FUD BUSTER  - Mining bitcoin at home is not profitable.

Bitcoin is worthless artificial gold. Bitcoin consumes more energy than entire countries. It's a way to both hide dirty money and destroy the environment at the same time. Bitcoin just seems like a scam.

So I forgot the whole business. It's anti-social, stupid. We've got debit cards, isn't like we don't have a pay on stock. I'm dealing Bitcoin and we'll shut the fuck up about Bitcoin, your money-hungry opportunist.

Stop that. This is the FUD buster line. Please leave your name, your FUD and your response after the beep. Hey Max, this is Akano Alchemist. The FUD I would like to bust today is that mining Bitcoin at home is not profitable and that you would be better off using the money you spent on electricity to just buy Bitcoin at an exchange.

My response to that is, although this narrative stems from events leading up to the 2017 bull market peak and later reinforced during the 2018 bear market valley, the fact of the matter is that a lot has changed since then and old narratives die hard.

So what has changed? First and foremost, ASIC efficiency, which can be measured by how much hashrate you get for watts consumed. The most popular miner in 2017 was the Ant Miner S9. This miner could produce about 13 terra hash for about 1200 watts or in other words, roughly 92 watts per terra hash.

Today's new generation miners can produce 110 terra hash for about 3,200 watts or about 29 watts per terra hash. That's more than three times the efficiency gain. Second of all, the Bitcoin spot price is a lot different today.

Going from 4,000 US dollars to 19,000 in Q4 of 2017, many people were rushing to get their hands on S9 Bitcoin miners, sometimes paying as much as $3,000 for one. By the end of Q1 2018, the spot price was back down to $6,800 and it dropped even further going out the rest of the year to $3,200 at one point.

This meant that anyone who was mining within S9 in October 2017 was generating about 142,000 sats per day. Or in other words, if they paid the US national average of 13 cents per kilowatt hour, then they spent $3.75 per day on electricity for about $5.70 worth of Bitcoin.

Fast forward a couple months to December 2017, and the S9 was generating about 88,300 sats per day. Or in other words, spending about $3.75 in electricity would earn you about $17 worth of Bitcoin.

However, by the end of 2018, the amount of hash rate on the network had just kept increasing even though the price kept going further and further down. As the overall network hash rate increased mining rewards for existing miners with the static input to the network saw their rewards shrink more and more.

In fact, by December 2018, the S9 was only generating about 22,000 sats per day. Or in other words, about 88 cents worth of Bitcoin. And at a cost of $3.75 per day in electricity, it didn't make sense anymore.

Fast forward to today, and the Bitcoin spot price has increased 10 times since the 2018 bear market. The third thing that has changed is that the overall network hash rate has increased more than 5 times since the 2018 bear market. More hash rate on the network means less rewards for each miner.

Plus, the block subsidy dropped from 12.5 Bitcoin to 6.25 Bitcoin in May 2020. At this point, your listeners may be thinking to themselves, "Okay, ASIC efficiency has increased three times, spot price has increased 10 times, hash rate has increased 5 times, and the mining subsidy has been cut in half.

How does this all add up in today's ecosystem?" What hasn't changed that much since 2017 is the price of electricity in the United States. According to the CPI, US national average electricity prices went up about 12% since 2017.

Or in other words, they only went up 0.12 times. This means that although there is more hash rate online today, the operating cost of running an ASIC hasn't changed significantly. In fact, if you have the newest generation Antminer S19 Pro producing 110 tera hash, you could be paying as much as 25 cents per kilowatt hour,

and you would still be getting break-even value for value for the money you spent on electricity in Bitcoin rewards. Fortunately, the majority of people in the US pay about 13 cents per kilowatt hour.

So even with the Bitcoin spot price down 40% from its all-time high, an S19 Pro will cost most US citizens about $10 a day in electricity, but it will generate about $20 a day worth of Bitcoin.

If you get your power for cheaper than that, then you're in an even better position to mine Bitcoin at home. Even if the price of Bitcoin stayed flat at $40,000 and the overall network hash rate kept going up and up and double to $400 extra hash,

then that S19 running at 13 cents per kilowatt hour would just barely be breaching the break-even point. If you find yourself in that situation, then you might want to ask yourself a few things.

What's the alternative? A KYC exchange? Do you really want to expose your personal information to a company that contracts with three letter agencies? If you're going to pay 25% in capital gains tax, when you'd be better off just mining at a 25% loss?

What happens when your selfie, physical address, and Bitcoin holdings get dumped on the dark web during a data breach? What happens when the government tells your trusted custodian to disable the withdrawal button?

There are a lot of reasons people would continue to mine Bitcoin at home, even if they were mining at a slight loss. The last point I want to address is that you may think that you're better off just buying Bitcoin with the $10,000 it would take to purchase an S19 Pro.

That would get you about 0.25 Bitcoin today. But ask yourself, what are you going to do with that Bitcoin over the course of the next year or year and a half? Are you just going to put it in cold storage?

Then what? Stack $10 a day at a KYC exchange? Well, if that Bitcoin is just going to sit there in cold storage anyways, why wouldn't you put that capital to work and buy a miner with it instead?

Based on today's statistics, it's going to take you about 500 days to generate that 0.25 Bitcoin back in mining reward. You will have spent an additional $5,000 on electricity, but then your equipment is paid off in Bitcoin terms, and you're now in a position to continue dollar cost averaging through your electricity bill,

earning Bitcoin rewards for a 50% discount at today's rates, compared to the spot price you would have been paying at an exchange and you wouldn't have put yourself on anyone's KYC list. Considering that the S9 miners are going on 6 years old now and they still hold up about 28% of the Bitcoin network hashrate,

you will be able to continue running your miner for years after you've earned your Bitcoin back. So ask yourself, would you rather buy some Bitcoin today with a KYC exchange just to put it in cold storage and then continue paying spot price, or buy a miner today, stack non KYC Bitcoin anonymously,

and then be set up to keep stacking at a discount? Based on the information available today, after a thousand days, you'll either have 0.375 KYC Bitcoin or you'll have 0.5 non KYC Bitcoin.

I hope that this has been thought-provoking and helped clear it up some confusion about mining Bitcoin at home. Thanks for listening, and if you can think of someone who has thrown this exact thud at you, maybe over the dinner table, maybe when Bitcoin prices down over Christmas and they throw it in your fucking face,

you can send them this file. If you're listening to this and you can think of some more thud that needs destroying, email me or write to me on Twitter. You can suggest someone you think would be great for battling the thud as well.

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