At-Home Bitcoin Mining To Secure The Network

By Bitcoin Magazine - 2 years ago - Reading Time: 13 minutes

At-Home Bitcoin Mining To Secure The Network

An at-home bitcoin miner describes his setup, offsetting heat costs, tax incentives and his role in securing the Bitcoin network.

This piece is part of a series that features interviews withBitcoin miners about their experiences setting up and scaling mining operations, as well as their views on the direction of the mining world. If you are mining Bitcoin and want to share your knowledge and story — the ups, downs and innovations – reach out to the author on Twitter @CaptainSiddH.

I had the opportunity to sit down with one of the most helpful plebs in the mining world, Dan, the person behind @DaddyBTC_pleb, to dig into how he is heating his home with ASICs. He has shared several of his projects on Twitter, from a space heater enclosure to quiet fans that allow an unboxed S9 to heat a room. Dan also shared some numbers around savings in his natural gas bill to give you an idea for how much his system is saving him.

Hey Dan, thank you for coming on with me to chat about your home mining activities. You are sharing a ton of your experiments and setups on Twitter. What is your background, and how did you first become interested in Bitcoin and mining? 

So, I am actually a physician, and I have four kids. I got into investing back in 2006 as I was finishing my training. At that point, I was investing in stocks and doing some options trading. Since that time, I’ve gone through two big financial upheavals: the whole period from 2007 to 2009 as well as the panic in March 2020 at the start of the pandemic. Both times I was struck by the fact that things in financial markets just didn’t happen the way they should. For example, in 2007 to 2008 when the bottom dropped out, the government stepped in and stopped the system from falling apart. No one wants the system to fall apart, but frankly it should have back then and I was banking on this fact.

There was one time in particular where I had quite a bit of money in puts on Bear Stearns. These puts (a type of option trade) were a bet that the value of the stock was going down. At the time, I was in a trading group and all the guys in our group basically thought Bear Stearns was going to zero. Well, my wife and I went on an island vacation during this period and we were sitting on the beach and ran out of sunscreen. I ran back to the room to get the sunscreen and quickly logged into my E*TRADE account to check on things and my puts were essentially completely wiped out.

I could not figure out what the heck happened. It turned out that it was a day that the Federal Reserve was not scheduled to do anything, but it lowered interest rates by something like 75 basis points and the market popped, taking Bear Stearns with it. Eventually, Bear Stearns did go to zero and I was able to exit the trade in three steps, breaking even overall, but that event put a bad taste in my mouth, because here was the government stepping in to stop this contagion that needed to happen. The financial markets needed to unwind. At that point, I knew the playing field of the investment game was no longer level.

That experience and several others caused me to shift to a very conservative model — investing in dividend-paying stocks. For the last decade, I was all about dividend-paying stocks and DRIPs, which are dividend reinvestment programs. But when the pandemic hit and the market tanked, I felt like this was going to be the Great Depression all over again. Several of the guys in my trading group were discussing approaches to investing and staying largely in cash. Then the government stepped in again, putting $5 trillion into the economy. I mean, when the hell did you ever hear the word “trillion” before that? I never did.

The conversation went from billions to trillions in a split second. The market came roaring back and there was just nothing that I wanted to buy. Everything seemed so overvalued in the stock market. So — to get to Bitcoin — at the end of 2020, I was on a trail run with a buddy of mine and the conversation turned to investments. I literally spent the last six miles of the 10-mile run explaining to my friend why he was a complete idiot for starting to invest in bitcoin. I repeated all the typical FUD I thought I knew about Bitcoin. And to be clear, the first time I heard about Bitcoin was around 2012, but I never investigated it.

After that run, I started paying more attention to the bitcoin market. I watched it run up to $40,000 before pulling back, and somewhere in that time I listened to a couple of podcasts. I have to give a big shout out to Preston Pysh and Peter McCormack. As soon as I heard that there was only ever going to be 21 million bitcoin, the light bulb switched on. That’s a perfectly scarce asset — nobody can mess with the monetary policy. It just started to make sense to me, and I felt confident enough to start investing in it.

I watched my investment double, but I also spent hundreds and hundreds of hours listening to podcasts, reading books, and going down the rabbit hole. At first, I saw it as a very unique alternative investment, but as I got more and more educated, it became so much more than that. I never had an interest in monetary policy or politics, so I never considered how our money is created and how that influences so many things in our lives. I never really cared about other places in the world that don't have access to “good money.” Shout out to Alex Gladstein for opening my eyes to the influence of Bitcoin around the world.

