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7 Lessons from Building and Scaling Bitcoin Mining Operations

6 min reading

Let's take a look at the 7 lessons which teach us more about bitcoin mining and its importance.

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It all started with digging Bitcoin (BTC) in the hostel. What started as a hobby with multiple mining platforms has spread to twenty industrial-scale mining farms around the world. When we scale our operations to a new industry, we have to try and error to figure out what works and what doesn't - because there's no manual for that. Building a scalable, multi-site operation like ours isn't easy, but if you're looking to start your own mining operation, scale your inventory, or invest in a mining company, here are the top seven lessons we learned to help you navigate your next steps:

  • It takes (a lot of) money to make money
  • Building Long-term term relationships
  • Obsess with Operational Efficiency
  • Never stop innovating
  • Choose your location carefully
  • Time is money
  • Benchmarks are everything

Lesson 1: It takes (a lot of) money to make money

There was a time when you could dig bitcoins out of a laptop or profitably set up some funeral facilities in your and mine's rooms. But here too, miners are creating more competition, and those who want to stay profitable must thrive. Soon, a hobby miner can't afford to dig in a dorm, but he needs a barn - or barn - full of mining machines that work day and night to stay profitable. We have grown and developed with this industry, but those who want to enter today no longer have the option of starting at the bottom and moving on. That means investing in capital-intensive projects from the start.

Lesson 2: Building Long-Term Relationships

Even though the bitcoin mining industry is growing rapidly, it is still highly consolidated and only a few key players are in power. For example, a large-scale excavation company cannot simply order new hardware from any supplier. Currently there are only a handful of hardware vendors and their production cycle is based on only a few chipmakers tightly controlling shipments - not to mention we are currently facing a worldwide shortage of chips. This means that success depends not only on efficient and well-managed processes, but also on building relationships in the industry, many of which will be long term.

Lesson 3: Obsess with Operational Efficiency

Speaking of operational efficiency, great miners stay profitable when they have an edge over their competitors. That means optimizing power, having the latest hardware available, and having no downtime or issues that would result in a loss of computing power. Make operational efficiency a priority. For example, when Bitcoin price fell below $4,000 in March 2020, many miners couldn't survive the uncertainty and instability and had to leave - but we survived because of our operational efficiency.

Lesson 4: Never Stop Innovating

The saying goes "innovate or die". In search of Bitcoin value, where data centers must remain robust and fast to remain profitable, there is no choice but to continue to innovate. Most importantly, you always keep your equipment up to date and don't let it age. Mining operations must be planned in advance to replace equipment and read correctly, as hardware may have been out of order for a long time. Keep in mind that all types of stays will incur a fee. Innovation also means creating better and more efficient ways of working for your company, e.g. B. Develop software programs specifically designed to manage mining operations. In this industry, technology gives you an edge, and even the smallest improvements will give you an edge over the competition.

Lesson 5: Choose Your Location Carefully

"Location, location, location," they said. While Bitcoin can be mined anywhere, large mining operations should consider their location when setting up a business for a number of reasons. Not all places will offer the same source of electricity at the same price, so miners need to look for places that not only have abundant and cheap electricity, but also ensure that it is green and sustainable. Lastly, visit a place that encourages bitcoin miners, where you know the political winds will not change overnight and the suspension of all operations will be closed, as has happened recently in China and Iran.

Lesson 6: time is money

It has been mentioned before, that time is money, and any downtime or delays in processing power can be costly. This means you have full operational control over hardware upgrades, mine maintenance plans, and software that can effectively manage operations. It also means being creative: in 2015 we knew that waiting months for digging hardware to ship would reduce our sales. So, we hired a 747 to ship the machine faster, which allowed us to generate millions of additional revenues that would be lost with standard shipping. This is the type of calculated move that not only requires you to be prepared, but also familiar enough with your operation to know how to do it.

Lesson 7: Benchmarks are everything

After all, benchmarks are everything. I said before that you can no longer start from the bottom and go up. On the other hand, you want the competition to be as big as possible, because scaling is directly related to sales: the bigger you are, the more profit you make.

Building forward

The phrase “bigger, better, faster” really refers to digging for Bitcoin. So, if you're not ready to strategize, invest time and money, solve problems, and take risks, another industry might be for you. There are many more lessons we have learned and many lessons we will learn in the years to come. Today we will continue to build on new industries that have created the future of decentralized currencies and new ways to exchange value around the world.

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