Miner Breaks Down How to Start, Process, Costs
- Dason Thomas said he began mining crypto in his garage to earn altcoins like doge and litecoin.
- He then converts the mined altcoins to cryptocurrencies he prefers like ether or buys more miners.
- The global crypto mining hardware market could grow by $2.80B from 2020-2024, an estimate shows.
- See more stories on Insider’s business page.
Cryptocurrencies are the pog chips of 2021, but whether the craze is a temporary hobby that will die down, or one that ushers in a new market that’s here to stay, is anyone’s guess at this point.
May’s crypto selloff, which wiped out more than 30% from total market cap, hasn’t scared buyers off. A survey conducted at the end of May by cryptocurrency-asset broker Voyager Digital revealed that out of 3,671 respondents, 87% said they planned to increase their crypto holdings over the next quarter.
But buying isn’t the only way investors are getting their foot through the door: 18-year-old Dason Thomas decided to mine crypto, a process that allows participants to earn crypto by verifying transactions on a blockchain.
Thomas isn’t a crypto expert. He said he became interested in mining after seeing TikTok videos of people showing off their mining farms, and thought it would be a way for him to begin building early wealth.
“I’m just like a normal kid, I just graduated high school. I’m 18 and I kind of just realized that you need money to do what you really want to do in the world,” Thomas told Insider.
Mining altcoins has become a hobby of his — and he isn’t alone. The global cryptocurrency mining hardware market (ASIC hardware and GPUs) is expected to grow by $2.80 billion at a compounded annual rate of over 7% from 2020-2024, according to Technavio, a global market-research firm.
Nicole DeCicco, the founder of CryptoConsultz and a former ethereum miner, also started mining in her garage in 2016. Now, she helps others enter the crypto space and navigate it safely, including with mining solutions. She says the profitability of crypto mining depends on a variety of factors, all of which are moving targets.
“Cryptocurrency is highly volatile, and crypto mining even more so. Generally speaking, more blockchain miners equates to more competition,” DeCicco told Insider via email.
“So, while mining any given cryptocurrency could be profitable initially, the daily payouts can fluctuate dramatically and typically payouts tend to diminish over time. That being said, we’ve seen dramatic growth in the cryptocurrency sector, so a decrease in daily earnings of a coin doesn’t necessarily correlate with decreased profits.”
How Thomas started
Thomas, who shares content to nearly 420,000 TikTok followers with the username investwithdason, started off by doing research, watching YouTube videos, and joining Discord groups tied to crypto mining.
His early experience wasn’t a breeze. Thomas said in the beginning, he got scammed after paying for mining hardware that he never received.
Now, he only buys his miners from accredited manufacturers or platforms like Ebay, which have a money-back guarantee if there are issues with a product.
Today, he owns three types of models, including 12 Antminer l3+’s that mine scrypt algorithms, a type of cryptography used in hashing various altcoins including dogecoin (DOGE) and litecoin (LTC).
Additionally, he also has a mini dogecoin miner which he purchased for $699, according to a receipt seen by Insider, and four KD-Boxes that mine kadena tokens (KDA).
Thomas refers to a website called ASIC Miner Value to check various miners that are available and the profitability of each one. Models are continually upgraded and new options are added regularly.
Although he enjoys mining various altcoins, Thomas’ end goal isn’t to hold any of them.
“I actually bought these miners just to kind of get my foot in the door. Like, I really would prefer to mine ethereum but all the ethereum miners that are very profitable are expensive,” Thomas said.
His strategy is to convert the mined altcoins to coins he’s more bullish on and that he believes have long-term value such as ethereum (ETH), bitcoin (BTC), and chainlink (LINK), something he can do through his Coinbase account.
He also uses some of his gains to buy more miners.
The setup process
The miner needs internet connectivity, which has to be wired through an ethernet cord plugged right into the router, Thomas said.
Once the hardware is up and running, it will need to be plugged to a pool, which can be found through a simple Google search. A pool is where miners come together to combine their hardware resources to share processing power. The earned rewards then get split equally among the group. This process guarantees a more steady gain of altcoins mined over a period of time, Thomas said.
He told Insider that his Antminers are connected to a pool called Prohashing, a network that’s compatible with the hardware. The pool is also programmed to switch between altcoins being mined based on which one is more profitable at any given time. Thomas made a series of TikTok videos where he filmed himself setting up the various miners in his garage, noting that they can be very loud.
His mini dogecoin miner is plugged into a different pool called DxPool which allows it to mine DOGE and a little bit of LTC. Thomas told Insider this little contraption doesn’t make as much noise or take up as much electricity.
Electricity for the mini doge miner costs about $.67 per day according to ASIC, but this may vary depending on charges per kilowatt.
Thomas filmed a quick TikTok video to test the mini dogeminer when he first set it up. He told his viewers that in its first 12 hours, it mined 3.67 dogecoins and .002 litecoin. Dogecoin was trading at about $.24 as of July 2, according to CoinMarketCap.
There are online resources that can also assist with checking if your hardware is profitable. Nicehash has a profitability calculator that can either detect your hardware or you can manually key the information in, it also allows you to compare options.
DeCicco of CryptoConsultz added that mining equipment is a rapidly evolving technology. As newer, more powerful miners enter the market, earning mining rewards becomes more competitive. In most cases, mining rigs run 24/7 and have a shorter expected lifespan when compared to PCs.
She adds that when considering the profitability of crypto mining, one should also account for added equipment costs as miners may require replacements over time.