How to Mine Bitcoin Profitably at Home: Tips From Compass Mining ...

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He breaks down why bitcoin is incredibly profitable to mine right now due to a big catalyst.
He also shares how committed retail investors can mine bitcoin profitably at home.
In a career spanning online payments, sales at a dog brokerage, and TV production, Whit Gibbs has taken a circuitous route to crypto. But his conviction in the nascent asset class has been strong from the start.
During the raging bull market of 2017, Gibbs came across bitcoin, which immediately struck him as an opportunity that was akin to the internet boom of the late 1990s to early 2000s, one in which he was too young to participate.
"I viewed this as probably my best opportunity to put my family in a better and more secure situation," he told Insider in an interview. "I really just went all in. I cashed in all my savings, took out a $40,000 loan, and bought at the top."
The year 2018 ushered in a crypto winter that put Gibbs in a difficult place. Instead of switching courses, he doubled down on crypto by attending conferences, diving into crypto social media, and building his first computer in June that year to mine Ravencoin (RVN).
"It was very much a hobby but seeing how much money I was able to actually make in mining just Ravencoin, which at the time was a relatively small altcoin," he said, "it let me know that there's real potential here for a future."
Whit Gibbs is the CEO of Compass Mining.
Compass Mining
As he set out to learn more about the mining process, Gibbs started a podcast that eventually led him to meet his co-founder Thomas Heller, who was previously with China's first mining pool — F2Pool. Together with Paul Gosker (who now serves as the chief technology officer), the trio launched Compass Mining in October 2020.
Their timing could not have been better. Amid bitcoin's relentless surge in the following year, the company has grown from three co-founders to a 50-person team while serving thousands of miners, according to Gibbs.
Bitcoin is 'incredibly profitable' to mine right now
Gibbs said his goal has always been to "accumulate as much bitcoin as possible." After trying his hands at trading the crypto, he found mining bitcoin to be a much easier and cost-efficient option for himself.
"You really only have four inputs. You've got the cost of your hardware, your monthly expenses, your cost of power, and the price of bitcoin, that's it," he explained. "If you can line those four metrics up properly, then the economics will work for you."
His calculations suggest that industrial miners tend to have a cost of production somewhere between $3,500 and $7,000 to produce one bitcoin, which was trading at around $41,600 as of midday Tuesday.
For Compass customers, Gibbs said their cost of production is markedly higher than that of industrial miners because they are not getting the same economies of scale. As a result, their production cost to produce one bitcoin tends to land between $12,000 and $13,000, which is almost a $30,000 discount from the spot price.
In addition, bitcoin mining profitability has been boosted significantly by recent catalysts. Aside from a price recovery that saw the crypto climb back up above $40,000, China's severe crackdowns on bitcoin miners since June have been the biggest profit driver for miners.
"Bitcoin is incredibly profitable to mine right now," Gibbs said.
With the Chinese hashrate coming offline, two-thirds of the network fell off in one day, he noted, adding that Compass Mining had a 35% increase in mining profitability in mid-June.
"Anyone who had a machine plugged in or was able to get one plugged in quickly saw tremendous upside," he said.
How to mine bitcoin profitably at home
With rising bitcoin mining profitability, Compass has been able to double its customer base each month for the last three months, according to Gibbs, who attributes to the tremendous growth to the firm's retail business.
He recalled that during the first seven months, most of the firm's business came from institutional clients in need of hosting space making purchases of $5 million to $10 million. In August, 90% of its business was from retail.
Last week, it expanded its offering to retail clients by launching an "at-home mining" program to sell bitcoin mining equipment directly to customers so that they can mine bitcoin at home without having to pay additional hosting facility fees.
Gibbs said that the bitcoin application-specific integrated circuit (ASIC) machines usually sell for anywhere between $7,500 and $14,000 depending on the type of machine and bitcoin's price.
At home, retail investors could make $20 a day in bitcoin if they mine at the US residential average rate of 10.5 cents per kilowatt-hour with one of the newer generation ASIC machines, according to his most recent calculations. In comparison, Compass customers who are mining at a facility generally are paying 6 cents to 6.2 cents per kilowatt-hour, he said.
For all the profits it promises, mining at home also comes at a cost.
US-based miners will have to get major electrical work done so that they can support the power draw from one of these ASIC machines, which plug into 220-volt outlets. The most common electrical outlet in any US home is a 110 volt.
Miners also need to consider adding soundproof measures. Every ASIC machine runs at roughly 70 decibels, which is the equivalent of a loud blender running at all times. Besides the need for noise reduction, mining at home will also cause the heat to rise, making it necessary to install a cooling system.
"For now, we are really recommending that at-home mining only be explored by people who are understanding of the commitment that it is and what it's really going to take for them," Gibbs said.