The Russian cryptocurrency industry lives in a gray zone - over many years, the authorities have been honored to pass only one law regulating the status of the crypto market. The lack of clear rules of the game is already beginning to create problems: mining farms are overloading power grids, creating real risks of rolling blackouts throughout the country, and Russian citizens and companies are forced to cover the costs of the electricity they use. Representatives of the industry are ready to come out of the shadows and pay taxes on the same basis as other businesses, but the state is in no hurry to make decisions and help the troubled industry. The fate of digital miners is in the material of Lenta.ru.
Mining epidemic
There is currently a coronavirus epidemic in the world, but once upon a time there was a mining epidemic. To be precise, there were several of them. The largest one occurred in 2022. What drives each such epidemic? Of course, the rise in the value of cryptocurrencies. 2022 was no exception. In the spring of 2022, Bitcoin tripled from $1,000 to $3,000, and Ethereum even more. He jumped thirty times - from 10 to 300 dollars.
Mining suddenly starts to bring in a lot of money. Everyone is talking about it. All around. The Internet is buzzing.
What is mining, what is it used for? I don’t know anything - I called my friends, no one knows. OK. I'm starting to dig myself. For those who are still not familiar with the essence of mining, I will say that already in 2022 Bitcoin could only be mined on special equipment - ASIC miners. But Ethereum was and is still being mined mainly on video cards. Yes, yes, those same ordinary video cards on which you play “Tanks”.
Video cards for mining
The miner spoke about a new cryptocurrency, the mining of which on video cards is 33% more profitable than Ethereum
Seryoga Solyony will tell you in detail about Toncoin mining and the pitfalls that you may encounter announcements and advertising
One day Pavlik Durov was sitting and thinking about how he could raise money without putting in too much effort. We won’t describe all the ideas he had, but one deserves mention: his own cryptocurrency. It just so happens that being a pioneer is not always profitable. At first everything went great, Pavel sold virtual candy wrappers worth billions of dollars. The Gram coin sold with incredible popularity among investors, and many of the early buyers sold it to someone else for a huge profit. Just like MMM shares. If Pavel had a wife, he would definitely have bought her boots, but instead he had to fight with the American regulator. As a result, Gram turned into nothing, and all contracts were bought out. It seemed that that was all, but the developers who were entrusted with the creation of the cryptocurrency did not want to give it up.
The story is long and confusing. If you are interested, look for answers on the Internet. The point is that despite everything, Toncoin (formerly Gram) continued to exist and is even worth something today. We are not saying that tomorrow will be the same, but Seryoga Solyony is sure that you urgently need to assemble a farm based on GeForce RTX 3090 video cards and start digging Toncoin. We'll talk about this today. Below you can see a video where the author describes in detail the mining method, talking about profits and many key details. Some of our readers will be surprised, because Toncoin is created based on the Proof of Stake algorithm (yes, this is exactly the PoS that will soon come to visit Ethereum miners). Why then does he suddenly support the good old Proof-of-work?
But the fact is that the cryptocurrency developers decided to use a trick, standing out among hundreds of coins that are not so popular because they cannot be mined. The creators of Toncoin transferred a certain number of coins to special wallets, allowing them to be mined, and all this is called Proof-of-giver. So it goes. Let's move on to the numbers: in exactly 24 hours, a farm with 6 GeForce RTX 3090 brought Seryoga Solyony 24 coins. It is easy to calculate that at the current exchange rate it is about 60 dollars. According to the miner, during the same time, a similar installation mines $45 worth of Ethereum. In this case, it is worth understanding that the difficulty of mining Ether and Toncoin are disproportionately different, but the latter is 33% more profitable.
According to Selyony, since the developers allocated a small part of the coins to the miners, the possibility of mining them will be closed in about 235 days. Note that mining is carried out in the usual way through a pool, but the pool itself raises questions, because, according to Seryoga, payments take an extremely long time. For example, his $60 arrived in 4 hours. By the way, the most important thing is that you can mine Toncoin on video cards, processors and even calculators, if the latter are powerful enough. Have you already bought boots for your wife? If not, then rather dig Toncoin.
First mining farm
Obviously, searching for ASICs is difficult. How it works is unclear; the photos on the Internet look like some kind of Chinese consumer goods. In general, it was decided to mine on video cards. Several video cards, usually six or eight, are combined into one farm computer. And let's go. But here’s the first problem – the price tag for video cards is prohibitive.
The mining epidemic has led to a doubling of the cost of video cards.
I miraculously got eight Nvidia 1070 video cards from Europe for $400 and began assembling the first farm. Oh, what hell it was. Now you have the Cryptocurrency Bible and so on, but before you had to sit on disgusting forums and pull out information bit by bit.
Everything except video cards was purchased from DNS, risers and other special things for the farm on Avito.
Fortunately, I assembled computers when I was young, so I didn’t have any problems with how to install a processor on the motherboard [motherboard – editor’s note] or install Windows. In general, the first farm was assembled. I had to tweak the BIOS a little and dance around with a tambourine, after which Windows finally detected all eight of my video cards. Dancing with a tambourine around the BIOS for the sake of running eight cards under Windows, I tell you, was spectacular. I downloaded the mining software. All that remains is to make the wallet.
