Sep 24, 2020
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The Six Ways To Make Money Mining Cryptocurrency Are Equally Surprising

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Savvy readers of yesterday s article The Eight Most Popular Cryptocurrency Transaction Types Are Not What You Expect may have noticed a necessary omission: any discussion of processing cryptocurrency (crypto) transactions what the crypto cognoscenti call mining. Fear not: that is the second of a two-part article. During this part I discuss the most popular crypto mining business models – that is methods to make money mining

 

Crypto like Bitcoin are intentionally installed with an automated decentralized mechanism that creates Bitcoin out of skinny air to supply rewards to miners for processing transactions. The result: a booming business in mining. Anyone with a rack of high-speed computers and access to electricity anywhere on earth can essentially print money due to running free software

 

Six Common Cryptocurrency Mining Business Models JASON BLOOMBERG Crypto Mining Business Model #1: Legal Competitive Mining In the early days of crypto mining was a boon for small-time entrepreneurs – but soon the mining business became increasingly competitive as miners purchased massively powerful computers while scaling up their operations to remain profitable

 

Risks seemed low as the original Bitcoin software was speculated to account for falling prices making it easier to mine as the number of miners remaining in the game dropped thus ensuring that there would always be enough miners to process each of the transactions. Then the Bitcoin crash came severely limiting the ability for miners to churn out crypto while still creating a profit

 

As it turns out inefficiencies in the mining algorithm combined with market pressure on the transaction fees that were supposed to partly compensate miners has brought about a squeeze on the ability for anyone to mine at a profit. PROMOTED Grads of Life BRANDVOICE | Paid Program
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An Important Step To Success For Young People Starts With #WhyApply On September 18 Legal crypto mining using electricity at market rates is now becoming increasingly unfeasible even in places like Iceland that have exceptionally low electricity rates combined with temperatures conducive for data centers packed with heat-generating computers

 

What then are the remainder mining business models? Let s take a closer look. Crypto Mining Business Model #2: Subsidized Electricity Mining In Washington State hydroelectric power generates far more juice than locals can consume thus attracting a booming business in crypto mining. The region s five huge hydroelectric dams all owned by public utility districts generate nearly six times as much power as the region s residents and businesses can use explains Politico journalist Paul Roberts

 

Many of the surplus is exported at high prices to markets like Seattle or Los Angeles which permits the utilities to sell power locally at well below its cost of production. By 2015 however the Washington Bitcoin mining craze had run its course. Margins grew so thin—and correctly occasionally went negative—that miners had to spend their coins once they mined them to pay their power bills Roberts adds

 

If not Washington then what about Iran? I stumble upon some very interesting cases notes Mohsen Rajabi an Iranian blockchain entrepreneur. I lately installed a rig for a middle-aged customer who was not tech-savvy at all and had simply heard of mining and its potential profits. He wanted to start with ten devices installed at his factory because it can legally use extremely cheap industrial electricity

 

Crypto Mining Business Model #3: Steal Electricity Cutting electricity costs out of the equation entirely is an obvious way to improve the profitability of crypto mining. In the early days of Bitcoin college kids would plug their rigs into dorm room sockets stealing slightly of juice from their alma maters. Today compared stealing electricity is serious business

 

A Shanxi Datong [China] man named Xu Xinghua stole power from the poles near the West Second Plant of the Kouquan Railway which was borrowed from November to December 2017 reports Liu Yulin writing in Chinese for The Paper (translation by Google ). The coin mining machine and 3 electric fans were operated for 24 hours she continues

 

Xu Xinghua mined a total of 3. 2 bitcoins earning 120 000 yuan [$17 700] and the electricity generated by the stolen electricity was 104 000 [$15 340] yuan. What happened to the thief? Xu Xinghua was sentenced to 3 years and six months in prison for committing theft and was fined 100 000 yuan [$14 750] she reports

 

He also had to reimburse the electric company for the stolen power and forfeit his equipment. This story is among the many notable merely for the undeniable fact that the perpetrator was caught and the tale appeared in the local paper. Many more instances are sure to be accessible as yet unreported

 

Another popular if potentially unintentional way to steal electricity: installed a mining operation take the profits and then go out of business. That is the tale of among the Washington State mining companies. U. S. -based bitcoin mining firm Giga Watt has declared bankruptcy with millions still owed to creditors writes Yogita Khatri for Coindesk

