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 costly and electricity does not come cheap, either, and the number of people willing to risk investing in bitcoin mining operations has shrunk.

“In terms of demand, it declined in June very, very significantly,” Lauren Lin, operations manager at mining pool Luxor, said. “However, at the beginning of August, the demand has been picking up, partly because the bitcoin price went up a little 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 that comes with bitcoin mining, at least to be profitable, is substantial, Lin said. 

“To mine at home, it not only requires the capital to purchase the ASIC [application-specific integrated circuit rig], you need to know how to ventilate, you need to know how to deal with the noise and the heat, there’s a lot to consider,” Lin said. 

Profitability is first and foremost the top concern for most miners, Lin added, and recently, it’s been harder to turn a profit. More first-time miners have been purchasing S9 mining units, an older model that does not produce enough bitcoin to offset the electricity costs. 

“I will say, at least for our customer base, the people doing this have the main purpose to test how mining works,” Lin said. “If you are mining at home, with residential power rates, an S9 is not profitable at all, but you would get some experience.”

Bitcoin mining at home no match for major companies

Corporations keen to cash in on the crypto demand have been on the rise as well, further pushing out garage-based operations. 

“The big boys are playing hard and employing multiple strategies to make a profit from their sites,” Sam Doctor and David Bellman, mining researchers at analytics firm BitOoda, wrote in a recent note. 

The ‘big boys,’ i.e., the major corporations that have entered the mining space in recent years, are diversifying their revenue streams to weather rocky market conditions. Nasdaq-listed Stronghold Digital Mining has been selling power to the grid — and its mining machines — to cover debt. 

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

Private-equity firm Atlas Holdings purchased Greenidge Generation in 2014 and converted the coal-fired power plant to natural gas. In 2021, the company started using the generated power to mine bitcoin. There is now legislation in New York aiming 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 operations. Mining activity has picked up across Europe and South America, Lin said. 

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

---

Get the news in your inbox. Explore Blockworks newsletters:

• Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
• Empire: Start your morning with the top news and analysis to inform your day in crypto.
• Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
• 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
• Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
• The Drop: For crypto collectors and traders, covering apps, games, memes and more.