Ethereum wallet
What does any adequate person do? Type “Ethereum” into Google, go to the official website and download a cryptocurrency wallet. That's what I did. I launched my wallet and waited. He writes that the blocks need to be synchronized. Well, I'll synchronize.
The farm hasn’t been working all this time, by the way, because I don’t have a wallet.
I went to work, came back in the evening, and the synchronization was still going on. The wallet took up an incredible amount of gigabytes on the computer. I found a way to close this synchronization window, after which it turned out that the wallet address could simply be copied and not wait for the entire blockchain to be downloaded. Copied. I entered the wallet address into the miner program and the process began. I placed the truss in the hallway so that it would not interfere with sleep.
Ethereum
I wake up and look at my wallet, the synchronization is still not completed. I was surprised and went to Google. They write there that without an SSD, that is, with a regular hard drive, there is nothing to do. The forums recommended the Jaxx multi-currency wallet. He does not store the blockchain on his computer, but stores it somewhere on his server. This was, of course, a wake-up call for me, because I'm a little paranoid. But there was nothing to do, I really wanted to see the first treasured numbers in my wallet. I downloaded, installed, copied the address, reconfigured the miner. Gone. I came in the evening, opened my wallet, something had already dripped. Hurray, success!
I run around the apartment like a little child. I say, wife, let’s open the bottle of red that was left over from the birthday, we’ll celebrate. What an idiot, she thought, he’s collected some crap in the apartment, it’s making noise, and he’s also happy about it.
More than 40 thousand people mine cryptocurrency on the 2Miners Ethereum pool. In total, more than 66 thousand people use the pool.
Ethereum mining pool from 2Miners
They don't risk anything
Mining pools and companies do not expect draconian measures from the authorities, because they are also in favor of introducing regulation. Market representatives expect that if the authorities introduce a tax or an increased tariff, their size will be acceptable. According to Murad Yaliev, representing the MinerWorld mining hotel in Irkutsk, fees “will not be colossal and will not play a big role” for the mining of cryptocurrencies in the Russian region. This activity brings too much profit, and the introduction of new measures is unlikely to “scare off” miners and force them to look for more favorable conditions in other countries, he believes. Even now, when the hunt for miners has begun in Irkutsk, the MinerWorld mining hotel does not record a drop in demand - “there have been no places for three months.”
Bestchange.ru senior analyst Nikita Zuborev explained why miners began to leave Kazakhstan after reports of a tariff increase. “The increase in price itself is expected to be only 1 tenge (about 0.17 rubles) per kilowatt, which allows the price of electricity to remain one of the most profitable in the world. The main problem with the outflow of miners there was the introduction by local authorities of rationing of electricity supplies, and not the directly planned increase in prices,” he said.
Image: Depositphotos
According to Zuborev, even neighboring Ukraine, Belarus and Georgia, with very flexible cryptocurrency restrictions, present less profitable options for miners than Russia, all due to the cheapness of electricity. “We fully admit a situation in which, even with additional taxation, the profitability of mining remains more attractive than in other countries,” the expert said.
Accordingly, the risks for miners in Russia remain small even after the development of the legislative framework, and representatives do not expect “shocks” in the market. If the size of taxes and tariffs meets the expectations of industry participants, only political decisions by the authorities will remain potential threats, Nikita Zuborev believes. According to him, if lobbyists from the Central Bank continue to crowd out any digital assets other than the digital ruble, then miners will be forced to leave the country precisely because of political reasons, not financial ones.
Jump on a departing train
The farm mined for a week without any visible problems, Ether came to the wallet regularly. After calculating my energy costs, I realized that the farm brings me $10 a day. In general, it should pay off in a year. I understood that the cryptocurrency exchange rate was not very stable, but the euphoria took its toll.
I made money out of thin air. Every day. And most importantly, the payback period is a year. Where have you ever seen this?
When you make money out of thin air
I may now say some illiterate economic bullshit, but you’ll forgive me. Who can give 100 percent per annum? I thought no one. Although they regularly wrote on the Internet that this would soon come to an end, the train had left, it was too late to start mining, those who came a year ago had earned money, and the like. But there was no stopping me.
I started looking for cheap video cards by hook or by crook, because I didn’t want to buy them at exorbitant prices. With motherboards, power supplies and other things, everything was much simpler, because they were sold in regular stores. Sometimes there weren’t enough risers of the required model, so we had to take some curves. Less than a month later, there were already five farms in my apartment, and my daily income was $60. The trusses were not only in the hallway, but throughout the apartment.
At night I took them into the living room-kitchen and opened the window there wide open - otherwise it would be impossible to sleep from the noise and heat.
One night I woke up, went to the toilet, but something stopped me in the corridor. It smelled like electricity—or rather, burnt wiring. At first I thought about farms, but then I realized that it’s not about them. The wire entering the apartment was hot as hell, and the plastic around it was melting. I quickly turned off the farms. I thought it was good that I didn’t burn anything. It was impossible to continue like this any longer. It was necessary to look for another place for farms.
