you absolutely cannot mine in your home, the biggest thing is: don’t skimp on reputation to get a little bit of a cheaper cost! Because what’s going to happen is: these machines are not cheap, we’re talking about upwards of $10,000 apiece for one of these machines, so if you send a $10,000 dollar piece of equipment to somebody that you’ve never seen, never shook their hand, never been in their facility, that’s a big risk. It’s also a risk that — whatever happens, maybe they get raided by somebody, maybe somebody shuts them down, maybe they get a break-in — there’s all these risks. But it is a valid thought process to go through. It’s a valid option in certain scenarios — I just would highly encourage anyone that can mine at home to do so. But if you absolutely can’t and you’re gonna go with a hosting solution, go with one that has a solid reputation that gives you a legal contract that protects you and protects the loss of your machine. And that’s the best you can hope for.

Roninminer [2:17:23]: Yeah, I totally agree. I see the problem that Compass solves — there’s multiple problems that they solve, being whether the heat, the noise, the electricity rate, the electricity availability — those are what we’ve made this whole podcast about today is: those are the issues with mining. So if even one of those is too much for you to handle then I understand why you would want to mine but at all times it’s counterparty risk and you’re essentially taking on the exact same risk that I personally wasn’t willing to do with lending Bitcoin. Because you’re lending them your miner — you’re paying them a rate to get all those benefits. You’re paying them something: it’s a hosting fee. You’re essentially renting from them. And I’m not saying it’s a bad idea — because I don’t know, I really don’t — but all I’m saying is that I was in a privileged position to [mine], and if you don’t want to do any work to figure out solutions to your own personal getting into mining, it’s a very good solution. And you may luck out and you make more money than you spent on the miner over a certain ROI time, and then you’re sitting on a bunch of Bitcoin and you’re mining for free. And then if you get rug pulled or something — we’ve just seen so many rug pulls in this industry that you don’t know what is viable and what isn’t, and the hosting thing seems to be a newer type thing. I don’t know — I haven’t looked into it real closely.

Diverter_nokyc [2:19:45]: I’m just going to say: what I got into this for, what Econoalchemist got into this for, I think Neil you to a certain extent as well — we’re looking for KYC-free Bitcoin, which is what we’re talking about here. There’s a very important distinction to make here, because the term KYC is starting to be used now as just a catch-all phrase for any sort of identity. Like, if you have to hand over any of your identity where you did KYC — that’s KYC. That’s not actually technically the truth, okay? One of the comments I see in here is saying, Doesn’t the hosting solution — because of the legality — doesn’t that remove the KYC-free rewards? So what’s the point? Valid question, right? However, there is a massive difference between doing actual KYC/AML regulations and this particular setup. The difference is: when you do KYC, what you do when you go to this exchange is you fill out all this information and you give over all of your personal details to an actual Bitcoin exchange — a financial institution that has an obligation to have all of this stuff on file so that it can be picked by whatever authorities want to pick from it. Don’t even need a warrant, so it’s awesome. Whenever you’re dealing with one of these hosting solutions — that’s not the same thing that you’re doing. You’re not putting your information on a readily available, easily scraped database by whatever agency wants to scrape it to gather all this information about you. Now that’s not to say that this hosting company doesn’t have a legal obligation to hand over whatever information they give if pressed for it — I’m sure that they would. I’m sure that when push came to shove, your identity∫the fact that you have a miner hosted there — that’s a very good possibility. But it’s not the same thing as doing KYC, right? You’re not just immediately dumping into it.

Roninminer [2:21:56]: So what you do, though — like our boy FTB says: he says that there is a decently anonymous way to do it where you register with them, you pay them in Bitcoin, you use a burner e-mail — all the above, all the proper precautions to do so — but then you run into the other hurdle [which] is: if something does happen, now you have no assurances. Because how are you going to prove anything to them? If you haven’t properly KYC’ed, they can say that your machine — like, one of their machines could go down, one of the ones that they’re hosting for themselves goes down or something happens to it or whatever — and that’s not their machine anymore. That’s your machine.