I started running my own node, and also took a look at mining. In April of last year, I priced some things out with Compass to do a package and I'm kicking myself because I didn't pull the trigger at that point. Miners were around $4,000 apiece. By July, I decided to go ahead and start purchasing miners — so now I have several that are going to come online through Compass but I also bought a couple of at-home miners.

So, you bought bitcoin, spun up a node, did your homework, fell down the rabbit hole — but what made you confident enough to purchase miners versus just taking that capital and buying more bitcoin with it? What kind of planning or aha moment went into you actually thinking “I want to mine this”?

As I went further and further down the rabbit hole, I started allocating more and more of my personal wealth to bitcoin. I have more than a little bit allocated to bitcoin, so I just felt like I needed to be Bitcoin. Running a node is part of that, but I wanted to go further to help further decentralization of the network. There is a centralization of hash power occurring — it's in Texas and the U.S. instead of China now, and while I’m thankful that there’s so much hash, it’s a weak point in my mind to have it in these huge mining centers.

Hundreds of thousands of home miners out there make the network resilient. As I allocated more and more of my personal wealth to bitcoin, I felt obligated to be a part of that solution. Plus, it was interesting to me, and a way to acquire non-KYC bitcoin. Now, I pay taxes and do all the “right things” that I have to do and despite our government’s problems, I do believe in the United States of America, and I feel lucky to live here. However, I fear the possibility of another Executive Order 6102 to seize the gold. So, I want to know that I have some of my bitcoin wealth in non-KYC form. I still report what I mine on my taxes, but they don’t know my UTXOs.

So, I know from your tweets that you have a mix of machines, from S9s to S19s. Can you walk us through how you acquired your miners? 

First, I acquired two T19s through Compass — since those were the best machines I could find at the time for home mining. Once I ordered those machines, I hired an electrician to come out and install three 30-amp, 240-volt circuits to run these miners and give me some extra capacity.

Later, I discovered the Hardware Market group on Telegram and ordered an S19 Pro from one of the verified sellers. With all of these new-generation miners, I had a significant monetary investment, and although I wanted to learn more about their inner workings to get comfortable with them, I just did not want to open them up and mess with them for fear of breaking something.

Enclosure in Dan’s basement, spliced into the HVAC system. 

To have something to experiment on, I purchased three S9s. The S9s are different than the S19s, with separate power supply units and cables you have to plug in. Setting those up demystified things for me. The second I powered everything up for the first time and it just worked, I thought to myself, “Wow, this isn’t so bad.”

Then I broke them down, cleaned the fans, pulled the boards out and brushed them off with a paint brush, gently blew them out with compressed air and put everything back together — and it all worked. That made me feel more confident. So, just for that alone, that was worth the price of the S9.

I read you're heating your whole house with your miners. What does that system look like? 

So first, I have one S19 in the basement in a soundproof box. That box is actively ventilated using an inline duct fan to move air from the box into the return duct of the HVAC just before the filter and blower. We leave the HVAC fan in the “on” position ensuring that there is no pressure ahead for the smaller inline duct fan to overcome. The result of this is that we have lukewarm air constantly coming out of our air registers in the house. This has been enough to maintain a comfortable temperature on the main floor of the house during cooler months.

Dan’s basement box, showing filtered intake and exhaust into the HVAC system. 

For the two T19s, I built a bigger box and put it up in our attic. I have that ducted two ways with six-inch ducts: one heats our garage, the other goes into the upstairs HVAC system housed in the attic. So, that also blows out lukewarm air onto the second floor of the house.

Dan’s attic-based box with an S9 hashing above to keep the room warm. 

The S9s are all used as space heaters throughout the house. One is in the basement in my office, which is always the coldest room in the house. I used to run a 1,500-watt space heater but it would never keep the room at the right temperature, plus it would sometimes trip the circuit breaker. Now I'm running an S9 at 1,000 watts in a box, which is quieter than my old space heater while keeping the room totally comfortable. And it makes me money while it does it.

Another one of my S9s is in the living room, which I recently did a silent build on. Our living room has a very high ceiling and above it is the attic, so when it's 20 degrees outside, you get this cold air seeping through the ceiling. I put the S9 in there as a space heater, and now that room stays nice and toasty.

Dan’s miners drastically reduce his natural gas usage and effective electricity rate.

I want to ask about that silent build — you managed to get an S9 down to about 60 decibels (dB) just by replacing the fans, is that right? 

