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- Adam Gitzes started bitcoin mining remotely this year and earns around $190 a day.
- His passion for bitcoin and remote mining helped him secure a full-time role at Compass Mining.
- He shares why now is a good time to start bitcoin mining, and his tips for being successful.
- See more stories on Insider’s business page.
Adam Gitzes reached a point in his life where he finally secured enough excess savings to invest in a passive income stream. He was ready to put around $50,000 into a laundromat when he came across remote bitcoin mining.
As a major bitcoin bull, Gitzes had been invested in the asset since 2017. He had wanted to participate in the network’s mining process for years but always found it challenging to set up in a home environment.
“I started moving all of my investments into bitcoin around 2018,” Gitzes said. “I rode the dip down, and all the way back up, and it’s been pretty excellent.”
Gitzes tried half-heartedly to build a mining setup in 2017 and 2018 with little success. He tried again earlier this year following an online tutorial from Econoalchemist but the noise and excess heat of the setup was too much for his family.
Compass Mining
Remote bitcoin mining solves many of these problems as a customer’s mining hardware is hosted and serviced in verified external facilities. So instead of investing in a laundromat, Gitzes took a gamble on Compass Mining’s remote services.
“I was a little scared, to be honest, but everything worked out,” Gitzes said.
In fact, it more than worked out.
In addition to receiving excess bitcoin, Gitzes also secured a career switch from working as a manager of analysts and data scientists at Amazon’s adtech organization to director of product at Compass a few months into his mining journey.
What is bitcoin mining?
Bitcoin mining is the process of using high-powered computers to keep the network secure and up-to-date. In return, miners get paid in bitcoin.
Bitcoin leverages the proof-of-work algorithm, a process for validating transactions and mining new tokens that is slow and uses huge amounts of power. This mechanism is peer-to-peer, which ensures the currency is fully decentralized with no single authority verifying transactions.
However, because there is a cap on the number of bitcoins that can be mined, mining becomes more difficult and requires more energy with time.
The energy intensity, excess heat, and technology required for mining makes it difficult for individuals to set up at home.
Remote mining with platforms such as Compass removes some of these hurdles.
2 reasons to get into mining
The industrialization of the crypto mining industry in recent years put many individuals off entering the space. Gitzes, however, now believes there are opportunities. He decided to get in when bitcoin’s price surged from September 2020 to January of this year.
“The price of bitcoin appreciated [around] 500%,” Gitzes said. “But the difficulty to mine bitcoin only appreciably only changed by 30% which meant there was a really great opportunity to get into mining.”
To start off, Gitzes bought two machines in bitcoin and slowly started to feel comfortable he would at least make the bitcoin he spent on the machines back as well as a slight increase in the amount over the life of his miners.
When the Chinese government placed tighter regulation on crypto miners in the region, most Chinese miners were forced offline. As a result, Gitzes felt even more comfortable in his ability to secure excess bitcoin as estimates suggest Chinese miners made up around 75% of the world’s mining power.
“It was very clear I’d be getting excess bitcoin from buying these miners than if I just bought bitcoin and it was very good,” Gitzes said.
Now is a great time to be in mining, Gitzes said, for two reasons:
- Reduced difficulty rate with the miners being offline. As the difficulty rate increases, the amount of bitcoin mined will decrease.
- Chinese miners need to find new facilities but there is already a shortage in the market, Gitzes said.
“It’s going to take a while, in my opinion, for the hash rate to get back to where it was because of the lack of hosting worldwide,” Gitzes said.
What are the average earnings?
Gitzes now runs six machines while still working as an employee at Compass. He evaluates his success with mining in terms of total bitcoin rather than monthly profits.
He spent 1.1 bitcoin on the six miners, which was around $60,000, and they currently generate up to 0.0048 bitcoin ($220) daily after the deduction of mining fees, according to screenshots of the mining pools viewed by Insider. The average daily energy cost over the six machines is $30, which leaves Gitzes with a $190 profit.
The amount of bitcoin earned daily will adjust alongside difficulty changes. Assuming there are few fluctuations in energy costs and bitcoin prices, Gitzes will make around $5,890 this month. He expects to breakeven in around 250 days, maybe even less.
“I bought basically everything when bitcoin was $60,000, which wasn’t great, but I was using bitcoin anyway, so it doesn’t matter, ” Gitzes said. “My investment thesis is that bitcoin will be very, very valuable and I thought this would be a good way to get more bitcoin, which is looking correct.”
Tips for mining
As Gitzes buys his machines in bitcoin, he tries to buy when bitcoin prices go up but before the dollar value of the machine changes. This is a way to lower his bitcoin cost, he added.
The only other cost he needs to think about is energy. There is “basically zero” day-to-day work for remote miners as the Compass support team typically handles any maintenance or outages that occur in the facilities.
For the most part, miners will want to focus on the bitcoin difficulty, Gitzes said, which changes every two weeks. This is when the bitcoin network resets how tough it is for miners to mine. On August 13, the bitcoin network made it 7% more difficult to solve a block, this was the first significant increase since Chinese miners went offline.
Gitzes recommended Bitrawr to track the next expected difficulty change.
Another challenge for miners is the release of new technology and whether it will significantly impact existing machines.
“We’re reaching an asymptote of efficiency gains, so that the next machines that come out will be more efficient and better than the existing top of the line machines, but they’re not going to be like blowing anything out of the water,” Gitzes said. “I expect my machines to be online and profitable for at least until the next halving.”
Gitzes doesn’t just see remote mining only as a good investment strategy but also as a way to combat mining centralization and make the network stronger.
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