Diverter_nokyc [2:22:51]: Right. But that’s what I’m saying. The point that I’m getting at is: that’s not actually KYC.

Roninminer: No but if he’s lying about it he has no claim. Like you were saying that they had some insurance assurances or something like that, but you can’t collect on that if you lied about your identity.

Diverter_nokyc [2:23:09]: I’m not even talking about lying. I’m just saying: the term KYC is being used as a blanket term to just blanket describe any sort of identity. So I think it’s important to make a distinction between what is actually doing KYC — which is handing over your selfie and your ID and all that stuff to any to a financial institution or an exchange, that’s one thing, that is KYC — this other thing is not. We’re calling it KYC — it’s actually not. However, as you as you point out: when push comes to shove, yes absolutely, your identity — if you give yourself some sort of legal protection from this company — they will hand over all of your information to authorities. It’s not like they’re not going to. The point I’m making is: that’s not sitting on an actual KYC database like it is at an exchange — it’s not the same thing. So there’s a level of separation between where your identity is sitting and these regulators or agencies that may be interested in trying to deanonymize you. So there is a level of protection, but that will immediately dissolve if they’re pressed on it. The thing is: they have to be pressed first in that situation.

Roninminer: Yeah I 100% agree with what you’re saying.

Diverter_nokyc [2:24:44]: Just one thing I will say — I don’t want to give too much away here because this is something that I am literally actively working on myself, but — I hope to alleviate this within the next few months. I am actively working on a solution that I believe is tailor-made for individuals looking for privacy that also want some sort of protection for their machines for a hosting facility. So I’m working on something — hopefully it’ll work out. I can’t give too much of it away, but understand: I see the problem, I understand the problem, and I’m I actually am working on bringing a solution to market.

Roninminer [2:25:26]: Yeah, I am too. I’m four months into it right now. I’m not in competition with you — that’s the sweet thing about miners. It’s kind of the same thing about Bitcoin holders is: you’re actively trying to get your friends and family and randoms on the Internet to buy Bitcoin in competition with you, because you want more Bitcoin. And it’s the same thing with mining, is: you’re actively trying to orange pill your own competition. Like, you want more people to have miners because they’re like-minded people.

Diverter_nokyc [2:26:08]: Sure. And I don’t want anybody to walk away from this thinking that I’m advocating for hosting, or certainly not for KYC. I just think it’s important that we understand that everybody is in a a different situation — this is a very personalized thing — and there are trade-offs, some of which are completely and wholly unacceptable, some of which may hurt a little bit but you’re willing to make them depending on your situation. So all I’m saying is: cloud mining — scam, don’t do it. Hosted facilities — be very very very picky with who you use for a hosting facility if you choose to do it. Like, extremely picky — vet them as much as you can, make sure that their reputation is strong, make sure that you get the protection that you need. But at the end of the day: if you can, just mine at home.

Roninminer [2:27:02]: I know plenty of people — and what I originally said is: I understand what the hosting offers to people. I understand the problem that it solves for people. And all the questions from the people that I know that do it — I’ve asked them questions because that’s the only way I can get information about it — and they give you the serial number of the machine, they do put in place some level of security so that you know that you’re not getting totally rekt, but third party’s a third party. You can never truly trust someone that you’ve never been with.

Diverter_nokyc: Eco, host our miners for us!

Econoalchemist [2:27:57]: You know, if I had more than 200 amps to my house, I might consider it!

Roninminer [2:28:04]: Start leasing some Subways out! There’s a pizza joint that I’ve been looking at: they have electric pizza ovens — the place is a total disaster. $170,000. Just thinking about it, but the guy was a dick, so I told him I wasn’t interested.

Econoalchemist: I think you guys have a very level headed perspective on hosted mining. I’m a self-custody maximalist and a do-it-yourselfer, so I believe there are no problems — there’s only solutions, and you can find a solution to heat and air ventilation and noise and electricity in your own home, and you can get an ASIC and do it yourself. But I think everything you guys have said about hosting is valid — I think you’ve outlined the risks very well, and for those people out there that really want to mine but just really can’t do it at home, I think you guys have spelled out a good case where hosted mining can be a solution.

