The days of lucrative Bitcoin mining at home are over

With the price of bitcoin faltering and mining difficulty on the rise, crypto enthusiasts who once took home a pretty penny mining out of home garages are now finding it harder to break even.

Mining bitcoin at home today is much more challenging than in the early days of crypto. Mining equipment is expensive and electricity is not cheap either, and the number of people willing to risk investing in bitcoin mining has shrunk.

“In terms of demand, it dropped very, very significantly in June,” said Lauren Lin, chief operating officer at the Luxor mining pool. “In early August, however, demand has picked up, partly because the bitcoin price rebounded slightly from June’s decline and also more hosting sites have come online.”

Hosting sites are data centers where miners can store and operate their equipment for a fee. The infrastructure involved in bitcoin mining, at least to be profitable, is significant, Lin said.

“To mine at home, it doesn’t just require capital to buy ASIC [application-specific integrated circuit rig]you have to know how to ventilate, you have to know how to deal with the noise and the heat, there’s a lot to consider,” said Lin.

Profitability is primarily the biggest concern for most miners, Lin added, and recently it has been more difficult to make money. Several first-time miners have purchased S9 mining units, an older model that does not produce enough bitcoins to offset the electricity costs.

“I would say, at least for our customer base, the main purpose of those doing this is to test how mining works,” Lin said. “If you’re mining at home, with residential electricity prices, an S9 isn’t profitable at all, but you’ll get some experience.”

Bitcoin mining at home no match for big companies

Companies looking to cash in on crypto demand have also been on the rise, further pushing out garage-based businesses.

“The big boys are playing hardball and using multiple strategies to monetize their sites,” Sam Doctor and David Bellman, mining researchers at research firm BitOoda, wrote in a recent note.

The ‘big boys’, i.e. the large companies that have entered mining in recent years, are diversifying their income streams to cope with difficult market conditions. Nasdaq-listed Stronghold Digital Mining has sold power to the network – and its mining machines – to cover debt.

Other companies have changed gears completely. Bitcoin miners in Rochester, New York have brought a retired power plant back into operation to generate new cryptocurrency.

Private equity firm Atlas Holdings bought Greenidge Generation in 2014 and converted the coal-fired power plant to natural gas. In 2021, the company began using the generated power to mine bitcoin. There is now legislation in New York that aims to prevent new operations from drawing on fossil fuels.

There has also been a shift in geography, Lin added, especially in the wake of China’s ban on mining. Mining activity has picked up across Europe and South America, Lin said.

“From the end of last year, we see more and more South American miners scaling up,” Lin said. “Around the time of China’s mining ban, they were still buying a very old generation of ASICs, now they are moving into the latest generation of the ASICs.”

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