The crypto space is constantly evolving. People should evolve with it.
Numerous factors need to be taken into account when it comes to crypto mining and it’s important to stay ahead of the curve. In this article, we’ll discuss how you can do just that.
Understand what crypto mining is
Before we continue, let’s review what crypto mining is.
In short, cryptocurrency mining is the process of finding new ‘blocks’ in the blockchain by using crypto mining hardware. When a new block is found, transactions made on the blockchain get recorded in that block. That is how a ledger of all previous transactions is created, and why blockchain can also be called an immutable ledger. For a more detailed explanation, check out this article on what crypto mining is.
Know the 3 most important factors for crypto mining
With crypto mining, there are three main aspects to take into account:
- electricity price
- mining hardware
- market conditions
Market conditions are the one uncontrollable factor among the three. This makes the other two factors even more important, especially when looking to reduce costs. That’s because lower costs lead to a better comparative and competitive edge over the competition.
Electricity is a continuous cost for mining cryptocurrency, due to the need for electricity to run the mining equipment. Making sure to keep this cost as low as possible is therefore paramount.
Therefore, miners should note where the cost of electricity is lowest, as this can increase the profitability of a mining operation. Our R&D department has researched this and created a helpful comparison chart of electricity prices worldwide. A further study of the electricity prices within the US was also done to get a better understanding of state-by-state differences.
Mining hardware is another factor that impacts crypto mining success. Hardware is the main initial cost to start mining. It also comes with ongoing costs. Mining hardware needs maintenance in order to perform to its maximum efficiency and extend its product lifecycle. So, the initial cost of the hardware needs to be taken into account plus long-term maintenance costs. You also have to consider how well the hardware is managed. If you care for the hardware properly, you can ensure longevity and achieve a greater return on that investment.
To calculate the cost to maintain a mining rig, calculate the upfront cost, maintenance costs, and daily electricity costs. More information on how to do a mining rigs efficiency calculation can be found in the link.
Staying ahead in crypto mining
Several places across the world have low electricity prices. It is important to take advantage of opportunities in those locations. Note that, in many cases in order to take advantage of such lower prices, scaling is key, with a bigger volume of miners and larger quantities of electricity used. This can create lower costs and higher margins, should there be a possibility of discounts and deals with local energy suppliers.
Furthermore, understand that running mining hardware is no easy task. It’s time-consuming and requires electrical infrastructure with enough capacity for proper ventilation and cooling systems. Setting up and building such infrastructure and such a facility requires a whole different skill-set.
In order to stay ahead of the curve, it’s important to have accurate information and know the costs and requirements. Knowing how to minimize those costs as well as identify what advantages or disadvantages competitors have is key.
Remember: Knowing and analyzing costs only will not be enough to stay ahead. Management of hardware and extending the product efficiency and lifecycle are just as important. Additionally, the hardware itself is not everything. The actual infrastructure is a base requirement and can get costly when taking into account construction, engineering, and real estate. In-depth knowledge of construction and electrical engineering is something that can greatly help the development of a mining facility and also reduce unnecessary costs.
Here at EMI, we try to stay ahead of the curve on all accounts. At Elite Mining, we’re not only taking advantage of renewable energy at a very low cost available to us in Washington state, but we also have the electrical engineering expertise and a state-of-the-art mining facility. With high-quality electrical infrastructure, top-notch engineering talent on-site, use of cheap green energy, and advanced mining hardware, we’ve put ourselves in a position to try and get ahead of the crypto mining competition.
Written by the R&D department