Roninminer [2:29:15]: I agree. I would rather buy a miner — me personally. Like, I’m in a privileged position where I don’t have to do so, but I would prefer buying a miner with a company like Compass and having them host it for me for a fee than I would blindly handing my coins over to a lending service where what they’re actually doing with that coin is so opaque that you don’t even know how your money is being used. Like, you don’t even know why you’re getting that yield — they don’t even tell you. They don’t even tell you what assets they hold or anything, and that’s insane to me. At least you know the structure of a company like Compass.

Diverter_nokyc [2:30:07]: And one of the things I want to point out, too — I don’t know about Compass. Like I said, I don’t know anything about them — the only thing that I do know a little bit about is Blockware Solutions. That’s only because of Crazyk who I’ve talked with. Like I said he’s one of the Ronin guys — he’s had a couple of ASICs with them for over a year. He never had a problem. So one of the things that they do, though, is they give you VPN access to your miner. So it’s not like you just throw this machine in there and then you just hope you get a payout in your wallet later — you have VPN access to the miner. In the case of Blockware Solutions, anyway. And he’s able to choose whatever pool he wants to mine on, so if he wants to mine on SLUSH Pool, it works the same way — he has full VPN control of where his hash is getting pointed, so you don’t have to mine with their pool or anything like that in the case of Blockware. So again, that’s one more thing where it’s not quite just blind trust. It’s not like cloud mining where you just hope that they send you a payout after a certain amount of time. You do have some aspect of control over your hash — you just don’t have the physical access to the device. So again: massive trade-off, but that’s not to say it should be fully discounted.

Roninminer [2:31:26]: No I agree! And that’s the same way Compass Mining works too is — from the people that I’ve talked to — you get to point your hashrate at whatever pool you want: they’re just running it and they’re running at a fee, but the third party hosting thing is always what I’m worried about. Because like I was talking earlier: you can use miners as collateral against a loan — you don’t know that they’re not doing exactly that! They might be leveraging your miner because it’s an asset on their balance sheet — because they’re in possession of it — and it’s a liability on your side. So if they get margin called, all those miners might be gone. You just don’t know the funky business that might happen. It’s the same thing with GBTC or anything else! Nothing nothing is out on the table — you don’t know what anyone’s doing with your assets. And again I’ll go back to saying: I don’t think that Compass Mining is a bad idea. I see the problems that they solve and it is legitimate problems for most people. I’m in a position where I don’t need to deal with that, so I haven’t looked that much into it, so maybe my take is even bad on it — I’ll admit that.

Diverter_nokyc [2:33:04]: I mean look: trusted third parties are security holes, point blank, period — that’s been established. We know this. So it’s just a matter of whether or not this particular third party has done enough to garner enough reputation to allow you to put a level of trust in them. And like I said: I hope to be bringing something to market to actually deal with the identity portion of this in the future so that people concerned about KYC that want some sort of protection but don’t want to hand over their identity — it can be done, I just need a little bit more work on it, but I’m going to get it done. So look forward to that!

Roninminer: Attaboy!

Econoalchemist: That’s exciting!

Matt Odell [2:33:51]: I think that was a pretty great discussion on the trade-offs. It’s counterparty risk like anything else, and you have to decide — whatever your current situation is — how you want to handle that risk and if that risk is worth it to you. But I would say, like other custodians in the Bitcoin space: just because they might not formally be KYC currently, you always run the risk that there’s a shotgun KYC moment if they’re holding — whether that’s your Bitcoin or your hardware. And that can happen quicker than people expect. We’ve seen it happen a million different times with Bitcoin custodians, Binance being the most recent example.