Absolute precedent
In 2022, Russia became third in the world in terms of Bitcoin mining volumes—the country’s share reached 11 percent. The number of cryptocurrency miners has increased sharply after the ban on their activities in the largest mining center, China. In two months, the amount of computing power in China fell from 46 percent of the global hashrate to zero. Many miners decided not to give up their profitable occupation and began to look for more favorable conditions for the production of digital assets in other countries. Due to cheap electricity and the absence of any industry restrictions, Russia and Kazakhstan became the main centers of gravity for them.
11,2%
is the share of Russian computing power in the global mining volume
The only Russian law regulating the cryptosphere came into force on January 1, 2022. The Law “On Financial Digital Assets” defines cryptocurrency and prohibits its use to pay for goods and services. However, the Russian authorities have not yet even begun to legalize mining. To fit into the framework of the right field, miners can register as individual entrepreneurs and bear the corresponding costs for electricity and taxes, but until recently nothing forced them to do this - there is no punishment for “underground” mining in Russia.
However, these activities cause uncontrollable losses to energy suppliers and ordinary citizens. In mid-October, the governor of the Russian mining capital, Irkutsk region, Igor Kobzev, announced an “avalanche-like increase in energy consumption” due to cryptocurrency mining, for which the power grid was not ready. Mining in the region has already led to a series of power outages in the suburbs. The Irkutsk region has become a center of attraction for cryptocurrency miners due to the lowest electricity prices in the country. Currently, more than a thousand farms have been identified in the region.
Due to the lack of a legislative framework, Irkutsk energy companies decided to fight the miners “with their own hands.” A real hunt was opened for the miners - they began to be identified based on inflated electricity bills, and residents of Irkutsk were even asked to report their neighbors involved in mining via helplines. After collecting the necessary data, regional energy workers began to sue the miners.
This campaign has already dealt a significant blow to cryptocurrency miners - the Irkutsk energy company has sued them for 18.7 million rubles. At the moment, the company has won 9 claims out of 85. The energy workers managed to prove to the court that commercial activity is carried out in the houses where mining farms are installed, and homeowners do not have to pay for it at regular “household” rates. The court allowed the tariff increase and ordered miners to pay an additional amount for the energy already spent. At the same time, neither Russian miners nor energy experts could give Lente.ru convincing reasons why the proceedings ended the way they did - after all, according to Russian laws, mining is not considered entrepreneurship.
The largest mining farm in Russia, located in Bratsk and owned by BitRiver
Photo: Maxim Shemetov / Reuters
“Given the lack of clear definitions in the legislation, it is not clear on what grounds connecting devices for computing at home is recognized as a commercial activity,” Vitaly Borshchenko, co-founder of one of the leaders of the Russian market in the provision of services for placement and hosting of crypto equipment, BitCluster, told Lenta.ru. . Murad Yaliev, a representative of the Irkutsk mining hotel MinerWorld, also stated that there were no legal grounds for such a decision. Chairman of the Union of Housing Organizations of Moscow, specialist on homeowners' associations and housing and communal services Konstantin Krokhin explains the court's decision by saying that the Russian state has vested energy companies with very broad powers.
Energy companies are legally armed. These companies are always right. As a result of the energy reform and relevant government regulations, they have a lot of opportunities to regulate the tariff. Everyone owes them. They can now, for example, issue advance invoices based on their understanding of future consumption
Konstantin Krokhin, Chairman of the Union of Housing Organizations of Moscow, specialist on HOA and housing and communal services issues
Experts believe that miners can appeal the decision to the Supreme Court. Lawyer, partner atLegal Pavel Ganin believes that the Supreme Court can accept and consider such complaints, since this issue is relevant in Russia and is not yet regulated in any way. In his opinion, the Supreme Court is unlikely to overturn the decisions of lower courts, but may provide clarifications that will form the basis for the development of a legislative framework.
At the same time, representatives of the Russian mining community and energy experts recognize the fairness of the energy industry’s requests for tariff increases. “Irkutskenergosbyt can be understood - the use of devices to hide large amounts of electricity consumption provoked an increase in the company’s debt, the debt was constantly growing, and it had to be covered at the expense of citizens,” noted the head of the sales department of the mining company EMCD and a specialist in a conversation with Lenta.ru in the field of digital asset mining Dmitry Kudinov. In his opinion, the reason for this problem is the lack of regulation.
At the moment, the fight against miners in Russia is chaotic, and market participants do not believe in the effectiveness of such a “manual mode” of mining management, declaring the need for a comprehensive regulatory solution. Dmitry Kudinov and his colleague from EMCD, blockchain specialist and liquidity manager Denis Smirnov, believe that the lack of a legislative framework regarding mining hinders both energy suppliers and the development of the industry itself.
Global distribution of computing power by country
Screenshot: ccaf.io
“Since mining activity is the most energy-intensive, it should be classified as a commercial activity. I do not believe that Russia will lose its status as an attractive region for miners if mining is recognized as an entrepreneurial activity. On the contrary, this will give additional attractiveness to the country, where the rules of the game will be clear, and miners will be able to predict the development of their business and will understand the prospects. Legislative initiatives and normal regulation will attract a large number of market participants to us, and it is this step that will allow Russia to become a leader in the industry,” said Denis Smirnov.
