Mining with the ‘big boys’ – One year on

I can’t really believe it’s been well over a year since I started mining with CyberianMine as I blogged about here at the time. Then, my single Antminer S9 (nicknamed’ Eddie’) was happily punching out 13.5 Th/s and collecting sats 24/7. Every day, a small amount of Bitcoin was automatically transferred to my wallet and, like a savings account earning a small amount of interest, it grew and grew. That little Antminer is still whirring away right now, even as I type, in a facility deep in the Siberian landscape. It’s never broken down. It’s an amazing bit of kit.

I’d been mining before of course, with a 16 card Monero operation and a 12 card 1080ti rig that I’d built with the help of a couple of colleagues, but the truth was the former operation gained only 9 XMR over the period (it was using computer downtime only to run and so was only a part-time, although extremely efficient, operation) and ‘Big Blue’ (as my 1080ti rig was nicknamed) mostly only broke even after the crazy days of the late 2017/early 2018 boom. Some of the time it ran at a loss, but that was OK due to the tax efficient way I’d set it up and the fact my objective was – and still is – to ‘stack sats’. I’ll blog about that separately later as it’s something I’ve been asked about a few times. Yes, there really are tax efficient ways to mine, even in the UK. And yes, they’re even legal!

As I was new to ASIC mining, so too was CyberianMine new to the whole scene, and I hadn’t realized at the time just how new the operation was. They’d not been trading for long and some of the questions I’d asked at the time had not even yet been covered in the FAQs. They were still finding their feet, and, in retrospect, it was a gamble sending an unknown company based in Berlin ANY money at all in the Wild West state that the crypto world was in, and, sadly, is STILL in in many ways. But my questions were answered with honesty directly from the Max, the MD, and it just felt like this was an organisation that I could trust. It was the right call.

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Lots of expensive mining kit in Siberia. It’s even bigger now.

I was contacted by people who had read my blog and received mixed comments. Some were supportive, some thought I was crazy buying anything in the bear market that unfolding and that CyberianMine were even crazier trying to set something up now that the ‘boom time’ was over. I think it’s true to say that they would have preferred the market had remained more buoyant at the time they were growing, but it’s a credit to them they persevered and made sure their customers were looked after. It was certainly the case for me and I later found out I was one of their very first. Hell, my machine number was ‘7’. We took a chance on each other, I guess.

At that time ‘hotswap’ (the service whereby a faulty machine is immediately changed out for a spare whilst yours is repaired to avoid interruption in income) wasn’t initially available and you had to pay 10% of your monthly profit to the company on top of your hosting and electricity fee of 0.06 per Kwh. Of course, with the gradual bleed of the Bitcoin price down to $3400 ish over the next few months, the 10% profit became zero and was later ditched altogether and permanently by the company. Personally, I think this was a good move, not just from the point of view of a customer paying less, but also it meant that you knew exactly what your costs were whilst saving a whole load of messy and complicated calculations on CyberianMine’s behalf for each customer.

I kept a close eye on my single S9 and CyberianMine over the next few months. I was still trading cryptos and mining in my own operations, as well as running other projects and writing and publishing my second book ‘How to explain Bitcoin to your mum‘ inspired by an afternoon visiting my childhood home and trying to do just that.

But in truth, I was growing bored of my little trickle of Bitcoin and wanted to up my game. The trouble was, I was also grappling with that age old dilemma that all investors face (especially those of a certain age with responsibilities such as mortgages and children): Do I invest more or play it safe? Of course, my gut wanted as many mining machines as I could lay my hands on, but my sensible side was pointing out the numbers – it wasn’t making any money. For a time, in fact, I was paying just for the privilege of having a noisy machine in Siberia with my name stuck on the side. I was actually doing better just buying and holding Bitcoin directly. It was a compelling argument and for the longest time I sat on the sidelines watching CyberianMine grow and improve as an organisation. I paid the monthly bill with fiat from my company so I could still hoard the Bitcoin I was getting and waited. But all the time, the fact that I had no doubt that Bitcoin would ultimately succeed was still niggling away in the back of my mind. When the good times returned, I wanted to be in and ready. And, of course, I’d already found the company I wanted to partner with.

So it was utterly inevitable that one morning I woke up with one thought:

“Sod it” (or words to that effect), “let’s get stuck in.”

It was April 2019, some 10 months after I’d bought Eddie the S9 and CyberianMine, Bitcoin and I were still here. It was time to go shopping. It was time to up my stake in the game.