 

Creditors include the utilities provider in its Douglas County [Washington] base having a claim of over $310 000 and electricity provider Neppel Electric that is owed almost half a million dollars. One silver lining: there may well be attainable these stiffed utilities will eventually get some of their money back as Giga Watt raised about $22 million in its ICO – and it s possible the scammers were unable to spend or secret away each of the proceeds before the bankruptcy shut them down

 

Crypto Mining Business Model #4: Cryptojacking Illicit cryptomining colloquially referred to as cryptojacking has surpassed ransomware as the most popular type of cybercrime targeting enterprises. Cryptojacking means introducing crypto mining software onto a target victim s computer without their knowledge thus generating crypto for the hacker while stealing processor cycles and electricity from the victim

 

The cryptojacking problem correctly is far worse than it was when I wrote my article Top Cyberthreat Of 2018: Illicit Cryptomining in March 2018 – just as I had warned. Despite the volatility in the value of assorted cryptocurrencies the rage of illicit cryptocurrency mining activity among cybercriminals shows no signs of abating in line with David Liebenberg senior threat analyst at Cisco Talos

 

Among the reasons why the cryptojacking problem is getting worse is since the malware is getting better. One such package: Rocke. Talos assesses with high confidence that Rocke will continue to leverage Git repositories to download and execute illicit mining onto victim machines continues Liebenberg. Git repositories are where most of today s enterprise software developers store and manage their source code – but such repositories aren’t Rocke s creators only target

 

That is interesting to note that they’re expanding their toolset to include browser-based miners difficult-to-detect trojans and the Cobalt Strike malware [malware that leverages Cobalt Strike penetration testing software]. Crypto Mining Business Model #5: Evading Sanctions Evading sanctions was among the crypto transaction types I mentioned in yesterday s article – but it is also a first mining business model as well

 

For this story I m first turning to a couple of Iranian Bitcoin miners. On the time we bought the mining device the rate of the U. S. dollar in Iran was still quite high so we figured we might make about $90 to $100 a month explains Ali Hosseini an Iranian miner

 

The price of electricity is comparatively low in Iran so the math seemed viable. Hosseini s cousin also spoke up. Forex rates and Bitcoin prices have fallen and our profits were slashed but we re not seeing losses yet says Pedram Ghasemi another Iranian miner. In line with my calculations the U

 

S. dollar must drop below 110 000 Rials [about $2. 60] and Bitcoin must be down to $2 000 for us to actually lose. I will t mention Iran without also discussing North Korea. Priscilla Moriuchi a former top National Security Agency official and now director of strategic threat development at Recorded Future estimates that North Korea may have earned up to $200 million in 2017 mining crypto

 

How then would North Korea turn that crypto into hard currency? North Korea has such extensive criminal networks which have been well-established for decades to facilitate illegal activities Moriuchi says. If Pyongyang were able to cash out into physical currency it would be relatively easy for them to head that currency back into North Korea and to buy things with the physical currency

 

I would bet that these coins are being changed into something — currency or physical goods — which are supporting North Korea s nuclear and ballistic missile program. Crypto Mining Business Model #6: Mining at a Loss The final business model on my list goes contrary to common sense: mining at a loss

 

Hardly a rational business model on its face of course – unless ensuring that crypto transactions may be completed is your primary motivation. In yesterday s article I explained how crypto is important to the operation of the Darknet. Massive organized crime syndicates thus depend on the successful exchange of crypto to head their contraband

 

Should the cost of Bitcoin or the other crypto drop to the point that no one could make money mining it then such syndicates would likely step in to fill the void – mining at a loss to keep the crypto running. For each of the crypto fanatics accessible therefore there is a reason to take heart – there s no way crypto values will ever drop far enough for mining to cease

 

Organized crime wouldn t let that happen. Intellyx publishes the biweekly Cortex newsletter advises companies on their digital transformation initiatives and helps vendors communicate their agility stories. As of the time of writing not one of the organizations mentioned during this article are Intellyx customers. The writer doesn’t own nor does he intend to possess any cryptocurrency or other cryptotokens neither long nor short

 

Image credit: Jason Bloomberg

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