His colleague added that the low cost of energy and the reliability of the domestic energy system will inevitably attract large investors who are still afraid to enter this business due to the lack of regulation. Nikita Zuborev, a senior analyst at the Russian aggregator of crypto exchangers Bestchange.ru, shares this point of view - the key factors of attractiveness for miners are the security and legality of doing business, he believes.
Energy experts say that the issue of regulating energy consumption is relevant not only in Russia, but also in the world. In their opinion, in the coming years, many countries will seek tariff regulation so that the money miners earn goes to pay for electricity at higher rates. “They [miners] are not acting in good faith in relation to normal business. In Russia, the owner of a mini-bakery or cafe pays 30-50 percent more for electricity than crypto miners,” said Sergei Kondratyev, deputy head of the economic department of the Institute of Energy and Finance.
An industry in which taxes are not paid is no longer an industry - it is some kind of shadow economy
Stanislav Mitrakhovich, senior researcher at the Financial University and expert at the National Energy Security Fund (NESF)
“For example, there is information that miners are very actively using electricity in Transnistria, taking advantage of the fact that Transnistria actually receives gas from Russia for free. I think similar things [regulation of the industry] will happen all over the world,” said Stanislav Mitrakhovich, a senior researcher at the Financial University and an expert at the National Energy Security Foundation (NESF).
Server room
Yes, the server room. Well, what else was there to do? I won’t tell the landlord that I will mine cryptocurrency here. I called different factories and industrial zones and said that I was looking for space for a server room. Preferably with a window and a power of 20 kW. I chose factories because, as I thought, there should be no problems with power there.
A week later the premises were found and the farms were transported. The room was small, 15-20 meters, but with two huge windows, which almost immediately had to be opened to ensure cooling of the trusses. Otherwise, everything would get terribly hot, and it was scary to leave the door to the common corridor open.
Of course, what if my cards are taken away?
This is how the stage of “industrial mining” began in my life. Of course I'm joking. What kind of industrial is it? People are installing equipment worth millions and billions right next to power plants. Where was I before them?
The first ASIC miner
I collected a few more farms, but my curiosity knew no bounds. I really wanted to try an ASIC miner. Moreover, everyone knows that you cannot put all your eggs in one basket. What if Ethereum mining fails? Bitcoin has been mined for almost ten years now. That means we should try to mine it too.
I bought my first ASIC on Avito. I installed it, started it up, it makes noise beyond description. I think it’s good that it’s not at home, everyone would howl there, and the neighbor would immediately come with a gun. Setting up the ASIC was as easy as shelling pears: I entered the address of the mining pool, entered my wallet, and that’s it. Much simpler than farms. Payback period is less than a year.
Ha, this thing really works. We need to take more.
There is more and more mining equipment. Switching to Linux
I collected several more rigs and ordered different ASICs from China: Antminer L3+ for Litecoin mining, Antminer S9 for Bitcoin mining and Antminer D3 for Dash mining. Looking ahead, I will say that there was also Antminer A3 for SIA, but that was later, after a year of work.
Now I had farms not only on Nvidia, but also on AMD. An unpleasant surprise: in order for AMD to mine normally, you had to take each card separately and reflash it. Firmware (timings) were sometimes difficult to find. Even after flashing the firmware, I had to spend a lot of time setting up the “overclocking” of the card in Afterburner so that the card could produce the maximum hashrate. And AMD also heated everything ten times hotter than Nvidia. Yes, it depended on the model, but they were just stoves. For example, Devil.
Miner professional
Farms became impossible to control. There were always some errors, map glitches, Windows suddenly decided to update, then TeamViewer also said that I had a commercial use, and began to allow the connection only for five minutes. And then wait ten minutes. I had to go to my factory in my room and sit there rearranging Windows instead of having dinner with my wife.
I reinstalled the OS on all Linux farms: I had to tinker with the first one, but then it was easier. I thought, what a fool, I should have done it earlier, it’s so simple. Online monitoring - and it's only a couple of bucks a month from the farm.
Okay, let's finish with the boring historical part and move on to questions from Yura Dudya.
How much do you earn?
How much could you earn from mining?
You could make a ton of money. Did I make a ton of money? More likely no than yes, because I made a lot of mistakes. Although, as they say, you learn from mistakes.
How much money did I spend on mining equipment? 10 million rubles. Yes, that’s right, you could buy an apartment in Moscow.
Main question
How much money could I make? I think no less than 20 million rubles. That is, it was possible to recapture the equipment and earn the same amount from above.
If I knew the purchase, I would live in Sochi. What mistakes have I made? Why did I earn so much less? I'm telling you.
Mistake 1. Didn't sell cryptocurrency.
What is mining really? Mining is a process in which you receive a reward for computing. You buy equipment, launch it, then your task is to get money, real money - rubles, dollars, it doesn’t matter. You should receive them every day.