Well, the S9 in my office is running at 1,000 watts inside a box with the fan at around 1,900 RPM, and it's quiet. So I wondered if I put “quiet fans” like the Noctua on the S9 maybe it would be quiet without the box at around the same RPM.

I bought the fans off Amazon and fitted some adapters, which needed a little modification with a wood chisel. Then I had to duct tape it together. Once I got it up and running, I was super impressed at how quiet the thing was. Initially, I was running it at 1,000 watts on a 120-volt circuit and getting only 60 decibels, but I’ve subsequently dropped this to 900 watts and am now getting around 50 dB without compromising too much on the hash rate. This setup is something any college kid could have in their dorm room, sitting on a bookshelf, just keeping their room warm in the winter months.

What maintenance do you do on your miners? Are you regularly cleaning them? 

With the S9s, I’ve pulled them apart and cleaned them before. I basically pull out the hash boards and brush them off gently with a paint brush, then blow them off with compressed air. I avoid vacuuming them because the vacuum builds up static electricity and I would hate to have that discharge on the circuit board. My environment is not very dusty and the air going into the machines is filtered, so I don’t have to clean them often — maybe every three months will be enough. I have not pulled apart the S19 and T19 units yet as they’re still under warranty.

What was your biggest pain point in getting your setup to where it is now? 

The electrical requirements were tough to figure out. I didn’t even know what a PDU [power distribution unit] was when I started mining, nor how to understand the parameters — how many amps they can handle, what kind of plugs you need, the proper cords. All these things were very difficult for me to track down. Just the initial prep before the miner even got to my house, like telling the electrician what I needed, cost a lot of hours researching and going over these technical things to make sure I was understanding everything.

Cord lengths are a good example. I remember on the Bitmain site they indicate at some point that you want to keep your power cords less than 1.5 meters in length. I make sure my power cords are under four feet in length going from the PDU to the miner, but I don’t know what happens if I use longer cords. Could the cord heat up too much or create a fire risk if it’s too long? That information is just not available to the home miner without a technical background.

Dan’s space-heater box, designed to fit under a wall-mounted cabinet. Dan also mentioned enclosure construction was a challenge — he shared tips in a tweet thread that’s included at the end of this article. 

Have you explored any power purchase agreements from your power company for cheaper electricity rates? 

So, I did call my power company to tell them I am running server equipment for my business at home, and I would like to get a different rate. They said they don’t offer any incentives, however, when I dug further I found out if I had a separate meter, I could get what's called a small general service rate. That rate is about $0.05 per kilowatt hour, almost half my residential rate.

If I were to set up a separate meter on my property, it would have to be unattached to my house. The power company would consider that "new service” and they would run a circuit out to the shed for free, with up to an additional 350 amps of service. I'm debating that route, potentially with an immersion setup, but it depends how far down this rabbit hole I want to go.

How are you accounting for the income from your mining activity? Do you have a corporate entity or is this personal income? 

I have an LLC. The beauty of that is you write off your expenses, you know, like my miner purchases. You can take full depreciation on those the first year or you can depreciate it over the course of three years. Then you write off your electricity cost as your business expense and so there's a lot of tax advantages to properly reporting this and it is very beneficial in terms of your bottom line.

What advice do you have for people who are thinking about getting into mining? And where should they go to get more information and guidance?

I think Telegram groups — especially the home mining one we are in — are really key. If you ask a question in there, you probably have three or four responses in a few minutes — and usually from somebody who's pretty knowledgeable.

I would follow Econoalchemist on Twitter, because he constantly puts out good information and retweets really useful stuff. “Mining For The Streets” was a really great article written a while ago by Diverter.

Overall, just do your homework. Don’t buy into the b.s. that mining at home is too difficult, mining at home is not profitable, you can't do it at your residential electrical rates. Unless you're in California and paying $0.40 per kilowatt hour, you're probably able to do it and be profitable. There are a lot of factors that go into it, but if you do your homework and research it ahead of time, you can figure out if it's worth it to you. Even if you’re only breaking even, it may be worth it to you in terms of getting non-KYC bitcoin or just helping to secure the network. That may be worth it to you. I know it was worth it to me.

Thank you for sharing your knowledge with all the plebs out there Dan. Your tinkering is an inspiration to many, including myself. 

If you want to reach Dan, he’s on Twitter @DaddyBTC_pleb. He shares his builds here as well as home mining projects from others. After our interview, Dan shared this incredible thread of tips on building your own enclosure for miners.

This is a guest post by Captain Sidd. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Original source: Bitcoin Magazine