Claus is an anonymous miner. He is about 33 years old and he has a Telegram channel “One-man miner”. He has been already interviewed in December 2017. Then we talked about earnings on cryptocurrencies and the aspiration to legalize manufacturing. A few months later, after the value of Bitcoin and a number of main altcoins fell down, the miner shared his experience of mining and told about the prospects of “entering” the industry right now.
Since December 2017, when you give your interview, many cryptocurrencies went seriously down. How did this affect the profitability of your farms and whether plans for return on investments were destroyed?
Firstly, I considered everything as an experiment. I was ready for situations when something could fail. Therefore, if I give other advice I say: “Be ready to lose everything.” The market is very unstable, I would have never looked for 100% probabilities and made forecasts undertaken.
I rely on experience and market observation of this market – and I watch it since 2013. During this time I saw many ups and downs.
Fingers of the hand are not enough to list all the catastrophic falls, fantastic ups, and all this jazz. It’s a sinusoid.
I am absolutely calm about what is happening now. Simply besides investing in equipment and mining, in a good way, it is worthwhile to have a stock of investments from which you would cover operating expenses. That is, you do not need to sell the crypto asset (especially, if the market goes down), but keep it until the moment the price will allow it to do it profitably.
In percentage terms, what part of total investments should this stock consist of?
Of course, everything depends on the volume of operating expenses. Approximately 20-25%, closer to one fourth a year. It is clear that costs can be covered by the profitability of mining. The activity continues to be profitable, no one works at a loss. Simply this strategy will bring the most returns on mining.
What are the moods in the crypto community and among the miners? Do you know examples of people who “left” in recent months?
I think, not many come out. Anyone who is more or less familiar with the market, who understands the risks – they realize that this is a swing. In my opinion, the decline is a good thing. If the market grew up, steadily and rapidly, this is simply physically impossible to sustain. We need to understand: the decline is not bad, but only if you do not panic – hodl as crypto enthusiasts say.
This approach severely calms down the situation. Plus, if you look in the long run, then there is always a stable growth.
You’re terrified if only you bought devices at a rate of $19,000-$ 20,000 and they now lost their price up to three times.
The market should be investigated very systematically and don’t rely on today’s data. Look before two or three years ago and plan for two or three years ahead. Under no circumstances focus on the current situation.
There is an opinion that the equipment is now cheaper and it’s really profitable to enter the market. What do you think about it?
I absolutely agree with this. I advise everyone who thinks about it to enter now. It is better to start purchasing equipment for bitcoin mining. For example, the tested ASIC S9. Although recently new promising models from other manufacturers like DragonMint T1 have appeared.
Now the barrier to entry is very small – the same S9 with a power supply can cost $ 1500. It has a forecasted payback period of up to a year, even with the current bitcoin rate and the complexity of mining. A good choice to think, test and take a closer look at mining.
You post a lot about the farm arrangement. What was the biggest unpleasant surprise?
The most unpleasant moment was when everything started to spark and sparkle, electricity turned off and so on. It happened when I decided to turn on my own three ASICs. And this is even considering that I’ve already possessed certain instructions.
It turned out that the claimed characteristics of power cables are not true at all. Usually, no one talks about it. But ASIC even if it is sold with a power supply, is delivered without cables – there is no power cord and an Ethernet cable.
It’s very easy to check the quality of the cable. Wait 20 minutes after connecting it – if it didn’t melt, then everything is fine (laughs). Temperature is really a good marker: if in 20 minutes the cord is just warm and does not lose elastic properties, you can use it.
I did not come up with the story about the melted cable, incidentally – one I flowed on the floor. Thank God, I guessed to put a good voltage regulator, which saved me. Therefore, you need to take into account that the device must be supplied with very good quality electricity. It can be provided only with a good and expensive stabilizer. Well, of course, the wiring is something that you cannot save your money on.
The calculated data should be multiplied by 1.5-2 to ensure that everything was in stock.
