A Beginner's Guide to Bitcoin Mining: The Routines and Pitfalls We've Got Over the Years

In the previous article, I wrote about the mining strategy for novice retail investors and briefly mentioned some pitfalls in mining. Today, let’s take a closer look at the tricks and pitfalls that retail investors have encountered in mining over the years.

• Mining pit

When newbies start mining, they will definitely buy a mining machine first. Although it is safest to buy mining machines on the mining machine manufacturer's website, due to various reasons (such as the official website price is relatively expensive and there is often no stock when the market is good), people still often buy mining machines from other channels.

The main channels at present are: specialized mining machine online malls, physical stores, and mining machine dealers on WeChat. When buying machines through these channels, you basically pay the full amount first and then wait for the agreed time to ship.

Trick 1: Asking for extra money before delivery. This trick is most likely to be used by mining machine vendors on WeChat. I remember ordering a batch of machines a few years ago, 13.5T s9s, and later they told me that they had changed them to 14T ones, and they had to pay an extra 500 for each one. Although I was a little unhappy, I still accepted it because it had been delayed for a month.

Trick 2: Insufficient delivery. For example, if you ordered 200 units, but only 100 were delivered to you, although the remaining money would be refunded, you would lose a lot of time. Even more exaggerated is that you ordered hundreds of units and paid for them, but after a while, the price of the machines increased, and you were directly told that the manufacturer was out of stock and your money was refunded.

Routine three: Sending faulty mining machines. This is common in the sale of second-hand mining machines and second-hand accessories. The quality of the purchased products depends entirely on the other party's conscience.

Routine 4: It is a direct scam. The full amount is transferred and the person disappears. I remember that in early 2018, there was a mining machine fraud case in Anhui. The case value should be more than 10 million yuan. Many people and mining machine vendors were deceived. My friend also suffered certain losses in this incident.

The above routine occurs more frequently and with higher probability in a bull market, because the market is active at that time and too many people are rushing to buy mining machines, which leads to sellers taking the initiative and also attracts many scammers.

• Mine pit

A newbie who has bought a mining machine needs to find a mining farm to host it, but it is not easy to find a suitable mining farm. The threshold for a professional mining farm is relatively high, and it basically requires a minimum of one or two thousand machines. A mining farm with a low threshold may not be professional enough.

Routine 1: Difficult to get electricity. Some new mining farms start to attract hosting customers during the construction phase. When you go to inspect, you will find that the infrastructure is basically completed, except for the power supply. The mining farm tells you that the power will be available in a month. A month later, you arrive with the machine and find that the power is still not available. Then the mining farm tells you that it will be available in three to five days. In this way, three to five days and three to five days, sometimes it can be delayed for a month. It’s not that the mining farm doesn’t want to get electricity, but that getting electricity requires not only the completion of infrastructure, but also some procedures. If the procedures are not completed, it is difficult to get electricity, but they don’t care, and they will attract customers first. For mining, every day of machine limitation is a loss. After a month, it will be a big loss.

Routine 2: Lure someone into a trap. Some mines will give you a relatively low price when you first start negotiating. After you have been running for a while, they will reveal their cards and raise the price for various reasons. At this time, your machine has already been put on the shelf and run. If you look for a new mine, the time cost, labor cost, and downtime cost will add up to a lot, so you have to accept it first.

Routine three: Concealing the truth. Many retail investors who are entrusted with custodial services do not stay at the mining farms, but are managed by the mining farms. This provides opportunities for the mining farms to do tricks. For example, sometimes the mining farm will notify you that the mining farm will have a power outage for one or two days for maintenance. In fact, they have switched your machine to their account for mining, and you have no way to really go to the mining farm to verify.

The above are some of the pitfalls I have seen in mining. If you know of any, please feel free to add to my list.

The pitfalls mentioned above can actually be avoided if the scale is large enough. For example, if you want to buy a lot of machines, you can directly negotiate with the mining machine manufacturer, which is both favorable and safe. Finding a large and reputable mining farm for hosting can also save you trouble and effort. If the scale is large, everything will be easy.

Therefore, if your scale is not large enough, for example, you only plan to have a hundred or eighty machines, and at the same time, you don’t have any familiar mining farms, I really don’t recommend mining. It is laborious and the input and output are not proportional.