If your new to Bitcoin mining, and the market is doing very well, it can feel like you’ve acquired a license to print money. The real test comes when the price of Bitcoin turns sour, which it can very quickly, and a mining operation has to do everything it possibly can to keep making a profit.
Managing all the variables of the chaotic Bitcoin mining industry can be tricky.
The basics don’t change very much either way, so streamlining an operation to work regardless of the price of digital currencies is key. That starts with keeping costs low.
An operation wants to start with the most energy efficient equipment it can get its hands on to keep the demand for energy as low as possible. After that, it will also want to find the cheapest, most reliable sources of energy. Canada makes a great option for cheap renewable energy, and it has the added benefit of being a cold weather country, keeping cooling costs low. Finally, different governments might be offering tax incentives or energy discounts to attract mining operations, and this kind of bonus is hard to walk away from.
Once a mining operation has these basics down, it then becomes a question of how does it handle the fluctuations of the marketplace. The price of Bitcoin can vary wildly, and energy costs are rarely guaranteed to stay consistent.
The key here is the ability to scale and stay flexible. If the price of Bitcoin suddenly falls off a cliff, having an operation that can quickly shift to other SHA‐256 derived digital assets could mean the difference between running a deficit or turning a profit. Having a few rigs in reserve that can be turned on when the market starts climbing or turned off when it takes a dive, could help pad the budget for when the price levels off later on.
The uptime of those rigs is important to maintain overall as well. If the market suddenly surges, and only 900 of 1000 miners are operating, 10% of the hash power at an operator’s disposal is being wasted. The key to maintaining an efficient, profitable operation is getting the most uptime out of all the hardware, and avoiding situations when it needs maintenance at the worst possible time.
Having flexible energy options can make a huge difference here as well. If a mining site is entirely dependent on one external supplier of energy, sudden changes in prices, perhaps because of a change in seasons, could be disastrous to the bottom line. Having internal solutions, if local government allows it, such as solar panels of wind turbines, can both stabilize energy costs and provide an additional source of revenue.
Bitcoin mining can be extremely profitable, but if an operation doesn’t take control of as many variables as possible, it can also be very risky. By taking all of these factors into account, a Bitcoin miner will find much more long success and survive the next rollercoaster ride of the marketplace.