I bought a couple more machines. My hash rate went up, as did my trickle of Bitcoin. So, of course, did my bills, but the fact was I could still afford to pay them without having to sacrifice any Bitcoin. Then, without warning as so often happens in this market, Bitcoin jumped broke through its resistance levels and started creeping back up. $7000. $8000. $9000 and then up to the recent high of $13000. Not only was Eddie profitable again, but so were my new machines, even with the big jump in difficulty that accompanied the price rise. Inevitably, I bought another batch of machines, but now lead times were longer and prices were higher as demand suddenly rocketed – clearly, I wasn’t the only one who had been watching from the sidelines. It didn’t matter. It was apparent from the calculations that due to CyberianMine’s famously low power and hosting fees, each and every machine would make money. In fact, I worked out a couple of weeks ago, that Bitcoin would need to drop below $4690 before they started losing money again and I strongly suspect that this fact wasn’t lost on them when they came up their slogan sometime in that last year of ‘Last Mine Standing’. The average cost of mining a Bitcoin today varies (quite wildly) by source, but I suspect it’s somewhere around $6000. Below this level, many miners will switch off their equipment and wait, making it far more profitable for mining operations with the lowest overheads to carry on.

Don’t take these figures as gospel by the way, especially the one about CyberianMine’s break even price. It was correct at the time according to my calculations and specific to my set up of hardware, but was also based on the difficulty of the time (9.06) which will vary as that figure and other factors change. The point is that however you cut the numbers, it’s definitely below the global average whichever source you use.

Getting access to good information had also changed over the last year. Some of these tools were available at that time, but they’d improved and real time calculations have got better. Asicminervalue.com, for example, has a great tool that takes into account current price, difficulty and power cost to give you a real net profit figure for each and every machine type.

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31st July 2019 profitability of a simple and bullet proof S9

For example, my little S9, as of today (July 31st 2019) will give you a net profit of £917.46 a year. That’s profit, not income. Ten of them will give you £9174.60 a year in passive income which is a handy sum in itself, but I know people who have way more than ten and their mining income is measured in whole bitcoins rather than sats. I’m ‘well jell’ as the kids say.

Again, I must stress these are numbers for right now, at this moment. They could be higher at the time you’re reading this if Bitcoin has risen past about $9700 and the difficulty hasn’t changed too much or they could be lower if the price has tanked and/or difficulty has exponentially increased. It’s all about risk reward and, if you’re an investor, you pays your money and you takes your choice. Or not. It’s your call. For me, it’s a ‘no-brainer’ (as we used to say – all too frequently – at Microsoft in the mid to late nineties) and I’ll continue to invest and expand as my finances allow.

So, with well over one year of proper ‘big boy’ mining behind me, albeit mostly at a small scale to start with, what three things would I pass on to, well, anyone who’s interested?

  1. Buying at the bottom of the market whether capital assets (such as mining equipment) or the asset itself (ie Bitcoin) really is as sensible and as profitable as the gurus make it out to be. It’s also the hardest thing to do as it seems to be counter intuitive and you will have to consciously fight the doubt that questions your every decision.
  2. Bad times don’t last, good times don’t last and it’s irrelevant in the grand scheme of things, unless you trade over short periods. Otherwise, think long term if you believe in what you’re doing.
  3. Find a trusted partner who is better than you and learn, hopefully from each other. It’s still a mess out there with daily scams and dodgy deals, seek out and be loyal to the ones who are genuine – they DO exist.

Of course, it should be pretty obvious that if I could add a fourth it would be: don’t sit on the sidelines too long!

As my next batch of machines come on line over the following weeks and the market appears to be hotting up again, I’ll keep you posted on what happens next. One thing’s for sure: one way or another, it’s going to be quite the ride!

UPDATE: (Aug 2019) As I’ve been with CyberianMine now for quite a while, I’m pleased to be able to offer anyone wanting to get into mining (or wanting to expand their operation) an exclusive 25 euro discount on ANY machine purchased via their website. Just use the discount code jason25 on check out. No upper limit on purchases, but if purchasing several machines at the same time, please check discounts have been applied to each one before confirming. eg 5 machines should be a discount of 125 euro. You are free to share this discount code and there is no limit of times it can be used.

If you’re looking to get involved with mining Bitcoin but have questions, feel free to contact me for more information. If you’re looking to buy a machine and get stuck in right now, check out what’s available at CyberianMine’s website, but bear in mind there may be significant lead times or, at times, there may be no machines available. Don’t forget to use your discount code!

This is an opinion piece. I have not been paid or provided with any other incentives for writing this article.

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