XIV. Mining Shitcoins for Bitcoin

Diverter_nokyc [2:34:45]: Yeah I can hit this one little question here in the chat: How about mining shitcoins on a general purpose computer that’s already present in your home and then dumping them for Bitcoin? I mean I’ll probably get canceled for saying this but: sure, why not? The whole point of this game is to accumulate Bitcoin if, I’m not mistaken. So if you have a general purpose GPU or even a CPU that you’re able to mine some shitcoin that you care nothing about and instantly dump for Bitcoin without having to do KYC in order to do so, then I mean what are we talking about? Fire it up! What I’ll say though is a lot of the times that’s not really that true — like, a regular normal CPU or GPU that you’ve got sitting in your normal laptop is probably not actually going to do anything other than heat up your computer a whole lot and not really earn much. So what you’ll end up doing is spending a few hundred or even a few thousand dollars building out a GPU or CPU to mine something, when I mean — buy an ASIC! Spend that money: get an S9 or an S17 or an M31 or an M20 and just go directly to Bitcoin. That’s something. But there’s a miner that came out a little while back it was called a Coinmine One. First of all: don’t get it — it’s terrible. Their entire selling point was: this is a miner that you can just plug in and leave on your countertop and you can have it sitting in your in your home just on a coffee table — it looks just like an Xbox or something — and you can just leave it sitting there and you’ll be mining Bitcoin and you’ll be contributing to the network. This is their whole spiel, right? You contribute to the network, you’ll mine Bitcoin yadda yadda yadda — when in reality, you can literally never ROI with a Coinmine, ever! You cannot do it! And what they’re doing is you can mine like Grin or just some other — just the worst of the worst shitcoins, and then they’ll try to transfer that to Bitcoin and make you feel like you’re mining Bitcoin at home and you’re doing so with a machine that you can talk about at a party, like it’s a good conversation starter. No! It’s horrible! But in my opinion, there’s a massive market share here that’s not being addressed yet that I believe ASIC manufacturers in the future may do where they actually target a home miner.

Roninminer [2:37:47]: Well we see some of our friends, right? Matt Odell is actually the only one left out of the chat that we shared together. And we see some of our buddies doing exactly that — they’re mining shitcoins and insta-converting them. Essentially it’s a speculative attack against the shitcoin: it drives the price of Bitcoin up because they’re mining shitcoins and then they’re selling the shitcoin to drive the price down on the coin that they’re mining and drive the price of Bitcoin up, but everyone has a hard time against them because they are “supporting the network”.

Matt Odell [2:38:38]: Well if I could just jump in here real quick — first of all I’ll reiterate what Diverter said: CoinMine is extremely overpriced and they put it in a super-classy package or whatever and they get sponsorship deals on big podcasts to sell it but it was extremely overpriced. I do agree that there’s a place for a home miner. As far as mining shitcoins and autodumping them for Bitcoin — I mean Diverter you said in the beginning I might get canceled for this — I mean I think that aligns pretty strongly with Bitcoin in that you’re providing autosell pressure on the shitcoin and you’re providing autobuy pressure on the Bitcoin. And one of the nice things about it is: if you do have a gaming computer at home, you can just use that already. You already have that — it’s general purpose hardware. To go out and buy a purpose-built overpriced machine to do that is a whole nother story that doesn’t make any sense.

Roninminer [2:39:43]: Yeah no back to my point is these guys that we know that are doing this are buying Alienware machines that are essentially purpose-built to do exactly this: they’re super fast, everything about them is great for doing this, and they’re still essentially money at a loss but they’re being subsidized because the machine itself is under a one-year warranty — you can just cook the machine. You can crank it up as high as you want, destroy the machine, and then you get it replaced at the end. And then when the new one shows up in a box you say, All right this game is over — I’m just gonna resell it brand new in the box. So there’s a whole different dichotomy of what else is going on: like they might be speculatively attacking that particular chain that they’re on and making Bitcoin out of it, but when all is said and done, the hard work costed them nothing. I hope I didn’t give away too much, but don’t do that — it’s dumb. You’re gonna get caught with your pants down.