My life situation allowed me not to sell the mined cryptocurrency. Its rate was constantly growing. And I kept it, saved it. My fortune grew by leaps and bounds. Now I’ve already bought a virtual Tesla, now I’ve already bought a second virtual Tesla. And then bang, and we flew down, so much so that not only on the Model 3, but on the Priora it was even barely enough. In the spring of 2022, Bitcoin and other cryptocurrencies fell even further.
Depreciation rate
All year I was waiting for Bitcoin to rise back, but it didn’t happen. Every day I lost money, just like every day I got richer in 2017. Selling Bitcoin for 10 thousand dollars was scary, because it recently cost 20 thousand. Selling for 8 thousand is stupid, because it will grow back again, I was sure. Sell for 3 thousand dollars? Damn, there was nothing left to sell there anymore. I was trapped.
Conclusion: Mined - sell.
All-time market capitalization of cryptocurrencies
Mistake 2. I felt like an investor.
I furiously exchanged the first Ethers I received on the stock exchange and collected a cryptocurrency portfolio. I didn’t have a chance to trade on the stock market, but here is a new niche - interesting and unknown to anyone. I studied cryptocurrency projects, teams, bought their cryptocurrency or tokens. Participated in ICO. One ICO brought me x2, another x3.
Born investor
Wow. Yes, I was born to invest. I am cool.
Only later did I realize that in a market that was growing by leaps and bounds, everyone was cool. Buy the crap and even it will grow. Oh, how painfully I fell later.
After about a year and a half in the cryptocurrency environment - by the end of 2018 - I realized that there was only one “dad”, and it was Bitcoin. Everything else is a pitiful imitation. Well, maybe Ether is still normal, okay. But no more.
Conclusion: Mining and investing are two different things.
You can't mix them together. Either mine or play on the course - everyone should mind their own business. To play on the course, you do not need to mine, and vice versa. You don't need to be an investor to mine.
Mistake 3. Mine shitcoins.
Euphoria is a dangerous thing. In 2022 and 2022, cryptocurrency projects grew by leaps and bounds. I got bored and every time the idea arose: “What else should I mine?” And there were more than enough new “promising” coins. Those who dabbled in programming took Ethereum or Bitcoin, created copies, replaced a few words in the code and sometimes didn’t even bother to write anything new.
The same wallet, the same infrastructure, the logo was just changed. What did I not mine? WhaleCoin, PegasCoin, Ubiq, Musicoin—whatever was there.
Then I kept all this stuff. Sometimes I waited for some exchange to add a new coin and sold it immediately. Sometimes it was possible to “make X’s.” I was happy. Looking back, I realize that if I had mined Ethereum, I would have made more money.
Ethereum price chart for all time
Conclusion: You need to mine liquid coins that are easy to sell. If you want to mine something new, immediately exchange it for something normal (Bitcoin) or sell it for real money (rubles).
Mistake 4. Was greedy and inattentive.
Bitcoin budded constantly. Every month there was a fork - either Bitcoin Cash, then Bitcoin Gold, or God knows what kind of Bitcoin. Every time I wanted to get more new coins at any cost. It's interesting.
Right when Bitcoin Gold (BTG) launched, there was a wild buzz around it. At the start it cost about $300, if I'm not mistaken. In general, everyone was waiting for him - and I was no exception. I wanted to check how much BTG I would receive, but to do this I just had to enter the private wallet from the address on the “official page” of Bitcoin Gold. Entered. I saw how much I would get.
He took my bitcoins
Some of you probably laughed and thought badly of me right now. Well, yes, now I think the same way, but then I didn’t understand it. As you understand, I never saw more Bitcoins from this wallet. Neither BTG, nor BTC - none.
To tell the truth, I was smart, I entered an empty wallet on the BTG website, but then money was transferred to this wallet. And, of course, I never saw them again.
How much have I lost? A lot, more than 1 BTC - I don’t even remember. I tried to forget about it like a bad dream.
Conclusion: Hide and do not show the private key to your wallet to anyone.
Mistake 5. Stored money on cryptocurrency exchanges.
Everything is simpler here. This is a law that everyone knows - from Andreas Antonopoulos to a fifth grader. Just don’t store coins on exchanges and that’s it. They brought in, changed, took out. And nothing else. Sooner or later the exchange may die. Several exchanges collapsed, but the most memorable one was Cryptopia. By the way, I lost quite a bit on it, it seems to have been the late Pirl. I look now, someone else is mining it. I wonder why?
The 2Miners mining pool pays rewards to users to the specified wallet. This can be either an address on an exchange or a hardware wallet.
Broken Cryptopia
Also on the same topic – Nicehash. Who doesn’t know, this is a platform for renting mining capacities. ASICS worked for me for a long time through it. The coins were accumulated in the Nicehash Bitcoin wallet. At one point, Nicehash collapsed. Or rather, it didn’t collapse, but money was stolen from it from all users. They apologized profusely and even came up with a coin refund program. They refunded a little more than 80 percent and said, we won’t give you any more, you’ve had enough. Cool.
How much have I lost? A lot, about 0.5 BTC, I also tried to forget about it.
Conclusion: Do not store money on cryptocurrency exchanges.
