Mining Bitcoin solo: Is it worth challenging the odds?
Another solo miner becomes a lucky winner
--
Last week, an incredibly lucky miner managed to find a Bitcoin block with only 10 TH/s, forever recording it on the blockchain and securing a reward of 6.25 BTC, or $141.875 at today’s price.
While the chances for this to happen are extremely slim — one in 26.9 million, to be precise — it’s also an amazing demonstration of Bitcoin’s security and democracy. Literally anyone, regardless of their resources, can find and create the next Bitcoin block.
That said, is it worth going for solo mining’s extremely low odds like this miner did? In this article, we’ll explore the basics of solo mining and the best way to get started.
What exactly is solo mining?
Just in case you’re a first timer, let’s refresh the basics.
Bitcoin mining is the process of confirming transactions and adding new blocks to the Bitcoin blockchain. This is done by encrypting the data on the blocks using the SHA-256 algorithm, which returns a string of 64 hexadecimal characters, called a hash. To find a block, miners have to try different variations until the hash they obtain in return meets certain network parameters.
Now, miners can either join a mining pool or mine on their own.
Mining through a pool is the process of joining a group of miners who work together to increase their chances of finding Bitcoin blocks and earning the rewards. When a block is mined, the reward is divided among all the members of the pool according to their contribution to the pool’s work.
When you mine solo, you compete with other miners to be the first to find and add a new block to the blockchain entirely on your own. This greatly reduces the chances of finding a block, but in case you do, you get to keep 100% of the revenue, which is currently 6.25 BTC.
Solo mining, pros and cons
One of the main advantages of solo mining is that you have the potential to earn the full block reward if you are the first to solve the mathematical problem.
However, the chances of solving a block solo are very low. This is because the current Bitcoin difficulty is extremely high. In contrast, mining through a pool increases your chances of earning a reward because you are working with a group of miners.
Another great plus of solo mining is saving on costs. Pool operators often charge fees to miners who want to mine against their pool. When you mine solo, you assume additional responsibility, as you have to administer your miners yourself, but you also save on administrator fees by doing so.
Transparency is also a relevant issue. Many pools do not provide proper data and analytics about your miners performance and the payment amounts you’re entitled to. Instead, you have to trust that the pool is giving you the rewards you’ve earned fair and square. When you mine solo, it’s the Bitcoin protocol that’s paying you directly, that’s as transparent as it can get.
Finally, there’s also uptime. When mining against a pool, you depend on their infrastructure for connection to the Bitcoin network. If something goes wrong with the pool servers, you might be wasting valuable time and energy mining in vane.
As we already mentioned, the main disadvantage of solo mining is that the chances of earning a reward are very low. This means that you may have to mine for a long time before earning a reward, and you may not earn anything at all. On the other hand, mining through a pool increases your chances of earning a reward, but the reward will be smaller than if you mined solo.
Think of it this way: Solo mining is betting on small odds for a greater reward, while mining with a pool is playing it safe and going for small, regular payments.
Want to try solo mining? Here’s how you can do it
So, are you willing to challenge the odds and see if you’re the next lucky miner to find a block mining solo?
It’s important to note that, if you want to mine solo, you’ll also have to set up your own Bitcoin node. This is a program that validates transactions and blocks from the network by accepting transactions and blocks from other full nodes, validating those transactions and blocks, and then relaying them to other nodes.
There are many ways you can set up a Bitcoin node, but we recommend you check out the instructions on Bitcoin.org.
After you’ve set up a node, you’ll have to acquire an ASIC miner if you don’t have one. These machines are designed specifically for the purpose of mining and can be quite expensive.
Then, download and install Bitcoin mining software. This will connect your ASIC to the Bitcoin network and manage the mining process. Some popular options include CGMiner, BFGMiner, and EasyMiner.
Once you have your ASIC hooked up, you will need to configure your mining software to connect to your Bitcoin node and start mining. Again, depending on what software you’re using, the process may vary, so check out their official instructions.
Alternatively, there are mining pools that offer solo mining services, saving you most of the trouble of doing it all yourself. However, as we mentioned above, these pools charge a service fee. Make sure to consider the pros and cons of each option and make the decision you feel more comfortable with.
Solo mining with peer-to-peer hashrate contracts
Many enthusiasts consider solo mining, especially after a story of one of them finding a block on their own breaks out.
However, the low probability of finding a block, added to the high upfront cost of getting geared up, often discourages most people from even getting started.
We hope hashrate contracts will change that.
These are peer-to-peer exchanges of real Bitcoin mining hashrate between two users. With hashrate contracts, you’ll be able to acquire a set amount of Bitcoin computing power for a certain amount of time for an agreed-upon price.
This will allow you to mine Bitcoin exactly how you want to, spending only what you want to spend and without assuming any long-term commitments. Like buying an expensive ASIC miner.
Hashrate contracts will soon be available on the Lumerin Hashpower Marketplace. Want to learn more? Make sure to visit lumerin.io for more details!
