Home and hobbyist miners in the U.S. are finding creative ways to slash their energy bills in the face of increasing prices and the tanking of the crypto market.
Smaller operators have not been spared in the current crypto bear market but can adapt more swiftly, say veteran home miners.
While companies like Bitfarms and Core Scientific have had to sell bitcoins to bolster liquidity in markets where profit margins are getting tighter, indie miners can pack up their equipment and relocate relatively painlessly to protect their income.
For larger miners, relocation presents logistical and financial challenges. They are also typically locked into long-term contracts with electricity providers, which can fix electricity costs to a reasonable degree. In contrast, smaller operators have the advantage of tapping into residential tariffs.
Two hobbyist miners netting a few hundred dollars monthly from mining with graphics processing units (GPUs) offer insight into how home mining is feasibly done.
Many ways for miners to skin a cat
Michael Carter from St. Louis, Missouri, and Chris Vega from Florida have a combined experience of 20 years in small-scale crypto mining. Carter, who operates a larger mining farm from his home in the Midwest, believes that smaller miners have fewer overheads and more flexibility than larger ones.
Both Carter and Vega point to the relocation of miners within the U.S. as evidence of this. While the U.S. government predicts that electricity prices are expected to increase by 5% in the summer, the distribution of tariff increases is not uniform.
Tariffs in southwestern states are only likely to increase by 2.4%. On the opposite end of the spectrum, the six New England states can expect a 16.4% increase in electricity costs, according to the U.S. Chamber of Commerce.
Some miners are turning to renewables to lower electricity costs. Miners in mid-western states are moving to Illinois or Missouri, where wind energy is abundant, while miners in Florida are turning to solar energy, the duo said.
Selling rigs less popular option
Others are selling their old equipment to raise funds. However, this is limited to those looking for a quick exit from crypto after buying expensive equipment during last year’s bull market. Some rigs are going for as little as $300 on eBay.
The price of rigs may drop further. Last month, Be[In]Crypto reported that the prices of mining rigs have halved, following the downward trend of bitcoin. Suppose large miners continue to sell their bitcoin holdings. In that case, lenders could start liquidating their ASIC-backed loans, driving prices down even further.
FTX boss Sam Bankman-Fried has expressed concern that mining companies unable to repay debt could contribute to the credit contagion that has affected lenders Celsius and BlockFi.