What started off as an activity rolled out of one computer has now grown into large-scale operations carried out from warehouses with mining hardware–crypto mining has come a long way. It has evolved in terms of efficiency and has scaled up over the years. Read more about what is staking
Typically, crypto miners can be categorized into two segments.
- Retail miners: They mine crypto tokens from home at an individual level
- Large Scale miners: They operate at an industrial level and are backed by organizations, corporations, or maybe even high-net-worth individuals (HNWIs).
Crypto mining comes in all sizes
For blockchain networks that operates on Proof-of-Work (PoW), it is of utmost importance to maintain and keep the international, decentralized network of computers running. These miners use their system hardware to validate the transactions on the network. In return for their efforts, they’re rewarded with the native tokens of the cryptocurrency network they’re working on.
One must bear in mind that the different miners who are part of any blockchain network can be different in terms of scale and scope. They could be working out of their homes or out of a large-scale mining system led by a corporation. Another thing to take into account is that there is a wide range of crypto mining hardware called rigs, which can vary from personal computers to mining hardware built specifically for crypto mining. The hashing power of these hardwares can also vary greatly. They may also have different energy efficiencies and all of this could affect crypto mining profitability.
Retail mining and industrial mining are two different types of crypto mining operations. While retail mining is majorly taken up from home as a side hustle for some profit, industrial mining is typically done at a large scale.
Warehouses and large-scale operations
A retail miner could be mining crypto from their room while an industry-level miner might have a full-fledged, dedicated office/warehouse. If we keep aside central processing units or CPU and graphics processing units or GPU miners, a large number of commercial mining operations could use hundreds or perhaps even thousands of ASIC miners that are efficient and powerful. Crypto mining farms can benefit from efficient business forward systems to be able to mine crypto-tokens profitably.
Cold climates are best for large mining farms
Crypto mining uses up a lot of energy. Which is why retail miners should be prepared for extravagant electricity bills that they’d have to pay for their hardware setups. For large crypto mining operations, there’s a bigger problem. During the mining process, a lot of heat is generated. These mining farms often use industrial fans to prevent overheating. Even though new ASICs come with liquid cooling, they may still require additional fans.
This is why you will find that some of the best industry-level operations are based out of nations with cold climates like Canada, Russia, Iceland, Kazakhstan, or in northern parts of the United States. Yet another advantage of these locations are the relatively cheaper electricity rates which can also bring down the overall mining cost. All of these factors add in to create the most conducive environment for the growth of more and more mining farms in these areas.
Multi-structured and colocated farms
A number of large crypto mining operations have multiple warehouses to carry out day-to-day functions. At present, some of the leading ones use as many as 3,000 ASIC miners simultaneously. One has to look at the logistics to be able to successfully carry out an operation like this. There are a few mining operations that can easily adapt and work out of existing infrastructure, while there are also others who are working towards building this kind of infrastructure. This can play an important role making sure the operations are able to efficiently adapt to market conditions.
Retail users who wish to explore crypto mining at a bigger scale and reach out to a co-location service. Co-location mining services let aspiring miners have ASIC miners on-site in a shared space. Typically, you can get infrastructure for your mining operations through these services at a certain fee or cost. These may or may not include warehousing, powering, cooling, and unit maintenance. It is a worth exploring option for the ones who want to mine at a large scale but have limited means to do so.
Availability of green energy
You could get electricity at a cheaper rate but can you actually have access to sustainable electricity? With renewable energy sources like wind, solar, and hydropower making inroads, we now have access to much more sustainable energy sources. According to a report that came out in 2019, 56% of the energy that came from renewable sources provided electricity at much lower rates than the ones generated by coal, gas, etc. Even though sustainable energy has proven to be the most cost-effective source of energy, miners haven’t been using it as widely before. Now as more and more investors are starting to get interested in Bitcoin and cryptocurrency at large, sustainable aspects are being looked at.
We’re quick to judge Bitcoin miners when we say that all of them are greedy and don’t give a hoot about fossil fuels. As many as 76% miners have made a shift towards sustainable energy sources to fuel their mining operations. The industry overall is looking to take up more sustainable ways to work and cut down emissions with the Crypto Climate Accord. With the Accord, the excess heat produced by data centers can be used to power farms, towns ,and greenhouses.
Though crypto miners are put into two categories of retail and industrial miners, these are not water-tight compartments. There are retail miners who make ample profit to the extent that mining makes more money than their full-time jobs. It often encourages them to shift completely and take to mining full time. Then there are industrial mining operations that back a company and also hand out salaries regularly but could be running out of a co-location service due to lack of sufficient means.