Diverter_nokyc [2:41:03]: Yeah I mean look: the whole idea here is that we want people to be able to directly mine Bitcoin and to be able to earn in a way that they don’t have to give over too much of their identity and with too much third-party counterparty risk. That’s the whole goal. Now there are myriad ways that that can be done. But at the end of the day: if you have the ability to buy a Bitcoin ASIC, set it up in your home and mine — that can be done. It’s absolutely feasible, you’re not necessarily “competing” against the big players, you’re just dollar cost averaging in through your electricity bill, as Econoalchemist alluded to, however you want to accomplish that goal — do that. But understand that this is absolutely a feasible thing that can be done today.

Econoalchemist [2:42:03]: Yeah all the narratives against home mining have been shattered in my opinion.

XV. Profitability

Diverter_nokyc: Oh absolutely. I mean you look right now at the profitability for miners right now — one of the tools I like, there’s a couple of them, I like whattomine.com or cryptomining.tools. Those are mining calculators that you can look at. You can put in your residential electricity rate, choose the different miner that you want to actually look at, and you can get an idea of what your profitability will be. And if you look right now — like if you’re at a residential rate: the average for the United States is 13 cents per kilowatt-hour. At 13 cents per kilowatt-hour, you’re literally mining Bitcoin probably at around a 60%-70% percent discount from what you would buy on the spot market.

Roninminer [2:43:01]: A lot of those calculators are broken after the whole China thing. So the one that I found to be most accurate is insights.braiins. And an Antminer right now, it’s break-even price 13 cents a kilowatt hour, daily profit $2.86. You jump to new generation — even not the newest generation — the Whatsminer M30s is 30 cents a kilowatt-hour is break-even, daily profit is $21.25. And once they put Braiins on that — you got four miners — you’re making more money than you’re making at your fiat job.

Diverter_nokyc [2:44:01]: Yeah like right now I mean I run the S17 Pro 50 terahash model and for me basically per miner I’m essentially DCAing $100 a week in Bitcoin.

Roninminer: Daily profit on an S17 not a pro but just a regular S17: $16 a day.

Diverter_nokyc: Yeah for mine I’m basically getting around $100 a week and I’m paying around $30-ish.

Roninminer: Yeah on the M32s at 8 cents a kilowatt-hour we’re making $400 a day.

Diverter_nokyc: Right so at this point right now it’s not only just about breakeven — I mean if you have even a decent electricity rate, you can be rather profitable. And that helps a lot to get your return on initial investment as long as these machines have a little bit of longevity to them. It’s important when you deploy — there’s a lot of things that go into it — but as Econo alluded to the entire narrative for so long that was just buy and hold, don’t even worry about mining: I am so excited to see that be falling away, and day by day I see more people on Twitter. There’s a guy bob.hodl, he just released his guide and it’s like every guide that comes out I feel like that’s another baton being passed to the next to the next round to the next round of people putting out these machines and becoming garage band miners. So I’m so happy to see this this change.

Roninminer: Yeah I love it too. But we I think we need to move away from this idea of ROI like return on initial investment. Because people look at it and they’re like, Okay so it’s 14 months before my machines are paid off. And I understand that that’s conventional. But at the same time you got to remember: Okay so now the machines are paid off and it took you this many months to pay them off, but at the same time, those machines are not a non-zero value! Those machines are still worth an incredible amount of money. You can’t discount the fact that you have physical capital still.

Diverter_nokyc [2:45:43]: No not at all. It’s not that but there is a real cost that you have to deposit into this, especially if you’re paying for a miner in Bitcoin. Then your return on investment — are you pricing that in USD are you pricing that in Bitcoin? So there’s things that you need to look at, but especially the state of the network as it is right now, I’m of the opinion that there’s never been a time better than potentially right now. The next three to six months are crucial as all these miners are coming out of China all this stuff. The iron is hot right now.

