Guzman Pintos, of Luxor Technologies, considers solo mining “crazy”.
Could this Bitcoin mining lottery-like practice become popular?
There are people who are not interested in seeing Bitcoin as a form of money that could change the world as we know it. Some see it as a way to obtain “easy” riches, although the truth is that there is nothing easy about it.
Even mining is a complex topic in Bitcoin, and profits today are not so easy to obtain: Too much processing power on the network equals too much difficulty and too many competitors involved for the reward each block generates. Today, you receive 6.25 bitcoin, plus fees for processed transactions.
Currently, the only way to guarantee that Bitcoin mining is profitable is to participate in a pool or group of miners, a mechanism in which the profits of each block are distributed among all the participants, regardless of who finally solved the block.
Attempting to mine individually could be compared to buying lottery tickets: you get all or nothing for your investment, in this case, in dedicated equipment that are expensive (ASIC).
Winning the lottery is not easy
Is solo mining as easy as these recent examples make it seem? What are the pros and cons? Daniel Frumkin, Content Director of Braiins, the company that operates Slush Pool -the oldest Bitcoin mining pool-, responds bluntly: «It is incredible luck and I am very happy for those miners who beat the odds. That being said, I wouldn’t mine on my own with such a low hash rate.”
Interviewed by CriptoNoticias, Frumkin explained that with approximately 100 TH/s “it should take more than 30 years to find a block”, if we take into account the current difficulty of the Bitcoin network. At a historic peak over the 26.6T.
However, there is a way that those odds can be improved: “Suppose you have 1,000 miners, each mining only 100 TH/s. So one of them is likely to find a block in about 15 days.”
It will then depend on how many people are solo mining and with how much processing power, so that it is more or less likely to see things like those that have occurred in recent weeks. “But the chances of any single miner with a small shared network finding a block are small,” the engineer recalls.
In calculations by Guzman Pintos, co-founder of a company that offers mining services (Luxor): «The probability that a miner with a single 110 TH/s Bitmain S19 Pro finds a block is 0.006582% each day. That is, after a full year of mining, the cumulative probability that this miner will find a block is 2.4% and after 10 years it is 24,026%. That is, after a decade, the chance of winning the reward alone is still less than 1/4. In that period, operating with pools that distribute the rewards, there would be guaranteed profits.
But these estimates are subject to current mining, in terms of difficulty and power accumulated in the network. That picture could be very different by the end of this year. Even, Pintos believes, the difficulty could be doubled and thus the probability that a miner only finds one block would be reduced by half.
“It’s crazy, it’s not something I would recommend to any miner”
To make his position more emphatic, Pintos catalogs allocating mining equipment to this modality as “crazy”. In fact, he added, “it’s not something I would recommend any miner to do.” Basically, because that person who tries to mine bitcoins outside of a pool that distributes the rewards “faces a scenario where they have very little chance of ever finding a block.”
However, in recent weeks we have seen several cases of miners “soloing” for the block rewards they managed to solve. Basically, we could say that they won the lottery, receiving the bitcoin (BTC) equivalent of over $200,000. with a negligible portion of the computing power that the network has.
Pintos also commented that pools like Solo CK (to which the three lucky miners of recent weeks belong) do not operate very differently from the rest: «At the end of the day […] it just changes the payment methodology.”
Risky modality that becomes a trend?
Will this prompt more “lone miners” to embark on their own crusades in search of the exploit? “I guess yes, yes. But miners should only do that if they are willing to lose basically their entire investment.” Whether in the mining equipment put into operation or the electrical and maintenance consumption that this activity generates, Frumkin answers that question.
Being so, ambition could prevail over the possibility of taking “the prize” big of a lottery with very odds against it. The “common sense”, as current consensus of the mining market, is to guarantee constant profits, although smaller.
Guzman Pintos sees it differently. For him, conscience would win out over ambition. “I do not think so [que se popularice la práctica], since it is a very risky move ».
The miner hoping to make a return on their ASIC investment should never attempt such a thing. Unless a miner has thousands of ASICs and wants to play randomly with one or two machines, but that’s another story.
Guzman Pintos, co-founder of Luxor Technologies.
At the moment, in just 14 days there are already three the miners who have won that lottery. And knowing that the markets are not rational, there are those who could consider it as a new “millionaire opportunity” in a market where, almost daily, a new promise like that arises.