Crypto miners mine. That is their raison d’etre. Pick your preferred hardware, cryptocurrency, and pool, connect and let the machine do the rest. At least that’s how it’s meant to work. But the reality is that miners today have greater flexibility than ever, not just in terms of the coins they mine but in whether to mine at all.
The hashpower produced by overclocked ASICs and GPUs is a precious commodity – so precious in fact that people are willing to pay a premium for it. As a result, miners have the opportunity to increase their revenue during times of peak demand by reselling their hashpower rather than directly mining themselves. With the potential to more than 2x their revenue for doing so, reselling hashrate is fast becoming the new mining.
Maxing Mining Revenue through Hashrate Reselling
Bitcoin mining may sound like a simple job but it’s more demanding that it at first appears. Miners must constantly be looking to the future to check projected prices, network hashrate, difficulty adjustments, electricity costs, and new hardware, all of which threaten to impact their profits. When you’re mining crypto, there’s no such thing as “set and forget”: it’s a baby that demands constant attention.
Naturally, bitcoin miners are closely attuned to the hashprice index to gauge the volatility in mining revenues over time. While this supports future planning, it alone can’t tell them whether to keep mining BTC, switch to an alternative PoW crypto, or halt mining altogether and simply resell their hashrate. It is this latter option that has increasingly found favor among miners trying to squeeze every last drop of profits out of their high-powered rigs.
Mining hardware owners can earn passive income by renting out their hashpower to buyers. This is especially useful when direct mining is not as profitable or when miners want to mitigate risk. By selling hashpower, sellers can choose to switch between mining and selling based on market conditions. For example, when mining is unprofitable due to electricity costs or network difficulty, selling hashpower may offer a more consistent revenue stream.
How Hashrate Marketplaces Work
Hashrate marketplaces provide a way for miners to rent out their hardware to buyers who can mine assets such as BTC and XMR without owning the actual mining equipment. Both parties can profit by taking advantage of price fluctuations and optimizing their approach. For miners, it’s a simple way of keeping their machines running around the clock, which is essential in order to recoup hardware and power costs. For buyers, meanwhile, it’s a chance to direct hashpower at pools and coins where, for a certain period of time, the greatest opportunity for profits lies.
But just how profitable can selling hashrate be? While this figure varies greatly, the latest figures published by NiceHash show the sort of return that miners can realize when the going is good – and right now, it’s extremely good versus directly mining a pool. On September 11, FPPS pool mining earnings averaged $39 per PH/day versus $100 per PH/day through NiceHash.
The generous returns to be earned from reselling hashpower right now can be partially attributed to Fractal Bitcoin, which has cornered 35% of Bitcoin’s hashrate since launching. While this is likely a temporary blip, it shows the value in miners being flexible when it comes to their strategy. It may be the case that a lot of the time it’s better to mine BTC directly, but when innovations such as Fractal Bitcoin’s sidechain catch on, the real money lies in reselling the hashpower.
Miners own the picks and shovels that provide access to the digital gold everyone’s chasing. Sometimes, it makes more sense to dig the holes and claim the gold yourself. At other times, there’s more money to be made in selling the picks and shovels. Smart miners innately understand these forces and are adept at switching strategies to match demand. If you’re an ASIC or GPU owner and you’re not routinely reselling hashrate, you’re leaving money on the table.