Econoalchemist [2:47:28]: Yeah and to Neil’s point about ROI, I think the asset appreciation actually bolsters the ROI argument. That’s one of the first things I hear people bring up when they’re considering mining is like, Well how long is it going to take me to earn my money back? Wouldn’t I be better off just buying Bitcoin with it and holding it instead? And that’s why a week ago I put that little mini thread together with some data I had collected about the previous 12 months to help people decide what the profitability of it will be for them. And right now, even if the price stayed static and the network hashrate doubled, you’d still be mining profitably at the average US electricity rate. And in a flipped scenario where the price crashes but the hashrate stays static, you’re still running profitably at the average electricity rate. So like you’re saying, I think right now you have nothing but upside potential to gain from this, because even if the price goes down and the network hashrate goes up from this point, most people in the United States are still going to be profitable mining at home.

Diverter_nokyc: Yeah and it’s important when you’re looking at these things that when you’re calculating potential return on investments or whatever you’re looking at: do worst case scenarios! Don’t calculate your absolute rosy eyed glasses, because profits come and go. Things can happen and things can change where this amazing profitability we see right now today could go back to like it was just a year ago and you were potentially — I was mining at a loss on these same exact machines that I’m now mining at basically 70% under market value. So calculate your risk as if things were going to be really bad and be pleasantly surprised.

Roninminer [2:49:45]: The last thing you want to do is not mining at a loss — the last thing you want to do is be selling at a loss. Do not put yourself in a position where you have to sell coins at a loss. Just always keep a reserve, just know that it’s gonna go bad — it always does. You’ll end up in a position where you can’t afford your bills or whatever. Mining at a loss is fine as long as you can cover your bills, but do not sell at a loss. That has wrecked more people than anything else, is overextending yourself. Do not overextend.

Matt Odell [2:50:37]: So guys this has been a great conversation. We’re nearing the three hour point I think it’s probably a good time to wrap up. I appreciate all your time. I guess we’ll do final thoughts. We’ll start with Eco. Eco final thoughts?

Econoalchemist: Anyone can mine at home: it solves the issue of privacy, it solves the issue of censorship resistance, it solves the issue of KYC, it’s very profitable right now — there’s a lot of margin to go to the downside and still have this make sense, it’s worth the effort. The hardest part is going to be the infrastructure, but once you get over that hurdle it’s smooth sailing from there. Plug it in, let it run. The thing is on autopilot. There’s just so many benefits to mining at home and I’m just thrilled that there’s been a lot of interest from the community in pursuing it.

Matt Odell: Awesome thank you Eco. Neil final thoughts?

Roninminer: Not much. I just want to give a shout out to my brother again, Eric. It was such a blessing to orange pill the guy — one day I’m sitting at the bar with him and I go, You want to get into Bitcoin mining? He’s like, Yup. Done — so easy. And to have somebody to kick problems around with all the time every day — every day if I need him he’s there to answer anything and work with me. It’s just been such a blessing. And to answer some of the chat that I’ve been looking at: 12. I drank 12.

Matt Odell: Thanks Neil. Diverter, final thoughts?

Diverter_nokyc: Yeah so as the chat says: don’t be a degen. This whole Mining for the Streets thing, this whole individual garage band mining thing, I feel like we’re seeing a resurgence of it now which I absolutely love. We’re going to need it to continue to grow. Understand that when you are asking to operate in a market that is outside of regulations — which is what we’re doing, we’re asking to be left alone: we don’t want KYC, we don’t want all this stuff — so when that’s the case and you’re making the initiative that I don’t want-, I don’t need regulations, what that means is we have to regulate ourselves. So it’s on you to do the research. It’s on you to find the reputable dealers. It’s on you to learn about your infrastructure, your electricity costs, your profitability — all this is on you and your personal responsibility. Anybody that tells you that it can’t be done has just simply not done the research themselves. DYOR: do your own research. Don’t skimp on reputation to save a few bucks. And fire those miners up!

Matt Odell: Thank you guys! I hope to have you all on Dispatch again soon. I think this was a very good conversation.

Roninminer: One last point Matt: everyone can ask us anything they want whenever they want. Do not make a purchase without verifying it.

Matt Odell: 100%. We appreciate your time.