Error 6. Lost control of the equipment.
There were two cases. The first case is like this. A friend of a friend, or even a friend of a friend of a friend, offered to buy farms in the outback of Russia. And not just buy, but buy them with hosting. That is, you pay money - they give you farms, promise to keep them in a room specially equipped for mining and service them. Then you only pay for electricity.
And I bought, like, my own, I watched Brother 2: “my reluctant brother.”
In general, it all worked for several months, and then one problem, another problem. Either there is no electricity, then farms are moving, or something else. I say, okay, send them to me. What follows, as you understand, is a detective story. We barely managed to grab and get half of these farms.
My friend's friend's friend with my ASIC
Second case. 2022 ASICs were slowly becoming less and less profitable. Again, they say to each other, let me put them in my place in Irkutsk. 1 ruble per kWh. And I say, come on, of course, they don’t bring anything here anyway. Here I was already expecting a catch. I sent only those ASICs that I didn’t mind - Antminer D3. Why don't you feel sorry? In the next chapter. As you understand, I sent Asiki, and then the trace of the person disappeared.
Conclusion: Don't trust anyone. Well, yes, what did you want? The harsh truth of life.
Error 7. I didn’t understand what mining equipment to buy.
These are all scientists now. And then? Then I bought those ASICs that were available on Bitmain. Indiscriminately. Antminer D3 worked for a month and a half, then was abandoned. The difficulty increased instantly, the profitability dropped to zero. Antminer A3 worked even less. Maybe a week. While he was driving, he was no longer needed. It was even a pity to give the rest of the money for it upon arrival, but somehow “turning on the back” is ugly, and most of it was paid immediately.
Miner
There was absolutely no need to buy expensive video cards. Nvidia 1060, 1050Ti can mine quite normally; do not hesitate to take already used video cards or rigs if they can be checked. Many “recaptured” farms and sold them cheap. It was possible to buy it at a profit, which I did several times.
Conclusion: Choose your mining equipment wisely. Do your own calculations.
Don’t think about the warranty: over the years of mining, I only replaced two cards under warranty, and they were defective from the start. The cards work for years without maintenance.
Private Bitcoin miners talk about their collapse
Mining is one way to “earn” cryptocurrencies using the power of your equipment. Miners were engaged in confirming transactions, protecting blocks from entering false information and hacker attacks.
Ten years ago, when the first cryptocurrency, Bitcoin, appeared, only a few enthusiasts were miners. In 2013, when Bitcoin first amazed the world with its phenomenal growth, advanced IT specialists and techies became “miners” of cryptocurrencies. In 2017, when the exchange rate reached an unimaginable $19 thousand, only lazy people, as they say, were not involved in mining. At the same time, a side business appeared - the sale of ready-made “farms” - equipment for mining, which could be bought even by those who do not understand computers at all. “Farms” for mining appeared on balconies, garages, corridors, and spare rooms. They had to work around the clock, without breaks, and therefore “ate” a lot of electricity. However, the miners were more than compensated for the spent energy resources: mining cryptocoins was a very profitable business at the then Bitcoin exchange rate.
“I built the first loggia house trusses in 2016, then expanded. In less than two years, I earned enough money from mining to buy an apartment—this is with an initial investment in equipment of about a million rubles. By the fall of 2022, the business had to be wound down. Bitcoin cost only $3 thousand and mining cryptocurrencies became unprofitable - electricity barely paid for itself,” says former miner Vladimir.
Our other interlocutor, Vladislav, also said goodbye to his farms when Bitcoin, and with it other cryptocurrencies, began to rapidly fall in price. On the best days, mining virtual coins brought him an average of 40-50 thousand rubles a month, while spending about 9 thousand rubles on electricity. When costs equaled profits, Vladislav began selling equipment at a low price - video cards, hard drives, processors.
There are plenty of people like Vladimir and Vladislav all over the world. In China, the main abode of mining, entire cemeteries of “farms” began to appear: no one needed them and were directly sent to the trash heap by disappointed miners.
Associate Professor of the Faculty of Computer Science at the Higher School of Economics Yuri Yanovich told MK about what happened with mining
— Many amateur miners, having made money from mining 2-3 years ago, sold their equipment and retired when the cryptocurrency rate fell. If they kept the “farms” and resumed production now, at new peak rates, would they succeed?
“They would have needed much more perseverance and effort and most likely would not have succeeded.” Mining now is not a good idea. In 2022, many projects in the field of virtual money appeared, new cryptocurrencies were created. Large businesses are slow to switch to something new, so the niche was relatively free. Time passed, some projects disappeared, and large players have already shown interest in the remaining ones. Now there is no place for “random passers-by” in mining.
— Who is doing mining now?
— Mining today is a business area with two main directions. Some companies provide services for hosting and maintaining “farms” in huge data centers. They, as intermediaries, receive a commission, and their clients - private miners - receive income from mining. Others are large companies that have mining capabilities themselves.
Currently, mining the largest cryptocurrency by capitalization, Bitcoin, consumes approximately the same amount of energy as, for example, Belgium, which is not the least popular country in the Western world. That's how much energy is produced by four medium-sized nuclear power plants.
