Topic: Mining as a business?? (Read 2991 times)

I agree with you, if one rented and lived in a space with electricity included in the rent, the setup can work as well.  If you don't mind me asking, are you structured as a business entity?  As in an LLC, S-Corp, or Sole proprietor?

I have actually thought about this recently, years ago i got into bitcoin mining as a newbie. played around with the couple hundred usb asic miner rigs, then went to S5 antminer and ran it tell it died and honestly i think the reason it died was purely heat because i had it running in my 2 car garage on a shelf 24/7....

I am a twitch gamer streamer and recently upgraded to a watercooled rig with massive 1080mm external radiator mounted on the wall pointing the majority of the airflow from the radiator at the a/c suction vent in the room allowing the house a/c to pull the hottest air in the room directly out of the room before it gets a chance to really mix with the room when it cycles on... this setup dropped my 50-60c gaming temps on the CPU/GPU to now my rig stays around 28-32c at the hottest temps with very minimal amount of fan speed used.. half the time the fans are off and the temps are just cooled passively...

So you could manage GPU cooling with a massive watercooling loop easily... and it would take very low amount of wattage to perform this task in my opinion...

I really should look into the GPU mining currencies more.. because i have a rental property that i struggle to keep rented out right now due to the area that i could invest solar on the roof and setup a mining operation inside to produce some income..

Mining would only be a business if you already seeking for investors or clients who would share to make your investment big which can be really called a business but actually you can start up your own mining farm on your own without minding about that business permits or whatsoever but expected on having a limitation on building on it. Knowing that mining rigs are very expensive.

1. I get that using ambient air is useful in many areas up north but I'm in Florida and there really is not much of an option other than to use traditional cooling methods. My temperatures were as high as about 99 degrees so I had to do something. I am currently only running 32 cards right now and I am now building the 4U rigs that you were describing in the 6 to 8 gpu variety. They do run much cooler on average than the open air rigs that I began mining with.  I will move to a warehouse here in Florida due to me still having a year of military obligation left and that I have maxed out the power in my home. Mining has allowed me to match my military salary and I also just got my bachelor's as a backup plan should this all not work out so I feel fairly secure.  My rates will decrease to around .085 kwh and warehouse space with 3 phase power is dirt cheap around me. I will probably add an additional 60-80 gpus when I move into a warehouse towards the end of the year. At any rate, I would consider making a move to your area in a few years if all goes well since low electricity rates do provide a certain level of stability should mining become less profitable in the future.

2. There are many many areas in the .04/.05 kwh range. Some of them are Niagara Falls, a dozen or so places in Idaho, and a few isolated places Nevada. That is just what I have found but I am sure there are other people here that could shed some light on their local rates.

Hay. I want to start a business by minering ethereun. Firs of all i have in mai mind to buy a ethereun rig 6 x MSI/xfx RX 570 4G from a datacenter special made for miners. the price is 2500 USD. mai rigs will be host by the company and i will sign a contract with them.
the tehnical data is:
6 x MSI/xfx RX 570 4G
6 x USB PCI RISERS
1 x MB BIOSTAR TB250 BTC
1 x CPU INTEL G9300
1 x DDR4 4G 2133MHZ
1 x SSD 120G
1 x PSU 1250
160-170 MH/s

Please tell me you opinions about this business.
Can be profitable? can i know the furure of the rigs in minering?

 1. 30% is a lot closer on traditional A/C - SEER 10 would work out to about 33% if you have ZERO ventilation at all - but most places you can manage to get to 80 F for a LOT of the year with no more than good ventilation.
     
  To quote from one of the articles I've read about Yahoo's Chicken Coop design, though:

 "Yahoo engineers determined that YCC yielded roughly two percent annualized “cost to cool” with evaporative cooling; meaning that free-cooling would have an even lower percentage. (cost to cool is the energy (kW) expended to remove the heat generated by the data center load as a percentage of the data center load itself.)"

 Their setup uses standard rack mount cases, though, but it uses the fans IN THE CASES to do all of the air moving - I suspect their actual total COUNTING those fans would be under 10%.

