One of the ways to get some bitcoins other than to purchase them with national currency is to “mine” them. Mining bitcoins means you participate in the transaction verification process and receive a reward (in bitcoins) from the network for doing so. Although this is an overly simplified explanation it is basically what is happening when you mine bitcoins.
So how does one go about mining bitcoin?
Well, it used to be that a year or so ago you could use your graphics card, but these days the mining game has gotten a lot harder and there is now dedicated mining chips out there on the market. This means the competition for the available bitcoins that are released by the network on a daily basis is very high, and is only due to increase as more and more people buy dedicated bitcoin mining hardware.
Does this mean that I can no longer make any money by becoming a bitcoin miner myself?
No, not really. You can still make a profit but you have to be very careful into which bitcoin mining hardware you invest. At the moment I am typing this there are quite a few companies that will sell you dedicated bitcoin mining hardware that use specially designed chips (bitcoin ASICs) to mine bitcoins. But beware where you invest, because not all companies are a good bet. Some of them promise good performance but are due to deliver actual working hardware only much later on this year or the next. By then the competition amongst miners will push the difficulty level of earning bitcoins through the roof. Time is critical when it comes to bitcoin mining.
I’ve taken a look at all the available dedicated bitcoin mining companies out there and one good bet in my opinion is a Swedish company called KNCMiner. Here is a little background information about this company:
KnCMiner has been setup to create truly ground breaking mining equipment specifically designed and tailored for the Bitcoin market.
The company is created as a joint venture between two strong companies, ORSoC AB and Kennemar & Cole AB. Together we combine different kinds of expertise into KnCMiner which we believe is absolutely critical for a company offering any products and services to the bitcoin industry.
ORSoC is a company with a long proven history of expertise within embedded electronic development, focusing on FPGA and ASIC design. With approximately 10 years in the industry, serving several global companies with complex design services as well as development of electronic products guarantees that KnCMiner will have the best possible team for hardware development.
Kennemar & Cole is a combination of Andreas Kennemar and Sam Cole. Together having more than 25 years of expertise and global experience of bringing services and products to market.
They currently offer 3 levels of bitcoin mining hardware.
1) Mercury – 100 GH/s (gigahashes per second), 250 watts power consumption, $1995 per unit
2) Saturn – 200 GH/s, 500 watts power consumption, $3795
3) Jupiter – 400 GH/s, 1000 watts power consumption, $6995
So, as you can see there are several price and performance points to suit both the small and the large bitcoin miner. Personally I recommend their Jupiter model as you stand to make the most, but naturally it is the more expensive choice. Also power consumption is pretty reasonable given the level of performance this unit offers. It won’t make out a residential 15 amp North American circuit. If you live in a country that uses 220 to 230v then it won’t even come close to maxing out one circuit. You could run two per circuit in Europe and other 220v regions.
So why KNCMiner?
If you order today according to their website they will deliver your unit(s) in October of this year. This is the shortest delivery period of any of the current bitcoin mining hardware manufacturers. Of course you buy a much less efficient ASIC miner from someone but I doubt you’d get a good deal and even if you do the less efficient chips inside those means those units are going to be unprofitable that much quicker.
So let’s do some math here. Have a look at this calculation I did:
If you go there you will see that according to that calculator this miner should pay for itself within the very first month of mining. I used pretty conservative variables such as a power cost level of $0.15 per KW/h. Most of you I bet have lower power costs (such as me with $0.07) but the US national average seems to be $0.10. Beware that in some parts of Europe it’s a lot more expensive but power cost is not as important a factor in the profitability equation just yet. So, back to the numbers. With just one Jupiter unit in your first month (given that bitcoin price stays at $111 per 1 BTC) you will earn $8940. The next month it’s $5880, and the next $3870. This calculation assumes that the difficulty in mining bitcoins goes up by 50% each month. This is in my opinion a conservative but realistic expectation. It could very well increase by a smaller percentage and thus you’d earn more. The bitcoin price could also skyrocket again and once again you’d earn more!
The point here is that even though there is a risk involved – like any investment – the rewards for a properly executed investment can be pretty sweet.
Where do I host these miners?
Well, you can host them in your home or business location, or in a dedicated data center. If you have access to a nearby data center and the costs are not prohibitive I would recommend hosting them there. Bear in mind that some data centers will charge you far more for power than you pay at your residence. Take all the costs into consideration, but if the hosting fees are not go great compared to the expected monthly profit then go for it. If power costs are your main concern or you don’t want to deal with the hassle of managing these miners then I can recommend a hosting solution in Washington State which offers the lowest power costs in the world – $0.02 per KW/h!. The hosting fees are 8% of your profits though. If you are geeky enough to host them yourself I recommend you do that. I could also help you out a bit by offering consulting services where I will do my best to help you get the miners up and running. I can guide you via teamviewer and skype or telephone.
How do I pay for these miners?
You can pay with bitcoins (BTC), credit card, bank transfer (wire payment, or paypal. I bet most of you will probably pay with paypal, credit card or wire transfer (useful for large purchases).
Are these miners easy to setup?
Yes, they are pretty easy. If you’ve ever setup an internet router then you should have no problems setting this up. But, like I said there is help available to you.
Ok, I’m ready to invest!
Great. Then the next step for you would be to visit the KNCMiner website and go to the miners section and complete the checkout process.
*If you happen to live in Sweden you can pickup your mining hardware locally. Pretty sweet and saves you on shipping charges. I suppose if you also live nearby you can drive/fly to Sweden*