More than 3 thousand cryptocurrencies and cryptotokens are traded on exchanges. To get them, you don’t have to mine them – you can just buy them. You can also store coins and receive passive income. Only a few hundred cryptocurrencies are used for mining. Depending on the computational tasks, mining can be divided into two types.
The first way is with the help of special and very expensive ASIC chips, which are only good for mining cryptocurrencies - but at the fastest speeds (this is how they mine, for example, Bitcoin). The second is using general-purpose chips, that is, ordinary video cards. This is how the second largest cryptocurrency by capitalization, Ethereum, is mined.
— If the cost of Bitcoin has now reached record highs, why isn’t there a new boom in its “mining”?
— Mining was a highly profitable business when Bitcoin and other currencies were just appearing or reaching their first peaks of capitalization. Now the cryptocurrency audience is estimated at 400 million people (those who have ever sent a transaction). That is, this tool has become widespread and, like in any mass business, players calculate costs, risks and potential income.
When mining now, you need to consider three important points.
First: since specific high-performance equipment is needed, supply disruptions are possible. Equipment must be constantly changed because computing power is growing. In the case of Bitcoin, half of the amount that can, in principle, be earned from mining is obtained in the first three months, the rest - later. Therefore, it is important when new equipment arrives. If the delivery of equipment is delayed by three months, you will lose money.
Second: mining concentrated in regions with cheap electricity. Russia is not the worst, but also not the best territory for mining. It is more profitable to install mining capacities in some post-Soviet countries where there are hydroelectric power plants, but after the collapse of the USSR there were no enterprises consuming this cheap electricity. Data centers are also located in some regions of China. Chips and video cards are also produced there, which means the problem with equipment supplies is solved. Half of the mining capacity is now located in China.
The third point: exchange rate fluctuations. Miners' income, expressed in cryptocurrencies, is easily predictable and stable. But cryptocurrencies are not attractive on their own; you can’t use them to pay for electricity for mining. Capitalization in fiat currencies is important, but here the exchange rate is already unpredictable.
The general director of the cryptocurrency platform, Michael Ross-Johnson, told MK about how the modern cryptocurrency business functions
— Mining has indeed already become a separate type of business, moreover, narrower directions have appeared: some miners began to engage in repairs, others began to engage in exchange, sales, consulting, and marketing. Mining has become a separate culture, an ecosystem, where separate niches have formed over time. Accordingly, the popularity of mining grew, including in the professional community, as users gradually became professionals in their own field.
A not very large community has formed, but it knows each other well and provides a variety of services to clients. At the same time, there was no disappointment in mining for professionals, because this activity pays off anyway. Naturally, with the current Bitcoin exchange rate, which has exceeded 20 thousand, the return on equipment is much higher than before.
— What are they mining now?
— Mainly classic Bitcoin, Ethereum and the main virtual coins from the Top 10. In addition, new coins are popular, which do not even need to be mined; you can buy them and get a reward for it. Someone went into staking (a mechanism of passive income for storing cryptocurrency - “MK” ) and exchanges, someone mines coins from the main cryptocurrency exchanges. In general, in recent years, mining itself has grown professionally, expanded, and become more technically and technologically advanced. Most professional miners expect that the market has great prospects.
End of mining
Everything comes to an end sooner or later. This happened with my mining. Unfortunately, with the current cryptocurrency rates, the industrial tariff for electricity (5-6 rubles per kWh), associated costs (rent, equipment maintenance, replacement of faulty elements), mining has become practically unprofitable for me.
I turned off the last ASICs at the beginning of 2022. The Antminer S9 lasted the longest. Then they just stood there. It is unclear what to do with them; they are now lying around in the garage. I'm trying to sell it on Avito. Asics have lost 90-95 percent in price, and even for 5-10 percent of the purchase price, I still can’t sell them. There is no market.
ASIC miner
I turned off farms on video cards in January 2022. The profitability became zero. Surprisingly, I managed to sell almost all the video cards separately, and for good money. I would say that video cards have lost about 50 percent in price. That is, they can be sold for half the purchase price. I used the cheapest motherboards, memory and processors; unfortunately, no one needs them. We managed to sell some of them assembled for 1-2 thousand rubles, and even then happily.
Does your inner Yuri Dud haunt you? How much do I have left?
As I said earlier, 10 million rubles were spent. I won about 9 million. I plan to sell video cards for another 2 million in total. I have approximately 2 million left in Bitcoin. I decided that I put this cryptocurrency aside and will not touch it for 5-10 years. And then we'll see.
Maybe I’ll really buy a house somewhere on the beach in Miami later. Or maybe it will collapse to zero.
But my conscience seems to be clear. I came out unscathed. I repeat once again: if I had thought with my head, I could have easily walked away with 10 million rubles in profit, or even more.
The ice has broken
In 2022, several government departments proposed to equate mining with entrepreneurship. Among them are representatives of the Ministry of Economic Development and the Ministry of Energy, as well as the head of the State Duma Committee on the Financial Market, Anatoly Aksakov, and the auditor of the Accounts Chamber, Alexey Savatyugin.