 They use a "flash evap" misting type setup, not traditional "aspen" or "rigid" media style evap cooling, which also would keep their costs down - and this IS in a building custom-designed and built for this work.


 3. no doubt rates will rise - but with the AMOUNT of hydropower available, and the ability to bump "for sale" rates up even more, local rates shouldn't go up very fast.
     This year's increase in the county I'm in was 2.1% or LESS for most classes, though the lower level of "Industrial" got tagged for a 5% jump - but the higher level of industrial got tagged for less than 1%.
     
     Most folks in the Electric industry still use a "one household averages 10KW" estimate - you might think that should have gone up over time, but it gets dropped due to a lot more folks being "single" and therefore the average household size has been dropping for a long time, which evens that estimate out.
     Rough ballpark 50k pop each in Chelan and Grant counties = 500 Megawatt local usage each (ballpark), probably add that much more at MOST for local business usage (not a lot of manufacturing in this area so that estimate is likely VERY high) - and you're up to about HALF the available Hydropower in each county from it's dams on what should be a rather pessimistic estimate of local usage.
 Douglas ends up at pretty close to the same, since it's pop is a LOT lower.
 Area pop also isn't growing very fast, nor is there any real reason for it to do so.
 
     I've seen a very FEW other areas that can get to 5c/kwh on industrial rates, but haven't really looked all THAT hard as I'm already in the "optimal area".

1. Even with the traditional costs of air conditioning, I am currently making huge profits as I don't mine with ASICS but rather GPU rigs. ASICS are largely not that profitable now and thus that is why people have to resort to such cooling practices. I can tell you that when I made the switch to having dedicated air conditioning my hashrates went up a good 10% and my gpu fans don't have to run ragged. Just to clarify I don't keep it at 68 degrees as most data centers now keep it around 77-79 to lessen electricity consumption. I will have to now amend my cooling costs to being more in the range of 25-30% but to me it is worth it for the stability and sustainability.

2. I happen to be such a person with an exceptionally high credit rating and some extra capital laying around.  

3.I agree with you in regards to the rates. I know about the local rates as well but it was just to prove a simple point. Even though they have not increased the rates dramatically it is a reasonably good bet that rates will continue to rise as consumption in that area increases. However, there are still some low profile areas in other parts of the country that are in the .04/.05 kwh range.

4. I agree with the rest of your statement but it is simply basic business practices.

 1. the "data center" model of needing 68 degrees doesn't even apply to DATA CENTERS any more, and was a legacy holdover from mainframe and BIG mini days that has been dying for a while now.
     Look up the Yahoo "chicken coop" data center design they've been using on ALL of their recent data center builds (specifically including Quncy WA), for a well known example of using AMBIENT airflow and flash evap misting for cooling.
     Microsoft and Google have similar concepts in place in their large Quincy-based data centers.

  Cryptocoin models don't NEED "old style data center" level cooling, and never have - if you're putting more than 10% into cooling, you are being stupid about it and going to lose a TON of money (perhaps 15% if you're in a VERY HOT area and have to use a lot of evaporative cooling).

 Cryptocoin mining rigs should be able to handle 90 degree F temps as a general rule without issues, *IF* you have adaquate ventilation. More than that, you either start downclocking or if you can go evaporative cooling.

 If you're going to put serious money into a cryptocoin BUSINESS, you don't set it up somewhere that is hot AND humid, BECAUSE that drives your electricity costs up to the point you can't make any money at it long-term.
 (this is another reason for the large cryptocoin mining presence in Central Washington - it gets fairly hot but not REAL hot here, and it's DRY year-round - average of 8" or so rainfall A YEAR in the Wenatchee area and parts east).

 2. Yes, a FEW folks have managed to get loans and such for a cryptocoin business - but most of them have been at the "BIG" business level with technology-orientated investment banks like SoftBank or venture capitol groups, or the loans have been "signature/personal" loans to someone with a very high credit rating, or in some cases (I know a few of these) folks putting a morgage on their home to finance starting up or growing a cryptocoin business.

