The popularity and price of Bitcoin (BTC) are rising significantly and every crypto enthusiast wants to add BTC in their portfolio. However, buying this digital asset is a costly affair and that’s where Bitcoin mining comes into picture.
Solo Bitcoin mining is gaining attention and miners are winning more and more blocks lately defying the odds.
Recently, a solo Bitcoin miner’s $259,000 win was celebrated by mining community, that believe in not joining a mining pool and independently trying to solve the complex cryptographic puzzles by using advanced hardware and software to get full BTC reward.
Satoshi Nakamoto’s whitepaper says that there are only 21 million Bitcoin available. And more than 19 million have been awarded to miners in block rewards, according to the Blockchain Council.
In this guide, we will dive deep into solo Bitcoin mining, how it works, what its pros and cons are, and the odds of winning as a solo Bitcoin miner.
What is Solo Bitcoin Mining?
Solo Bitcoin mining is a type of mining process where an individual miner mines Bitcoin all by himself. It is like digging alone for treasure without working with a group.
Usually, Bitcoin mining is done via joining a mining pool or by large corporations. This reduces solo miners’ chances of winning. Unlike pooled mining, where BTC rewards are shared between a group of miners working together to find and verify blocks, the solo Bitcoin miner works alone to solve complex puzzles and verify blocks to get a full BTC block reward.
Solo Bitcoin mining is preferred by miners who want full autonomy, privacy, and do not wish to share rewards with anyone.
How Solo Bitcoin Mining Works?
Solo Bitcoin mining works by running its own full node and mining software independently. To start solo mining, a miner needs Application-Specific Integrated Circuit (ASIC) hardware to solve complex cryptographic puzzles with an aim to find a new block and earn a BTC reward, which is currently 3.125 BTC per block (after the 2024 Bitcoin Halving).
However, due to high mining struggles, solo miners have an extremely low probability of successfully mining a block unless they have significant hashing power.
Along with ASIC mining hardware, a solo miner also requires adequate electricity supply, reliable internet connection, and connectivity to Bitcoin blockchain via dependable node. It also includes configuring mining software to connect with the full mode and manage hash calculations autonomously.
The process of solo Bitcoin mining involves:
- Setting up an ASIC mining hardware.
- Installing mining software that will connect miners to the Bitcoin network.
- After connecting to the Bitcoin network, miners start solving cryptographic puzzles.
- If the mining process is able to solve the puzzle first, then the miner gets 3.125 BTC as a reward.
Pros of Solo Bitcoin Mining
Below are some benefits of mining Bitcoin independently:
Full Block Reward
In solo mining, successful miners who find a block independently receive the full block reward. Unlike pool mining, solo mining helps get maximum profit without sharing rewards.
No Pool Fees
Solo Bitcoin mining doesn’t incur any pool fees like what happens in the mining pools, wherein a fraction of the reward is taken for service. A solo miner receives all the rewards from the successful mining attempts without incurring any intermediary fee.
Full Control
Solo Bitcoin miners have full control of all the required hardware and software for the entire mining process. It also provides full control over tactics and strategies employed in the mining operations.
Freedom to Work
There is no limitation in solo Bitcoin mining because the miner does not require any third party or pool structure to rely on. To minimize the impact of outages, solo miners ensure their mining rigs can continue working even when faced with such disruptions.
Cons of Solo Bitcoin Mining
Though solo Bitcoin mining is highly rewarding, there are various disadvantages.
Low Success Rate
Bitcoin mining is a very competitive business where big miners are using advanced hardware to mine Bitcoin. And, in this aggressive environment, it is difficult for solo Bitcoin miners to successfully solve puzzles before anybody else.
High Expense
Bitcoin mining requires advanced ASIC mining hardware. For example, Antiminer 21- is an expensive equipment costing more than $10k. It also requires high electricity power and an uninterrupted internet connection, which makes solo Bitcoin mining an expensive process.
Time Consuming
Solo Bitcoin mining is a difficult process. It does not guarantee a Bitcoin reward within hours or days, and there are no regular earnings as seen in pooled mining. Hence, it is unsustainable and time-consuming for solo Bitcoin miners.
Network Difficulty
Bitcoin mining is an open process, and anybody can join the network to mine Bitcoin. With the rise in number of miners, the hash rate also rises, which makes it even tougher for solo miners to compete against large-scale miners.
Odds of Winning as Solo Miner
Bitcoin mining, as discussed above, is a challenging method, and success in solo Bitcoin mining depends on the miner’s hash rate compared to the total network hash rate. If a miner has advanced software and computational power, then he gets chance to find a block and earn a reward.
Currently, Bitcoin mining is dominated by large mining farms, which also dominate Bitcoin’s network hash rate. This comes as a hurdle for solo Bitcoin miners when competing and also reduces the chances of successfully mining a block.
Large-scale Bitcoin miners use various ASIC machines to find a block while solo miners use only one or two ASIC machines. Using which, the odds of solving a block in an entire year are very less and depend on luck.
Key Considerations
Before getting started with solo Bitcoin mining, following points needs to be kept in mind.
- Use Mining Calculator: Before starting mining, just calculate your chances of profitability by considering the mining costs.
- Use Upgraded Mining Hardware: With the rise in Bitcoin mining complexity, mining hardware is regularly upgraded. Hence, ensure using the most upgraded hardware.
- Use Renewable Energy: Bitcoin mining requires high energy consumption. Therefore, if a miner uses solar or wind energy, it will reduce his power expenses.
- Consider Joining Smaller Pools: As solo Bitcoin mining is a risky process, a miner can consider joining a low-fee mining pool for increasing the possibility of receiving rewards.
Conclusion
Solo Bitcoin mining provides miners complete control and lets them retain all benefits, unlike pool mining when participants split processing power and rewards. However, it requires significant investment, technical knowledge, and ongoing management.
Mainly, Bitcoin mining is common and involves large-scale crypto miners with powerful hardware and low energy cost. Hence, thorough research and evaluating profitability and risks involved are essential before indulging in solo Bitcoin mining.
Also Read: Bitcoin Mining Machines Prices Jump 30% Amid Demand Surge
