Bitcoin, the first and most well-known cryptocurrency, was introduced in 2009 by an anonymous entity known as Satoshi Nakamoto. It operates on a decentralized network using blockchain technology, which is a distributed ledger that records all transactions across a network of computers. This innovative approach eliminates the need for intermediaries like banks, allowing users to transact directly with one another.
The original Bitcoin miners were just ordinary people hashing coins with their personal computers, aka “garage miners”, because this is where many of them kept their mining equipment. At that time it was easy to mine a Bitcoin, because the network difficulty was very low. Then, as the value of Bitcoin increased, the network became dominated by Industrial-scale mining operations; huge warehouses running hundreds or even thousands of ultra-high-power mining rigs. (There are now Bitcoin mining enterprises so large they are publicly traded on the NASDAQ.) But all this additional computing power increased the difficulty of the Bitcoin network by a factor so large, that garage miners no longer had the resources to compete.
Today, garage miners are re-emerging as a new category of hobbyists known as “lottery miners”. This fresh genre has given birth to a plethora of tiny mining devices that are giving fresh hope to cryptocurrency enthusiasts as they upset the entire Bitcoin eco-system by occasionally succeeding against all odds.
Beyond Bitcoin, there are thousands of other cryptocurrencies that can be mined, each with unique features and use cases. Ethereum, for example, introduced smart contracts, enabling developers to create decentralized applications (dApps) on its platform. Other cryptocurrencies, such as Ripple (aka XRP), focus on facilitating cross-border payments; while stablecoins (such as USDC) aim to maintain a stable value by pegging themselves to traditional assets like the US dollar.
Selecting the Best Device for Solo Mining
What is perhaps the most fascinating, is that anyone can participate in the vast landscape of blockchain technology by investing as little as $20 in hardware to get started. From something as tiny as an thumb drive Bitcoin miner, which has no screen and hashes around 70,000 times per second (70 KH/s), to a Bitaxe Miner that can hash 500 billion times per second (500 GH/s)!
Bitaxe miners utilize the same type of computer chip found in industrial mining rigs, known as ASIC chips (Application Specific Integrated Circuit). Unlike a Central Processing Unit (CPU), which are designed to an average job of performing any general task you throw at them, ASICs are highly specialized processors, designed and manufactured specifically for cryptocurrency mining. This results in profoundly enhanced mining speed and efficiency. Other ASIC miners include the Bitmain Antminer S19 XP and the MicroBT Whatsminer M30S++, both of which offer impressive hashrates, but cost exponentially more than a Bitaxe.
When selecting hardware for solo mining, it is essential to consider factors such as hashrate, energy consumption, and cost. The hashrate of a miner is the computational power, or number of calculations it can perform per second, when attempting to solve the complex mathematical problems necessary to find a block; a higher hashrate leads to a higher probability and, therefore, higher profitability.
Consider the Electric Costs Before you Purchase
Just like when you buy a car you consider it’s fuel efficiency before signing on the dotted line, when you purchase a cryptocurrency miner you must consider the amount you will spend on energy consumption to run it. The larger ASIC rig I mentioned earlier, Antminer S19 XP, consumes over 3,000 watts, which can cost between $600 to $1,000 a month in electricity cost. An entry level solo miner, such as the Bitaxe Lottery Miner which runs on a single BM1366 ASIC chip, consumes only 15 watts, which will cost you less than $2 a month to run.
Setting Up a Cryptocurrency Wallet
The next thing to do is set up a digital wallet. A cryptocurrency (crypto) wallet is a software application or hardware device that allows users to store, send, and receive digital assets securely. There are several types of wallets available, including hot wallets, which are connected to the internet, and cold wallets, which are offline. Hot wallets include mobile apps and web-based platforms (such as Coinbase), while cold wallets can be hardware devices or even paper wallets. Both wallet types have pros and cons.
The caution behind hot wallets isn’t only that they are cloud based, making them potentially vulnerable to hackers, but vulnerable also to technical problems, insolvency, and regulatory restrictions.
“Not your keys, not your coins” is the moniker used to illustrate the control you lose when you relinquish control of your security credentials to a third party. There are myriad factors that can endanger your coins. For example, it was recently made public that If Coinbase were to go bankrupt, your cryptocurrency stored on the exchange would likely be subject to bankruptcy proceedings. You would be considered an unsecured creditor, and the currency held on the exchange would likely be considered part of Coinbase’s bankruptcy estate. This means that your cryptocurrency could be used to pay off creditors and fulfill other obligations owed by the exchange. (The same would not apply to Coinbase Wallet, because it’s a self-custody wallet.) It is for these reasons, and many others, that hot wallets are recommended for brief transactions and transfers, but never as a means of long term storage for large sums of currency.