 4. don't go by "statewide" rates, which is the only thing the EIA reports.
     Washington state, for the most important USA example, has different rates in different counties to my direct knowlage that range form a low of LESS THAN 3c/KWH FOR RESIDENTIAL USAGE (Chelan and Douglas counties, 4.5 for residential in Grant but the big-business and industrial rates can be LOWER than Chelan or Douglas by a thin hair and ALL 3 are well under 3c/kwh for large accounts) to well over 10 for INDUSTRIAL (the counties Seattle and Tacoma are in, and a couple of the adjacent ones).
 I think the EIA reports Washington as a state at 8.something cents (lower than the national average but nowhere near the lowest in the US) - but Washington also happens to have the 3 counties that have THE lowest rates in the USA, despite not being anywhere near the lowest rate on a state-wide basis.

 Chelan County PUD semi-recently made the news because of it's proposals for how to raise it's rates for "bitcoin mining operations" - but the final result was relatively minor, mostly they kicked up the "front end cost to pay for infrastructure" amounts quite a bit in their large user rates if you were setting up a "high density power consumption" operation - Douglas and Grant already HAD such provisions in their rate codes - and none of that applied to SMALL businesses, only to folks pulling in the MEGAWATT+ range.
 Smaller folks saw only the same very minor rate increases everyone else got, 1-3 % ballpark.
 I think MegaBigPower ended up getting hit with a 10-15% jump in total, and they're probably still THE biggest mining operation in the area - and I'm pretty sure they're STILL paying a fair bit less than 3c/kwh.


 Idaho has some hydropower in the state, and a low population that doesn't have a huge power demand - their lows don't go AS low as Washington, but their highs are nowhere near the SeaTac metro area on electric rates.





Setting up a mining operation as a business is in most respects the same as any small manufacturing business.
 
Your "sell coin into fiat" is your gross income.

If you use coin directly to buy equipment, that has to be counted at the then-current fiat value as income.
 
Your miners can probably be counted as inventory, which offsets income used to purchase them - and you have to count their sale value as income when you sell them.
  You DO have to sell them off sometimes for that, otherwise they have to be treated as computer equipment and depreciated as such - which sucks since ASIC mining gear loses value a LOT faster than most computer gear, and the IRS depreciation allowance for computer gear is ALREADY way too long.
 
Your rent, electric, water, sewer, garbage, and other costs for the space you put the miners into all count as operating costs.
 

It is true for now this mine has been made in business, many people who rent their computers to mine and that too many users

I think that you could diversify by maybe getting a few S9's, a few L3+'s, and of course some AMD and Nvidia miners. This would allow you to diversify your mining efforts which would overall increase the safety of your operations since you arent overly reliant on any one particular coin. This kind of method would be conservative and potentially very lucrative depending on the setup.

Hi!

I did read a lot of Bitcoin mining too. Well, it is a lucrative business for now because a lot of people are going into the Bitcoin world. However, the situation remains volatile as there might be new developments coming. So my advise is to not open an office yet and just remain steadfast in learning and practicing Bitcoin mining in the comfort of your own home until you are quite certain about where it will lead you. That way, you are able to save capital and operating expenses, and as well as overhead costs. 

I hope it helps!

As I type GPU is beter then BTC mining  if you are usa located.

I pushed this concept for about 13 months  and it has come to full bloom at the moment.

So  yes 100 zotac  mini nvidia 1070 cards will do  40000 sols of zcash 

gross net of 8125 usd per month

100 cards can be had for 35000 usd

six card rigs 
would mean 17 of them   roughly 4000

some racks and you are  setup with 40000 usd in

you would use  14 kwatts  about 10500 kwatts per month.

so at 10 cent power 1050 power bill.

net  8125 - 1050 = 7075  which means all gear should  be paid off in six months  if you have warehouse/barn/free space.

not many businesses  that good.  of course renting a space   means $$$  but   a  commercial space   means better power cost.

no btc deal on earth offers this anymore.