Head of the State Duma Committee on Financial Market Anatoly Aksakov
Photo: press service of the State Duma of the Russian Federation / RIA Novosti
In November, State Duma Chairman Vyacheslav Volodin ordered the creation of a working group to discuss the issue of circulation of cryptocurrencies. Its leader was Deputy Chairman Alexey Gordeev, and his deputy was First Deputy Chairman of the State Duma Committee on Security and Anti-Corruption Andrey Lugovoy, the author of the initiative to create a working group.
In a conversation with Lenta.ru, deputy Anatoly Aksakov said that the first meeting of the working group is scheduled for the third decade of December. Representatives of executive authorities and experts from the Central Bank will take part in it. Aksakov said that the Central Bank is preparing a report on cryptocurrencies, which, together with the results of the work of invited analysts, will form the basis for discussion at the first meeting.
There is no priority position on the issue of legalizing mining in the State Duma, said Andrei Lugovoy, deputy head of the working group. The regulation of the sphere is now on the agenda - there is no talk of banning cryptocurrencies and their mining yet, although there are many supporters of this measure among officials. They point to greater currency volatility and high interest in digital assets on the part of criminals.
First Deputy Chairman of the State Duma Committee on Security and Anti-Corruption Andrey Lugovoy
Photo: Vladimir Fedorenko / RIA Novosti
Russian President Vladimir Putin also expressed concern about these risks. “It [cryptocurrency] is not backed by anything, the volatility is colossal, so the risks are very large,” he said during a speech at the “Russia Calling!” investment forum. Of the participants in the discussions in the State Duma, representatives of the Central Bank were especially negative, Lugovoi said.
The Central Bank has a radical position. From various sources we hear that they are against everything
Andrey LugovoiFirst Deputy Chairman of the State Duma Committee on Security and Anti-Corruption
The deputy himself is not sure that a complete rejection of cryptocurrencies would be the right decision: “From the point of view of common sense, it is necessary to regulate. […] According to estimates from various expert sources, including foreign ones, Russians own 200 billion in cryptocurrency. I don’t really understand how 200 billion dollars can be taken and raked out of the pockets of Russian citizens.”
As for the regulation of mining, both Aksakov and Lugovoy believe that a comprehensive approach is necessary, including special electricity tariffs and taxes. “The fact that now miners are using tariffs for the population is, of course, simply unfair. This absolutely should not happen,” said the deputy head of the working group. He added that the increase in tariffs will be discussed with the Ministry of Energy, but most likely miners will be forced to use the same scheme under which any other legal entities now pay for electricity. According to Lugovoi, there is no need to develop separate tariffs for cryptocurrency miners.
Photo: Federal Tax Service of Russia
In addition, in order to avoid increased load on the power grid, miners will be required to coordinate their connections with energy companies: “If mining is a legal activity, before connecting, they will request the relevant electricity sales and power grid organizations. If they are refused, but they still connect, then they will be violating both the Administrative and Criminal Codes. […] Illegal miners will have to be jailed.”
Taxes will also be formed according to the generally accepted scheme, depending on the size of the business. “If you have land, real estate, then you pay for it in accordance with the established law. If you make a profit, then you pay income tax,” explained Lugovoi. When determining the tax base, expenses incurred will be taken into account, as in relation to other types of business.
“They produced Bitcoin - then they look at the exchange rate, calculate how much electricity they spent, what other expenses they incurred (on salaries and other payments). Subtract all this and the result is profit.” In accordance with this figure, income tax will be calculated. Despite the fact that the mining industry in Russia will become very attractive for investment after the creation of a regulatory framework, the authorities have no plans to support it.
Why help mining? So why help him? What is the goal? What are they producing, socially significant products? They now exist, work and do not ask for help from the state. They work and earn pretty decent money. Why help them? Regulate - yes, I understand that. Help - no, I don’t understand. […] What are they, some kind of orphans or poor people?
Anatoly Aksakov, head of the State Duma Committee on the Financial Market
According to Aksakov, it is not worth helping mining because of the lack of benefit to society and the possible risks associated with the spread of cryptocurrencies: “They help the business that is socially oriented, that produces products, but these produce it is unclear what. Virtual currencies are digital, which can burst, and so on. “They will create financial pyramids, and we must help them.”
The future of mining
The king is dead. Long live the king!
Of course, mining is not dead. It just became for professionals and on an industrial scale. He's making himself poor, you say? Not really. Objectively, mining is a profitable business. Only in 2022 was it beneficial for everyone without exception. In 2022, countries with expensive electricity were eliminated. In 2022, almost everyone else dropped out. In 2022, only those who have cheap electricity can. Most often this is China or Russia.
They continue to mine at any rate
It's no secret that in the Irkutsk region there is 1 ruble per kWh. At least wash yourself. But I don’t want to go there and organize mining there; without control, everything will quickly die. Some people set up giga-mega-farms next to power plants and take advantage of almost free electricity, but most often these are issues of a national scale - I don’t care about them. Someone is stealing electricity, but this is definitely not about me. Miners know that karma decides, blocks are not guaranteed.
