mining $110,000 in bitcoin a month

Client of Compass Mining Eng Taing

Eng Taing

Eng Taing is in the business of making money.

He runs his own private equity firm with $ 250 million in assets under management (according to his website), invests in real estate, has worked in science and data analytics at Apple – and joined bitcoin in 2013, long before it became popular to make a passive bet on the class of cryptographic assets.

Now, Taing runs 261 personal mining machines that generate the world’s most popular digital token.

“I like making money,” Taing told CNBC.

“I invest in a lot of things. I have a lot of apartment buildings, I have nursing homes. I have GPU mines,” Taing continued. “I just like to look at where I can get a good arbitrage advantage, and I thought bitcoin mining presented that much:‘ Hey, I could get more bitcoins by having miners than by buying bitcoins, especially on the scale I can get. ’In it, but also, that I am a big believer in the future of bitcoin. “

Bitcoin works on a working test mining model, which means that miners around the world use high-powered computers to create new bitcoins and validate transactions simultaneously. The process requires expensive equipment, some technical knowledge and a lot of electricity. Taing decided to outsource most of that work by enlisting the help of Compass Mining, a service that hosts, supplies and operates mining platforms for retail miners who do not want to manage the logistics of physically handling mining equipment.

So far, the experiment is working pretty well, according to Taing. Of its 261 mining platforms, which include Canaan AvalonMiners, Bitmain Antminer S19 Pros and Whatsminer M30Ss, 200 are hosted through Compass in Nebraska and Canada. They generate about 2.8 bitcoins a month, or about $ 111,000, according to the digital receipts he provided to CNBC.

Taing also earns money by buying and selling mining hardware to retail customers in the Compass market. They usually buy one or two at a time and are not as price sensitive.

CNBC has spoken with several Compass customers to better understand their appetite for small-scale mining as they increasingly compete with the industry’s leading players with massive operations. But Compass CEO Whit Gibbs says that’s exactly the point: to capture the market share of retail miners and put the network in people’s hands.

“Indeed, it will give small-scale miners a substantial portion of the hashrate of the bitcoin network, which ultimately has always been our goal,” Gibbs said. “We want 5% of the network to be controlled by retail miners and then move it up to 10% to 15% in the next few years.”

Gibbs says he has noticed that many people who would normally invest in real estate are taking those dollars to mining because they are able to see a mining return faster than buying a rental property, especially as private equity. intervenes to buy homes and raise prices.

Eng Taing is evaluating a former GM plant for reuse for bitcoin mining.

Eng Taing

From mining ‘plebs’ to billionaires

Compass customers range from the self-proclaimed “plebs”, which accumulate the smallest bitcoin denomination known as satoshis or “sats” to the billionaire bitcoiner Jack Dorsey.

One such mobster is Jon McClellan, a Texas-based AT&T lobbyist. He currently has a single bitcoin miner with Compass in Oklahoma, which he bought in late 2020. For him, the desire to mine is partly ideological, partly financial.

“I wanted to do my part to secure the bitcoin network: to have my own hashrate, under my own power,” McClellan said, referring to his share of the collective computing power of miners around the world.

“I knew that if I bought a miner, I would literally buy bitcoins every day, every minute, every second, every hour, no matter what’s going on in my life, in terms of budget,” continued McClellan, who calls the process. an “easy way to average dollar cost in bitcoins.”

McClellan says Compass was the only retail mining company that seemed affordable to the average person. Compass Mining allows customers to purchase mining machines (new or used) for between $ 4,500 and $ 25,800 on their website, then locate them in associated data centers, and take care of physical logistics and subsequent maintenance.

The return on investment for personal mining varies based on a few key factors, including the initial cost of purchasing gear, the number of mining machines you are running, the cost of electricity and accommodation, in addition to group rates, which they allow a single miner to combine their hashing power with thousands of other miners around the world to increase their chances of earning bitcoins.

McClellan, who took out a $ 10,000 bitcoin-backed loan through Coinbase at an 8% interest rate to buy his only miner, says his ROI is about two years. You’re currently getting about $ 400 a month, though you have to pay $ 150 for hosting fees, so you get about $ 250. But McClellan has plans to expand its operations this year in Texas, Oklahoma or Wyoming, as all three states are in favor of the bitcoin mining industry.

Taing says he has about 18 months until he achieves an ROI with profit margins of between 65% and 70% to cover operating expenses. However, unlike other customers, Taing has a special rate of 0% for group rates through Foundry.

Gibbs, the CEO of Compass, says his customer base is primarily retail, which he defines as miners who buy between one and five machines and invest between $ 10,000 and $ 50,000.

“That’s really where most of our business has been in the last six months,” Gibbs said, though he notes that Compass is starting to serve more institutional clients.

Nevin Bannister, for example, is using Compass to build a large-scale bitcoin mining operation in hopes of bringing it to the public market.

“They make it very easy,” Bannister said. “They’re a great turnkey option. They help you buy the machines, they plug you in, they keep all the operations going.”

To date, Bannister has purchased 6,000 platforms, 1,500 of which are operational. Most are housed in Oklahoma, and have just under a hundred in Canada.

Although Bannister did not disclose his monthly income, he told CNBC that each platform should produce about .015 bitcoins a month. On 1,500 platforms, that hypothetically produces 270 bitcoins a year, or $ 10.7 million.

“I’m a serial entrepreneur. I’ve had several companies sell, and I love learning new things,” continued Bannister, who says on his LinkedIn page that he founded startups that sold for a combined value of more than $ 800 million. “It’s like going online in the early days.”

Ultimately, Gibbs thinks institutional buyers like Bannister will be a good thing for small-scale miners, because their investment will help reduce overall costs and make more space available to retail customers.

Compass Mining Eng Taing client bitcoin mining configuration.

Eng Taing

Jack Dorsey bowed as well

Compass Mining Eng Taing client bitcoin mining configuration.

Eng Taing

Templeton writes that Block also seeks to improve reliability and user experience in mining.

“The common problems we hear with current systems are about heat dissipation and dust. They also don’t work almost every day, which requires a long reboot. We want to build something that works,” Templeton wrote on Twitter. “They’re also very noisy, which makes them too noisy for home use.”

Democratizing access to bitcoin mining is a big part of this project’s mission statement.

“Mining is not accessible to everyone,” Dorsey wrote in October, just months after the United States first eclipsed China as the world’s largest destination for bitcoin miners. “Bitcoin mining should be as easy as connecting a platform to an energy source. Today there are not enough incentives for individuals to overcome the complexity of managing a miner on their own.”

Gibbs says he welcomes another player into the retail bitcoin mining space.

“It’s going to be hugely beneficial for Bitcoin, and ultimately for us as well,” Gibbs told CNBC.

“My understanding of what they’re posting is going to be a low-energy, domestic product, probably more of a low-yield product, but it will give people that first taste of bitcoin mining,” Gibbs continued. It assumes that as individuals have to increase their hashrate rate, they will look to Compass or rival River Financial to expand their operations.

“I really think that, in line with Jack’s overall mission, he wants to get a massive adoption of bitcoins, and he’s going to throw dollars behind anything he thinks will make more people pay attention to him,” Gibbs said.

SEE: Texas cryptographic miners shut down to relieve network pressure

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