How to build a profitable industrial-scale Bitcoin mining operation
It's not easy to build an industrial-scale Bitcoin mining operation, but it is certainly feasible. Here's where to start.
So you want to build an industrial-scale Bitcoin mining farm, or scale up a smaller operation. Chances are you’re being forced to make the decision, too: Either scale up and become more competitive with other mining operations or have someone else mine for you by outsourcing or pooling — or stop mining altogether.
Over the past decade, Bitcoin mining has evolved dramatically. Anyone who’s in the industry knows things scaled quickly, and soon hobby miners were forced to either upgrade their hardware and expand their rigs, or jump out of it altogether. Many did leave, but those who stayed on scaled.
Our team behind Genesis Digital Assets has built 20+ farms and taken more than 250,000 miners online over the past seven years. Because it’s a new industry, there was no guidebook for our team to follow.
So we tried out every kind of hardware, firmware, and software learned how to set up a mining operation at scale, figured out how to efficiently cool it all, and went through a lot of trial and error to get where we are today.
It’s certainly not easy to build an industrial-scale Bitcoin mining operation, but it is certainly feasible. Here’s where to start:
Research, Research, Research
Don’t jump into it, but take your time and learn. Unfortunately, in an industry that lives or dies on urgency and timing, it’s tempting to buy the “next best thing” hardware or software just to get going.
But bad investments will stop you before you’ve even begun. Set your objectives, learn from others who have done what you want to, gain more knowledge around vendor offerings — and then jump in.
Additionally, don’t jump in before you know how you’re going to pay for it all. Where will your investment money come from? Before you begin sourcing capital, keep in mind that your budget will need to account for more than just hardware.
Think about building costs, rent, salaries, utility bills (specifically your electric bill), and other overhead. Scaling will be able to provide you efficiencies and cost advantages, but you don’t want to run out of money before you get there.
Fortunately, bitcoin mining isn’t dependent on being in a certain location, so mining companies can go anywhere in the world that they believe is going to be the most optimal place. When considering locations, look for cheap, sustainable electricity first.
Cooler climates also provide an advantage for mining operations. Additionally, consider locations that are supportive of bitcoin mining efforts, and that have favorable regulations and policies around locating there.
As mentioned above, this will be one of your biggest considerations when starting, and something you’ll constantly monitor as you operate, as mining at scale needs low-cost electricity to be profitable.
Consider more sustainable alternatives as you look at electricity, as some of the cheapest out there are hydro and wind.
Design and Construction
Once you have your location scouted out, consider building your own structure so you can tailor it to your specific needs for cooling, ventilation, space, and more. If the location makes it difficult and not cost-effective to do so, consider going modular.
Mining containers can be designed to specifics and manufactured cheaply. They can be shipped easily and set up on-site with minimal effort. And if you need to scale, simply add more.
Software isn’t quite a concern if you’re only in one location. But if you scale to different locations that may run different devices, or have different energy usage or cooling systems, you’ll need a software system that not only monitors all the disparate parts, but can manage them as well — ideally remotely.
Because software tends to be vendor locked, or may not cover all your needs out of the box, consider an in-house solution.
Once you start scaling, how would you manage your team? As mentioned above, be sure to keep the team lean to minimize costs. Once you start scaling to multiple locations, you don’t want to hire full teams for each site.
Keep your maintenance teams who will care for your rigs, replace fans, and make sure everything runs smoothly on-site. Then keep your team of specialists, electricians, and engineers centralized (or remote). We’ve found this hub-and-spoke method works best for operational management.
Don’t Forget the Extras
Don’t forget that in addition to your many miners, you’ll need an entire system to cool them, either with fans or ACs or both. You’ll need to make sure your network is secure, and should use cable connections rather than rely on WiFi.
Make sure you have a way to measure not only the farm temperatures but the humidity. Make sure you have the right outlets throughout your farm. And make sure to include all of this in your budget!
Continue to Learn and Grow
There’s certainly a lot to keep in mind as you begin scaling your mining operations. In addition to the guidance above, be open to trying new things to see what works and what doesn’t, experiment with new innovations, and cut loose vendors or methods that no longer serve you. But always keep in mind the objective of getting to a bigger-better-faster in order to be a competitive, profitable mining outfit.