I attended a home mining workshop at the Bury St. Edmonds conference recently.

At the workshop the panel struggled to explain why you would want to home mine when you will never make profit.

I’m going to explain my journey into home mining and why you want to do something that is nearly 100% guaranteed to cost you more money than you make.

Firstly, there are two types of mining, solo (lottery) or pool mining. Solo mining means you are almost certainly never going to earn anything, but it you do, at the current time, you’ll receive 3.125 BTC + fees, which is around $350,000.

If you pool mine, you are going to recoup about a third of your expenditure in Bitcoin over time. If your goal is to own Bitcoin, it is cheaper and easier to just buy that Bitcoin.

So why mine?

Everybody gets into Bitcoin because of NGU (Number Go Up), they see the price of Bitcoin increase over time and decide they like that idea.

After some time and after you’ve made gains,  you start to engage with Bitcoin and build a deeper understanding. You begin to realise that the fiat money you hold is not really your money and it isn’t really in the bank. The dollars, pounds or euros that you keep in the bank are susceptible to bank failure, as we were shown in 2008 when almost every bank on the planet failed. And as more recent events have shown, banks are increasingly reluctant to allow you access to your own money.

N.B. Try withdrawing thousands in cash or trying sending a five figure sum to anybody the bank doesn’t approve.

Self custody Bitcoin requires learning and a degree of intelligence. But providing you do it right, your Bitcoin is more secure in your hardware wallet than your dollars are in the bank. Not only that, but you have complete freedom to do with your Bitcoin as you wish, nobody can stop you, nobody can question you and nobody can force you to do anything (aside from a $10 wrench attack).

Once you’ve secured your own money in your hardware wallet, then you realise that to spend it, you need a node to broadcast your transaction. You generally rely on a third party to allow you access to a node and you hope they don’t log or block your transactions.

This is the point at which you decide to run your own node, this makes your transactions private and unstoppable. It also allows you to create your own connection to the lightning network giving you self custody lightning for fast Visa / Mastercard style payments.

Once you’ve run your own node for a while you realise that you are utterly dependent on miners to confirm the transaction you’ve broadcast to secure it in a block on the ledger. If a miner or their pool decides it doesn’t like your transaction, it may never get confirmed in the blockchain and you will never be able to spend your Bitcoin.

At this point you start to become interested in mining and how it works. While you will never be able to contribute significantly to the infrastructure of the mining network, by running a home miner you have a voice in the same way a voter has a voice in electing their government.

After mining for a while to a generic pool or solo mining, you start to discover the mechanism by which transactions are included or not included in the templates used to create new blocks. You start to understand that most miners have no say in this template creation. You also start to understand that they voluntarily revoke their say in template creation in exchange for guaranteed regular payments from the pool whom they delegated their authority to.

At this point you realise that miners have the power to reclaim that template decision making ability through the Stratum protocol. If you so wish, you can solo mine or join a pool that will use a template you have created should you be successful and win a block.

This completes the journey into self sovereignty and while you will probably never win a block using home mining, it gives you the insight and full practical knowledge of how Bitcoin works.

Only at this stage does the Bitcoin you own truly become yours.