Seven Lessons I’ve Learned From A Decade’s Worth Of Bitcoin Mining

Bitcoin mining is an manufacture that has evolved immensely and there’s overmuch to beryllium learned from that journey.

This is an sentiment editorial by Marco Streng, CEO of Genesis Digital Assets, 1 of the world’s largest industrial-scale bitcoin mining companies.

We tin enactment immoderate hard numbers down the maturation of the cryptocurrency mining manufacture — a existent marketplace size of $2.29 billion, a CAGR of 28.5%, forecast to scope $5.29 cardinal by the extremity of 2028 — but the existent maturation successful mining comes from the lessons learned implicit the years and implementing those lessons to go much profitable and sustainable.

I started mining bitcoin successful my dorm country successful 2012 and started industrial-scale bitcoin mining successful 2013, conscionable a fewer years aft Bitcoin was created successful 2009. Since then, our operations person scaled to see information centers astir the globe and billions of dollars mined. Mining mightiness person been a amusive pastime backmost then, but scaling an industrial-size mining cognition is simply a precise antithetic acquisition — 1 that takes focus, tact and the quality to larn from your mistakes.

Here are immoderate of the apical lessons I’ve learned implicit the past decennary connected however to standard bitcoin mining operations.

Lesson 1: Mining At Scale Requires Capital

Gone are the days of being capable to excavation bitcoin connected a laptop, arsenic large-scale mining operations person turned into a precise capital-intensive industry. There’s not lone the outgo of the existent instrumentality and associated upgrades. There’s determination overhead, payroll and each of the associated expenses of moving a exertion concern successful a determination astatine scale. Funding for those expenses needs to travel from determination — and not needfully from reinvesting the bitcoin mined backmost into operational costs, either.

When it comes to seeking superior today, galore mining operations are looking to indebtedness financing arsenic a bully option, arsenic its little hazard is much charismatic to investors. However, galore mining operations are taking their companies nationalist and raising equity done banal income arsenic a mode of financing — even utilizing their hardware arsenic collateral.

Lesson 2: Build Long-Term Relationships Within The Industry

While the cryptocurrency mining manufacture has grown truthful overmuch successful the past decade, it’s inactive comparatively small, with a constricted fig of players involved. Because of this, it’s important to found relationships and physique them for the agelong term. This is particularly existent with hardware manufacturers, arsenic determination are not galore of them. If you don’t similar the mode they bash business, you can’t needfully spell elsewhere; likewise, you besides request to beryllium a bully lawsuit to physique that spot and reliability.

Lesson 3: Prioritize Operational Efficiency

In bid to tally a palmy mining operation, you request to beryllium obsessive implicit your operational efficiency. At the core, you privation to guarantee that you’re moving the close hardware successful the astir businesslike manner, meaning proactively staying connected apical of upgrades, capable cooling, accordant uptime and different factors.

Thinking done your operational considerations volition not lone marque you much palmy but volition yet marque your institution much resilient to changes successful the marketplace and the industry.

Lesson 4: Continual Innovation

As you obsess implicit operational efficiency, you’ll privation to get originative with your solutions. Being successful a fluctuating manufacture similar bitcoin mining means facing recurring and caller challenges, and innovating arsenic a response.

Some of the innovations we came up with see creating a amended bundle absorption strategy for our information centers erstwhile faced with tools that couldn’t show and negociate our operations astatine scale. We’ve turned to innovations successful construction, including modular containers that tin beryllium shipped and acceptable up anywhere. We’re besides being originative with the excess vigor fixed disconnected by our information centers and utilizing them to powerfulness greenhouses.

Lesson 5: Evaluate Locations Wisely

Another acquisition learned is to take your determination wisely — particularly evidenced successful China’s crackdown connected cryptocurrency mining successful 2021, forcing mining operations that controlled 71% of the world’s hash rate to unopen down and determination to a caller country. So, successful looking astatine wherever to spot your information center, take a state that’s successful favour of having mining operations wrong their borders and wherever governmental changes won’t beryllium a hazard to livelihood.

Choosing a bully determination besides depends connected the types of vigor available, arsenic galore bitcoin mining operations question places that connection abundant renewable vigor sources. The bully quality is that the bitcoin mining industry’s sustainable energy mix has risen to 58.4% this twelvemonth — but there’s inactive a mode to spell to marque the manufacture much greenish and determination volition play a portion successful that.

Lesson 6: Downtime = Lost Profits

Another acquisition learned? Time is money. Any downtime, adjacent for a fewer minutes, tin enactment you behind. There was a clip successful 2015 erstwhile we knew that waiting months for caller hardware to beryllium shipped was going to effect successful mislaid productivity, truthful we rented a fewer planes successful bid to prime up the hardware ourselves, mitigating immoderate mislaid clip and profit.

However, with the planetary spot shortage leaving companies waiting up to a twelvemonth for supply, mining companies can’t simply rent planes to get machines quicker, due to the fact that determination whitethorn beryllium nary machines to beryllium had. In bid to forestall downtime, orders request to beryllium anticipated done robust modeling of the Bitcoin ecosystem and placed good successful beforehand of being needed.

Lesson 7: Scale Creates Momentum And Resilience

When bitcoin mining began, miners were individuals, but mining soon needed to standard into ample operations moving thousands of rigs mining astir the clock. It’s nary longer imaginable for individuals to mine, but adjacent tiny players volition person trouble mining arsenic well. There’s truthful overmuch going for large-scale operations, arsenic they person the economies of standard to prolong their operations arsenic good arsenic the momentum. Large operations are besides much resilient to fluctuations successful the market.

Lessons Learned And Implemented

Managing large-scale mining operations takes absorption and dedication, and determination are going to beryllium galore lessons learned arsenic we task guardant successful this precise caller industry. However, the extremity is to look challenges head-on, larn from them and beryllium originative successful our effect successful bid to physique a sustainable and profitable enterprise.

This is simply a impermanent station by Marco Streng. Opinions expressed are wholly their ain and bash not needfully bespeak those of BTC Inc oregon Bitcoin Magazine.