An Interview with Bitcoin Miner: Stories Behind Mining

As traditional financial institutions such as BlackRock eagerly applied for approval to issue a spot Bitcoin ETF, Bitcoin is attracting more attention and seeing its price climb up. Recently, Bitcoin’s price hit a new high for the year, surpassing $37,000. The upcoming year 2024 is crucial for investors in the crypto industry. As the next quadrennial halving event is due in 2024, Bitcoin’s price is expected to experience dramatic fluctuations based on past occurrences.

While Bitcoin’s price continues to rise, another fact that might be neglected is that the mining hashrate across the network is also on the rise. Since January 2022, Bitcoin hashrate has surged from 200 EH/s to the recent 450 EH/s. Mining is still a little-known and low-profile investment to many. The author recently had an interview with a Bitcoin miner to take you through the story behind mining from the miner’s perspective.

Bitcoin Miners: Adventurers in the New Era

“It is a vivid name. Bitcoin miners are often associated with traditional miners who traveled to the new continent in search of gold. We are heading for a future filled with the unknown and uncertainty as well as numerous opportunities. Some quit with losses, while some make substantial gains. The early birds who take the venture tend to earn more.”

In the early days, when Bitcoin still had a low hashrate, some enthusiasts could mine Bitcoin using their personal computers. Some of them sold early, while some believers held on for the long term. The latter became the first adventurers to achieve financial freedom in the “Bitcoin rush”.

Sure enough, failure is nothing new in the industry. For instance, when the Chinese mainland banned Bitcoin mining in 2021, some miners had no choice but to sell their mining rigs at a low price and bid farewell to the industry. In the Bitcoin bear market of 2022, major publicly listed crypto miners such as Core Scientific also ended up applying for bankruptcy protection amid the crypto winter.

Mining: Fight No Battle Unprepared

According to the miner, some people may mistakenly believe that mining is an easy investment—just buy mining rigs and earn Bitcoin. However, this is not the case. Particularly with the rising hashrate, the control over every detail directly affects the final profit.

“The mining costs and stable returns determine our profit margin. Unexpected events, such as a slump in the Bitcoin price, an increase in electricity costs, or policy changes, may even lead to losses. Therefore, the early screening and preparation for these unstable factors is a matter of great concern for us miners.”

Many miners give priority to policy risks and electricity prices, which makes geographical location crucial. Currently, miners tend to establish mining farms in regions such as North America (the United States and Canada), Northern Europe (Norway and Iceland), the Middle East (UAE and Saudi Arabia), Latin America (Paraguay and Brazil), Kazakhstan, and Russia. These countries and regions offer more friendly policies. More importantly, they have abundant energy resources, which makes the electricity supply stabler and cheaper.

Another consideration is the selection of mining rigs. New mining rigs boast better performance but come at a higher cost, which means a longer payback period. Besides, they experience greater price fluctuations in the early stages. Mining rigs also vary between futures and spot markets. Therefore, selecting the right mining rig is crucial for beginners.

Way to Survive: Embrace Long-termism

Bitcoin’s hashprice is often viewed as an indicator of mining profitability. In 2021, due to the impact of the policies released by the Chinese mainland, the hashrate across the network declined. Meanwhile, with the Bitcoin price remaining high, miners counted their luck through a “hashprice super cycle”. However, as the bear market hit in 2022, Bitcoin’s hashrate kept rising, and its hashprice tightened, making survival a top priority for numerous miners.

Source: woobull charts

“Many people believe that prices will rise again in the future. When the bull market is back, the coins mined will turn from loss to gain. However, it is really a tough time. Survival becomes a great challenge. Operating a mining farm incurs costs, and many coins have to be sold at low prices, which actually brings in meagre profit. It is all about surviving until the next bull market comes.”

Fortunately, miners’ efforts were not in vain. In 2023, Ordinal inscriptions emerged, leading to a surge in mining fees which even surpassed the block rewards at their peak. It is also a major contributor to the recovery of hashprice this year.

“Having been in this industry for a long time, we know that as long as we keep mining coins every day and selling them at the right time, we will make money. Being a long-termist is the key to survival. The industry chain is now well-established, and many mining pools even recommend reliable mining farms and mining rig manufacturers. ViaBTC Pool, where I am mining, promises stable mining income every day. It also supports Auto Withdrawal and Auto Conversion, allowing for real-time trading based on market conditions. Its Crypto Loans, a financial tool tailored for users, makes short-term asset flow flexible. Thanks to these favorable conditions, long-term miners like us, who need stability, can better live through the bear market.”

We also communicated with ViaBTC Pool mentioned by the miner. Founded 7 years ago, it is ranked among the top five Bitcoin pools in terms of hashrate.

“Bitcoin mining is a long-term investment. With a new block produced every 10 minutes on average, only the fortunate ones can grab it. The mining pool’s role is to bring miners together, allowing even small to medium-sized hashrates to continuously generate stable returns. While some people perceive mining as highly risky, many long-term miners on our platform have actually earned a good income.”
—according to a member from ViaBTC Pool.

Bitcoin mining is a game for adventurers. Some are fortunate enough to amass a wealth of coins, while others choose to give up along the way. Judging from what the miner said, we can also anticipate that more people will join this business, which involves both risk and reward and requires a longer cycle to mitigate risks.