By Abdumalik Mirakhmedov, Executive Chairman & Co-Founder of Genesis Digital Assets
To be competitive in crypto mining these days, you need to go big or go home. It's an industry where speed and power really do determine who makes money and who doesn't, and those wishing to remain competitive must have a "bigger-better-faster" mindset or risk being left in the dust.
When Bitcoin was first launched, anyone with a home computer could mine coins and contend against other hobbyists. But as more miners got on board, competition increased, and miners needed hardware that was going to work faster in order to have a chance at solving algorithms first. Rig set-ups expanded into spare rooms and basements, until space and price made mining untenable. It was either figure out a way to scale, or give up the hobby.
Our team at Genesis Digital Assets has been mining now since 2014. Seven years is a long time in the crypto industry, and with how quickly the industry has grown and expanded, we've essentially pioneered scaled mining ourselves. We've tried all sorts of hardware over the years and different kinds of software to manage our operations. We've mined at different climates and learned how to adjust cooling systems to protect our equipment. We've grown from our mistakes, and figured out how to scale up to multiple locations around the globe.
Here are some of the keys to successful industrial-scale mining, whether you're just starting to scale, or want to streamline your operations for better return.
Do Your Research
The last thing you want to do is jump into scaling. Since there’s a high sense of urgency in this industry, you may feel like you need to take the "next big thing" offered by a vendor to keep competitive. Don’t do it, as a bad investment early on will hinder you more than help. Take the time to learn from others, see how they approach their operations, and learn which vendors are reliable so you can scale your operations sustainably.
Think Big
If you want to become a viable competitor, you have to set your eyes on being a industrial-scale player. Staying smaller means that overhead and fixed costs impact more of your business. But growing larger gives you not only the benefits of economies of scale, which offers cost advantages through efficiencies, but industrial-scale mining can also be managed by a lean team. In other words, it's more profitable to be bigger.
Stay Lean
Another key to success is staying lean, as you don't necessarily need a big staff to manage your mining operations. As you scale and start establishing multiple locations, don't think you need a full operations and maintenance team at each site. Keep those who can care for your rigs on-site, and move those with expertise to a centralized location. Having the right software that allows for remote management keeps operations lean as well.
Electricity Costs
Make sure you're optimizing for electricity costs. Constantly upgrading to hardware that runs more efficiently doesn’t help if you can't get ahead on your electricity bill each month. Mining can be done anywhere, so if you want to scale, look for places throughout the world that offer cheap electricity. The good news is that the more sustainable options like hydro and solar are also the most affordable.
Location Receptivity
Speaking of location, don't just look for places that offer cheap electricity, but for places with local and national governments that are receptive to crypto mining. Make sure they offer policies, regulations, and initiatives that will help you grow. Additionally, look for places with cooler temperatures, and where internet access is strong and stable.
Construction at Scale
Another key to success is getting scaling right. If you are looking at scaling at multiple sites, possibly across the world, always look at all the options including launching operations in existing buildings as well as building your own to your datacenter's own specs. But a new option for easier production and quick scaling is modular containers. They can be cheaply produced in mass quantities, shipped easily, and set up quickly on-site. Then, if you want to scale the location, simply add more.
Software
A major key to success is going to be your software. Scaling means having software that needs to both monitor and manage your sites. But not all of your sites are going to be the same, as they may run different devices, have different cooling mechanisms, and may have different electricity requirements. Be sure to account for unique site aspects as you look for software options, which may not be addressed in an out-of-the-box purchase.
Growing Forward
This is certainly not an exhaustive list of ways to succeed at crypto mining. As you scale, you’re sure to make your own list of what you’ve learned and how you’ve succeeded along the way. Overall, we had to remember that we must be creative, innovative, nimble, and steadfast to continue growing the crypto mining industry forward.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.