 3 counties, to be specific - but only 2 for smaller mining setups, the third you have to get to the 200 KWH level to get to a competative rate with the SMALL BUSINESS rate for the other 2.

 And as it happens, I relocated to one of those counties last summer....

bitcoin train has already left. chuuu chuuuu

I do know which counties these are of course since I have done a ridiculous amount of research but I also know that these areas are now trying to raise their commercial rates because of the influx of data centers and mining farms that have gone there. Idaho is pretty darn cheap in certain areas and Nevada also has places with .04 kwh commercial rates. There is most definitely other places with cheap electricity but I supposed Washington is far easier to cool. In regards to Bitcoin mining you are largely correct but GPU mining is far more profitable these days so higher electricity costs are not a big deal. I will also say that many GPU rigs have a lower wattage pull than the S9's that most people mine BTC with. Basically, my GPU rigs mine for double the profit and require about 25% less electricity per rig while maybe costing only a few hundred dollars more. ROI on GPU rigs is far better than any ASIC and you can always convert to BTC later if you trust the currency more. GPU's>ASICS any day of the week.

There's no reason to use mechanical cooling for something that can be throttled by error rate and be radically cheaper to cool with ambient air exchange.  Just filter the incoming air.


State level granularity doesn't cover the nuance needed.  Idaho, as a state, has cheap power.

Several counties in central Washington have the cheapest power in the nation.  Washington State, as a whole, has expensive power over in the Seattle metro area.

And if you're serious about a mining business, you already know what those counties are.

1. No, For true cooling costs it will be around 50% and that is for CRAC units that are specifically designed to maintain temperature and humidity for data centers. Sure you can set up some fans and try to cool with ambient temperature but I don't think this is sustainable for long term growth of the mine. (This of course depends on if you live in Iceland or Canada)

2. I will generally agree with this point other than people have gotten financing from both government backed loans and also banks. It will be difficult but it is not impossible. In addition, there are other funding sources besides traditional banks.

3. I definitely agree! You only need 1 per 100 rigs on average or maybe if you are stretching yourself maybe double that.

4. https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a
Idaho, as of Feb 2017, is literally one of the cheapest states in the entire country in regards to commercial electricity rates. I simply was talking generally about a state but yes if there is a hydroelectric dam then the rates could be around .03-.05 per kwh. The thing I found funny and surprising was Virginia is very cheap for commercial electricity rates.   

 It's ENTIRELY practical to set it up as a profitable business on a LOT less than "millions" - just not HUGE scale, and you have to mind the costs a bit closer than the big-scale folks can get away with.

 $100k would be PLENTY to start up a small professional mining farm BUSINESS - I'm pretty sure I've got less than HALF that invested INCLUDING reinvestment of a lot of my mining income for the 4 years or so I mined "as a hobby".


 Cooling costs had better be a LOT less than 50% of your electric use - you can do mechanical air conditioning for less than that, and THAT makes costs quite a bit too high to be truely competative.
 If you're putting much more than 10% of your electric usage into cooling, you need to rethink your cooling setup.

 Don't count on getting a business loan though, Cryptocoin mining is a LOT too speculative for most banks to even think about dealing with.


 For a small farm, you don't NEED staff.

 Water usage should be very small, unless you are using evaporative cooling - then it's STILL pretty small.

 Idaho electric rates aren't all THAT low - for low electric rates in the USA, you're looking at 3 specific counties in Central Washington state.
 Idaho might be a good bit less than 11 cents/KWH in areas it's got hydropower access though - but it's certainly not in the 3 cent ballpark.