Cold wallets are air-gapped, which is just a fancy way of saying they aren’t connected to the internet. The air-gapped nature of cold wallets is the reason both hardware and paper wallets are both considered “cold.” A hardware wallet is a digital storage device, often resembling a USB drive, that securely stores and protects your private keys on a specialized chip that is difficult to compromise. A paper wallet is literally just a printed piece of paper that contains the private keys and QR codes that grant access to the funds stored in the wallet.
Since both types of cold wallets are physical in nature, if the wallet is lost or destroyed it cannot be recovered. Carrying a cold wallet is similar to carrying cash dollars in the sense that there is no record of the asset beyond the object you are holding in your hand. Unlike hot wallets, cold wallets are highly regarded for their robust security measures, making them ideal for long-term storage of large amounts of currency.
Solo Pools vs Group Pools: Understanding the Difference
The phrase “pool mining” can be somewhat confusing to new miners as it refers to both group and solo mining, despite the fact that solo miners work alone. This is because both solo and group miners need a means of connecting to the blockchain in order to mine; the pool is the proxy that facilitates this connection.
Group Mining Pools: These are collaborative groups where multiple miners combine their computational power to increase their chances of successfully mining blocks. By pooling resources, miners can achieve a higher chance of winning a smaller prize. This is because in a group pool, participants share their resources, but they also have to split the rewards based on their contributions to the pool’s total hash rate. Think of it just like a “lottery pool” in a job setting, where a group of co-workers all contribute towards a batch of tickets for the local lottery, and if any one person in the group wins, the prize is distributed amongst the entire group.
Solo Mining Pools: This is a method where an individual miner attempts to validate transactions independently, without collaborating with other miners in a pool. It is a much longer shot because solo miners work entirely on their own; but the trade off is that if your lottery miner hits a block, you get the entire prize to yourself. The rewards of mining in a solo pool can be substantial; consider that as of this writing the value of a Bitcoin block, 3.25 coins, is over a quarter million dollars!
Those who wish to mine Bitcoin with help from others will join a group pool such as F2 Pool, Braiins, or ViaBTC. Solo miners will join a solo Bitcoin pool such as Solo CK Pool, Molepool, or Braiins which offers both solo and group mining pools. These pools connect solo miners to the blockchain network, and the pool must correlate to the coin being mined. For example, you cannot mine Ethereum in Molepool, because that is a Bitcoin Pool; you would need to connect to an Ethereum pool like 2miners or K1 Pool.
Configuring Your Miner
Connecting your miner to the pool is not difficult, simply paste the URL of your chosen pool into the “stratum url” field on your cryptocurrency miner, and then paste your wallet address in the “stratum user” field. Everything else on your miners control panel is fairly intuitive, but if you need help, feel free to reach out to the active community we have here at Axeminer. Once you have completed setup according to the instructions that came with your mining device, you’ll access the web interface by entering the IP address shown on the display of you miner. This will allow you to view metrics such as temperature, and difficulty levels; and allow configuration of worker names, clock speed and fan speed.
It’s important to monitor temperature levels during this process; excessive heat can lead to hardware failure or reduced efficiency. Once everything is set up correctly, you can start your mining software and begin contributing your hash power to the network or pool.
A Lifetime Lottery
While the odds of finding a block on a solo mining device are low. At the time of writing, the odds of hitting a Bitcoin block within a year on a Bitaxe hashing at 500 GH/s is 1 in 34,028. Relative to an actual lottery game, those odds aren’t actually that bad. The odds of winning the Powerball jackpot is roughly 1 in 300,000,000 and Powerball only holds drawings three times a week; yet a new block is rewarded roughly every ten minutes on the Bitcoin network. As opposed to purchasing a ticket to every Powerball drawing, one can purchase a small mining device one time, and receive a lifetime of lottery drawings on the Bitcoin network every ten minutes!
Troubleshooting and Tips for Successful Solo Mining
Even with careful planning and execution, solo mining can present challenges that require troubleshooting skills. Common issues include hardware malfunctions, software crashes, or connectivity problems that can disrupt mining operations. For example, if you experience frequent disconnections from the network or pool, check your internet connection first; unstable connections can lead to a reduction in hashing power. Additionally, if your miner’s performance drops unexpectedly, consider checking temperature levels; overheating can cause throttling or shutdowns. Regularly updating your mining firmware can also help mitigate bugs or compatibility issues that may arise over time. Check out this article that provides five elements that are crucial to the performance and life expectancy of your solo lottery miner.
