We are often asked by customers that if someone wants to build a cryptocurrency mining farm, what does he need to do? What are the risks to consider? How to prevent them?
Well, investing in a cryptocurrency mining farm is indeed a huge project, and there are many factors to consider. With this article, we will analyze the common factors for investing in the construction of cryptocurrency mining farm.
The following picture might give you some idea about how a mining farm look like
The mining farm in the picture is in the process of construction. You can see the cable trench, the ventilation fans, and some other equipment.
Before jumping into the business, here are some factors to consider:
This is not just the cost of purchasing mining machines and power supplies, but also shelves, cables, transformers, routers, etc. Make a list of the accessories and be budget-wise.
Cost for infrastructure construction. To find a farm location that is cost-effective. And also to have your machines work in optimal environment, you will need professional measures in dealing with dust, moist, ventilation, power connection, ethernet connection and machine placement.
The mining machines make a lot of noise and heat which makes the farm a potential target for complaints. Also, humidity affects longevity and performance of the machines.
The construction of cryptocurrency mining farm involves many technical issues, which requires professional personnel including electricians, computer engineers, construction workers, and maintenance staff. Knowledge and experience on mining machines will make things work more efficiently.
To get higher ROI, finding a cost-effective location and cheaper electricity are the most important things.
Other than that, mining machines have certain life expectancy, maintenance and repairing costs are to be considered, including monitoring the performance of the machines, power stability, network stability, but also temperature, moist, etc. High temperature could lead to fire dangers. Power cut-off or network disconnection will do harm to machines and reduce earnings.
In addition, as the mining difficulties increases along with value fluctuations of cryptocurrencies, sometimes even a machine still works, but what is making is not covering it’s cost, that is a most unwanted scenario but it happens.
Lessons could be learnt from other cases
In the short history of running mining farms, there are lessons to learn. Some farms in China had some unfortunate encounters, such as farms being flooded (as being situated near rivers due to proximity to hydropower), burnt down or get stolen, or being ripped off by power provider, hash rate being stolen, etc.
Careful selection for mining pools
Carefully verify the way mining income is distributed by the pool, the way in which the block rewards and fees are distributed, and the lucky value of the pool, and in what currency you get from the pool. The mining machine can mine some altcoins through joint mining. Historically, there have also been cases of unreliable mining pools that steal the hash rate of mining machines mining in it.
Value fluctuations of cryptocurrency
The operation of the cryptocurrency system itself will also greatly affect the profits of the mine business.
The price of cryptocurrency itself is highly volatile, so the profitability of the mining farm is directly affected by the fluctuations. Therefore, if you have experts helping you manage your cryptocurrency assets, you will be in a better position.
Cryptocurrency is relatively new industry. Check if running a farm conforms with local law.
Investing in cryptocurrency mining “farm” is just the same as keeping an actual animal farm.
Keeping an actual farm involves infrastructure construction, feeding and taking care of livestock; operating a mining farm requires infrastructure construction, hardware, electricity and maintenance.
Keeping an actual farm are exposed to some challenges, so is keeping a mining farm, competition, value fluctuation and changes in market.
There are profitable animal farms and there are failed animal farms. The same is true for cryptocurrency mining.