crypto mining guide

What Does Crypto Mining Look Like And How Much Can You Earn?

Perhaps the coolest thing I did in the summer of 2017 was building a machine that “printed” money.

To be specific, two of my friends and I built an Ethereum mining rig. We thought it’d be a fun project, and hopefully we’d make some money too.

Captain was our unofficial leader, and the host to our project meetings. Our mining rig came to life in his man cave alongside generous servings of beer and chips. Gamer was our spark of energy, regularly bringing up new ideas and nudging us older guys when we got busy with other stuff.

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We unofficially closed the project last week. I have so many good memories, so I thought I’d share our story.

What is crypto mining again?

The concept of crypto mining confuses people like no other. So I’m gonna try explain in the simplest way possible.

Think of mining as “renting” your computer to people on the Internet who use cryptocurrency.

Why do all these people need your computing power? To process their crypto transactions (i.e. sending and receiving crypto) in a secure way.

This is because crypto transactions don’t rely on traditional companies (e.g. a bank) or governments to process them. Instead, it’s the miners who do the processing work. In return, they get paid for their services in cryptocurrency.

For example, if I send 1 bitcoin to my friend in London, it’s not Visa or Standard Chartered Bank that makes this transfer happen. Rather, it’s all the Bitcoin miners around the world working together.

Perhaps the coolest thing: technically, anyone can be a miner. Just like how anyone can publish a blog post on the Internet — no need to ask for permission — all you have to do is install crypto mining software and start.

FAQ: Could you use your laptop to mine cryptocurrency?

Yes you could, but you probably wouldn’t be profitable. Because your laptop is a general-purpose computer — not specifically designed for crypto mining — you’d spend more in electricity bills than you’d earn. Your laptop would wear out pretty quickly too.

In summary, here’s what mining looks like:

  1. Buy mining (specialized computer) equipment.
  2. Set up equipment.
  3. Install software, and connect to crypto network (e.g. Bitcoin, Ethereum) via the Internet.
  4. Earn cryptocurrency.
  5. Don’t forget to pay for electricity.

I’ll share a pic of our mining rig later.

Why mine crypto?

The concept of “creating” money fascinated me. At that point, I had already invested a bit of money into Bitcoin and Ethereum, and had a basic understanding of mining. But knowledge and experience are different things — I longed to try it for myself.

It still sounds a little absurd to me. A random bunch of guys in a small room, building a machine to generate money that can be used anywhere on the Internet. Maybe I have a bit of an inferiority complex, but the thought of doing something from Malaysia that impacts the world has always been a dream. Helping create money for the world? Yeah, I’m in.

(Just so we’re clear, I don’t mean money that’s issued by banks. I mean money in the broader sense of the word — something you can use to pay people. It was perhaps unclear in September 2017 that crypto would be successful, but it’s much clearer now.)

I suspect Captain and Gamer had similar motivations. Yes, we knew these things were technically possible, but would we be able to do them ourselves?

Time to put it to the test.

Building our mining rig

We started with an extremely basic mining rig. A mining machine might be a special type of computer, but it’s still a computer — with a CPU, motherboard and hard disk. So like any computer geek, we went shopping in Plaza Low Yat for components.

Everything we bought was cost-optimized: the cheapest component we believed that’d still be usable and reliable. Things like the monitor, keyboard and mouse don’t matter at all for mining performance, so we bought cheap, second-hand ones to use. No need for a proper enclosure either — we just modified a plastic shoe rack I got for RM 30 (USD 1 = RM 0.24) from Giant Hypermarket.

Except for one thing: the graphics cards. Since the bulk of crypto mining happens in the graphics cards, we bought 2x of the best graphics cards available: the Nvidia GeForce GTX 1070, which cost >3x the price of all the other components combined. If crypto mining can teach a life lesson, this is it: Just the essentials for most things are fine — focus your resources on your core mission.

Our initial investment came up to RM 2,300 each.

We spent a lovely Sunday afternoon putting the hardware together, and a few more evenings figuring out the mining software. Everything was available (legally) online for free, including guides and FAQs for when we got stuck.

Then we switched it on:

crypto mining rig

Our plan was to test for a while, figure out if we were making money, then add more graphics cards to earn more. Mining Profitability Calculators online estimated it’d take us one year to break even — if prices remained stable.

Crypto prices crashed in 2018 though (Ethereum only recovered in early 2021), so we never invested any more. We just let things run — two graphics cards working quietly in a room, grinding out magical Internet money.

Three years later…

At some point in 2020 — after mining for more than two years — we decided to shut off our mining rig for good. The electricity costs vs mining profits at that point meant we weren’t breaking even.

Crypto mining grew into a billion-dollar industry. There are multiple publicly-listed crypto mining companies today, running huge mining farms — think entire factories filled with thousands of mining machines. This means hobby miners like us aren’t competitive anymore. Higher electricity costs in Malaysia also mean it’s harder to make a profit from here.

(On an industrial level, I believe there’s a huge opportunity in “wasted” energy that can be converted into digital assets. If you’re in the energy industry and wanna chat about how crypto mining can help optimize resources and increase profits, feel free to contact me.)

For individuals, if you’re interested in crypto, buying Bitcoin/Ethereum directly on an exchange is the best way to get started.

Anyhow, the wisest move we made was just to hold all our mining profits in Ethereum. We paid for our electricity bills in cash, never touching the Ethereum in our wallet. I’m proud to say we had conviction about the future of crypto, especially during the crypto winter years of 2018-2019.

How much did we actually earn?

Four years on, most things have changed. The three of us used to work in a social enterprise together — which I’ll always remember as some of my most meaningful work.

Captain remains in that space, but is focused on digital learning now. Gamer has moved into freelancing, working on Human Resources projects. I went full-time into crypto in 2018, helping set up Malaysia’s first and largest digital asset exchange.

From seeing each other every day, we probably see each other once a year on Zoom now. If you’ve ever left a company, you’ll understand that most colleagues are “situational friends.” When the situation changes — if someone resigns — you realize you actually didn’t have very much in common. But for the three of us, we still had our WhatsApp group. Supposedly to chat about mining, but it allowed us to keep in touch too.

At Ethereum’s current prices (~ USD 3,100), we almost 4x-ed our initial investments: turning roughly RM 3,000 (including electricity bills) each into >RM 11,300. Nothing to shout about in the crypto world where people can make 60x gains overnight. Also, if we’d just bought Ethereum directly instead of building a mining machine, we’d have 10x-ed our money.

As for building cool things with good friends — whether they make money or not — that will forever be priceless.

Aaron Tang is the founder of mr-stingy.com. He writes about optimising time, money, and relationships – to make the most out of life.

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