Looking back, have you noticed any mistakes? Would you do anything different?
If possible, I would order the equipment directly from China – without waiting on services of resellers and so on. If you are too lazy to do this you can find someone who will agree to bring everything for 10-20%, then it’s okay. But it’s unreasonable to overpay 2-3 prices (it’s only about ASICs, it’s not about video cards), consoling yourself by the hypocrisy of guarantee.
In fact, no one provides a guarantee, it’s all just a matter of providing official services. Here are also a lot of pits to fall into. The official guarantee lasts six months from the date of “shipment” of the device. So if you buy ASIC of a December shipment in March, keep in mind that it has at best a month warranty. The ordinary user will never be told about this.
It’s much better to buy directly. And it’s easy. We have companies that provide logistics services for the delivery of goods from China. There are already a lot of them. I used Google to find one.
In addition, I would look at other devices. For example, I’ve messed up with devices for Dash mining. Now they are almost 5 times cheaper with a minimum yield. At best, they pay for electricity costs.
But again, I originally approached the case in order to gain experience. I took several different devices, video cards, tried different algorithms and approaches. I was determined to do something that might not work out. There was a danger of losing a certain amount, including everything. This is an experiment, the results of which I really appreciate. I gain experience and information I need. The income does not converge with the planned one, but I earn, I don’t work at a loss.
Don’t you afraid to reinvest now most of the funds back into business?
Until February I reinvested all earned money in purchasing new devices. Now I put it on pause and decided to mine for future use. I’ll try to wait for the growth rate. While reinvesting into equipment, I assumed that it would go up in price – to some extent it would be an additional income.
It turned out that it was more profitable at the peak to sell cryptocurrency and keep fiat money and then speculate at the exchanges. So far I’ll slow down with reinvesting in new devices and continue to hodl.
How long are you going to mine?
I have no plans to stop this activity. I believe this is the coming future and we are waiting for new peaks of the exchange rate, support of the states and so on. For now, such a time, the market is stormy including the unclear attitude of the authorities towards thу stuff. Someone is trying to promote cryptocurrencies to the masses, legalize, someone is against the movement.
What is the “safety margin” for mining considering that it is more and more difficult to mine coins?
This question is one of the reasons why I advise you to start mining with Bitcoin. It already has a transcendental complexity. Even large volumes of new devices do not have a critical effect on the overall state of the network. This factor is very important for other currencies like Litecoin, Dashcoin and others. It is more dangerous to enter them because for forecasting at least some profitability a very strong growth of the exchange rate is necessary.
Bitcoin is not too exposed to this. But even here there is a trick: the actuality of bitcoin mining will be greatly shaken when the next “halving” of compensation for the block takes place. It will approximately happen in August 2020 – there is no much time. If there are no major changes in the direction of the rate increase, then it is difficult to predict the situation. For my part, I believe that there will be growth and it will be multiple that’s why I’m not too worried.
What other events would you advise to keep in mind?
For example, hold your finger on Ethereum’s pulse. At first, I didn’t think about this currency and I was not interested in it for some unknown reason. Considering that Bitmain has been releasing ASICs for mining of Ethereum, it will very much stir up the market by the time they start shipping. That is, approximately in June or July it’ll be fun enough.
The point is that there were no analogs before, everyone worked on video cards. The power of ASIC from Bitmain is equal to six top-end video cards AMD and it costs as two cards. However, over time the situation has changed. The manufacturer raised the price for ASIC by almost 1.5 times for the second delivery. Lucky only those who managed to order the first batch. What will happen with the market of video accelerators and Ethereum in the middle of summer is very difficult to say. I would wait until July, August.
I’m also interested in Verge. At the same time, it’s not very clear why the pools for its p2p-mining are not developing. There are only a few classical pools for cooperation and they look pretty suspicious. From the technical point of view, it seems there is no problem. I’m interested in all these things but for now, I just watch and do not invest. I keep what the main line: Bitcoin, SiaCoin, Dash and zCash.