Well I don't exactly agree with this in the largest sense. You can run a small warehouse by yourself very easily since the average ratio in a data center is 1 employee per about 100 servers. If you take this ratio and convert it to miners then you can run about 100 gpu rigs without needing any help at all. Cooling costs are about 50% of the electricity that the miners use and even when you add liability insurance, property insurance, water, rent, etc. At my electricity rates, which is .11 kwh, mining with 100 gtx 1070 rigs would net you around 40k a month mining Zcash before having to pay back a business loan. The loan payment, by my estimation, would be around 10k for a 5 year business loan. Obviously you would still have to pay taxes and any capital gains but the margins are definitely still there to support all the expenses. This is all extremely speculative but there is still a huge profit to be made but just not in anything that is mined with ASICS. I am basing my numbers here around my plan to open up my own small mining operation which will initially consist of 20 rigs. I did extensive research on how true data center infrastructure is configured and not simply a bunch of fans moving hot air around. I will say it is ideal to do this in a place like Canada or the state of Washington/Idaho because of the ease of cooling and the low electricity rates.

It's not worth your time. All the paperwork, hiring staff, security, converting a location into a data center...
If you go completely legal with it, business style, you won't make much. Profits from mining aren't that high if the price stays in the same range, most of the profits usually come from the increased value of your coins. That's why in 2014 miners got in trouble, because the price was much lower than the cost of mining. If you have a small operation in your backyard you can sit and wait, but if you have to pay your employees and the price stays low for a year or 2, then you're in trouble.

I believe that very simple but accurate calculations are realy necessary to answer the profitability question   

one huge difference is probably that with a business you are obliged to declare your income to the IRS if you are in the USA, with casual mining not so much

i don't think they will ever check a random dude running a single antminer s9 in his mommy basement...

the other is releated to the cost and a proper place to run the miner with proper cooling solution, there is a huge investment to do with the business way

There are several important questions to ask at this point in time, for this question:

1. Are you a chip foundry, or do you have close ties to a chip foundry such that you can get ASICs at ~fabrication cost?  And do you have access to smart people who can design a more efficient SHA256 engine?  The first is much more important than the second.

2. Do you have access to megawatts of power at industrial pricing?  You're a perfect customer for megawatts of power - you have a totally constant demand, and can sign up for all the load shifting/peak shaving programs, as long as they're more profitable than your hardware, because there is literally no harm in reducing power consumption on demand.

3. Do you have access to some way of dumping a few megawatts of heat without paying anything (or pretty close) for cooling?  Ambient air exchange in a cold area with cheap power is probably the best option, though the throttling of ASICs in hotter temperatures (100+C ambient) is probably cheaper than paying cooling for that hardware.

If you can safely answer "Yes" to all 3, absolutely.  Go at it.  But you wouldn't be asking here.

If not?  Well, good luck.  You probably won't make money, but the tax writeoffs from the losses could be useful.

If you have access to free electricity or at least low electricity then that's a good start already. The problem that everyone in the mining business is the cost of electricity, next is man power of course you can't man your business alone 24/7 and going back to electricity cost its not only the mining rigs that will need electricity, you also need to cool down your mining rigs unless you live in a place with cold weather.

Mining bitcoins as a business can be very expensive at initial. Before involving yourself in this field, you should calculate how much electricity does your farm or miner consume.
This helps you to comprehend, collate your provisions of profits from your miner.

This is why GPU mining is so much better than ASIC! 

Mining can be made as an good business profiting big, but it needs a very big investment even for a small scale mining farm. Profitability depends upon the electricity consumption charge provided by the government​. In the past Venezuela served as a good region to profit big, but now the economic fall has caused a severe fall in mining process.

At the moment, it is not a viable business opportunity, unless you have millions of dollars to start big. However, as the most advanced technologies are being used to manufacture the ASIC miners, the jumps in hashing power (for a given power consumption) is starting to slow down.

For example, in 2013-2014, for the same amount of energy spent, you can have 5-10x more hashing power if you wait a little longer, because more efficient miners are being made. That was the time when the ASIC manufacturer will "delay" the delivery of their products as they can use them to generate bitcoin for themselves.

I did some searches and couldn't find anything directly related to what I was looking for...

But any how, anyone set up their mining activities to be a business?  I'm coming from the US perspective... like, buying the equipment, renting an office, running the machines, registering as a business, etc.

It was just an idea, but basically the difference between a hobby miner and someone who actually wants to turn it into a small business, etc.

Any thoughts?  Any experience?