Many people who start off investing in Bitcoin(BTC) later realize that they want to participate more fully in the sector. They want to contribute to the network and bring this beneficial technology to others. One of the ways to further participate is to mine BTC. What are the purposes of mining BTC?
From the Bitcoin.com site:
Bitcoin mining serves several functions:
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- It is a method for distributing new coins.
- It is part of a more complete system for ensuring only valid transactions are added to the blockchain.
- It is a method for prioritizing transactions given limited throughput (it creates a fair market for limited block space).
- It provides financial incentive for participants (miners) to dedicate resources to the network, and the resources dedicated help secure the network from attackers. Note that attackers here primarily refers to miners themselves. In other words, by making it expensive to mine, Bitcoin ensures miners follow the rules.
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The leadership team at Blockchain Advisors decided that we also wanted to mine BTC in order to contribute to the network. In addition to the benefits that mining provides to the network and community it can also be a source of recurring revenue. While many tech savvy people will buy a BTC mining rig and install it in their office or homes we decided we would take the easy road (which we usually don’t take).
We decided that we would purchase BTC mining computers from two different companies that also provide full turn- key hosting, maintenance and upkeep of these machines. We wanted to get experience with each company so that we could provide this background to our clients. The two companies that we purchased from were Compassmining.io and river.com.
For both of these companies you decide on the mining rig(computer) that you would like to purchase and decide how many to purchase. The sales departments were very helpful in this regard. You then sign a 3 year hosting agreement that covers the electricity charges, management and maintenance. The electrical usage is easy to calculate because the mining computers are dedicated to their task and run 24 hours a day (hopefully nonstop😊). The KWH rates for both of these companies were less than half of what we pay at our homes so we felt it was a no brainer. Both of these companies utilize mining pools in that your rigs are in a co-op with other rigs and when the co-op earns a reward it is distributed amongst the members in proportion to the computing power (hash rate) that they have contributed. The BTC rewards are deposited in your wallet and the monthly hosting fees are paid to the hosting company by ACH each month.
There were a couple differences that were noticed between the companies. The first is that River deposits the BTC that you have earned in your River account and compass considers it more in-line with the Bitcoin mantra to deposit it in an address of your choosing in an external wallet. I don’t consider this a big difference because you can easily transfer your BTC from your River account periodically as you see fit. The second difference is that when you sign up with River you are required to use the Foundry mining pool. There is zero cost for the Foundry mining pool for the remainder of calendar year 2022. With Compass you must decide on which mining pool you want to use, get an account with that mining pool and get it associated with your Compass account. Not a huge undertaking but I kind of preferred River’s approach. Other’s may prefer the freedom of the Compass approach.
For both companies we had very similar experiences in dealing with their sales and customer service teams. Both were very good. They both provided timely and accurate help and assistance. The only question we have at this point is, when do we buy some more mining rigs? We are happy to help you through this process or answer any questions you may have. Just reach out. Have a great weekend…Chris