As big bitcoin miners chase AI profits, individuals get another shot at the rewards

In the early days of bitcoin $BTC$77,456.24, way back in 2009, individuals could mine the cryptocurrency using ordinary home computers, earning rewards for helping process transactions on the proof-of-work network. Some early miners accumulated thousands of coins before the arrival of specialized mining rigs pushed hobbyists out.

Nearly two decades later, companies are trying to bring individuals back, offering ways to earn $BTC without buying and operating expensive machines at home. But making a profit remains difficult, even as some of the largest industrial miners exit the business to focus on artificial intelligence (AI) data centers in search of better returns.

“It’s still hard to make money as an individual miner, and it’s not going to get any easier,” said Ivo Georgiev, founder and CEO of crypto wallet company Ambire, who mined bitcoin in 2011, while still in high school.

In the intervening years, mining developed into a business dominated by companies running thousands of machines in specialized data farms with sophisticated rigs, specialized cooling systems and tailored power-supply deals. For individuals, services such as GoMining, KuMining and Sazmining offered access to the same professional environment.

Now, the larger bitcoin mining firms are shifting toward AI computing, renting computing power to technology firms rather than relying solely on bitcoin mining rewards, prompting speculation that any resulting drop in bitcoin computing power might make the activity more profitable.

That depends, however, on whether mining equipment actually leaves the network or is simply redeployed. The hashrate, a measure of the total computing power on the blockchain, was recently around 1.09 zetahash per second, little changed from about 1.13 ZH/s a year ago, according to data from Hashrate Index. It has been rising for two months.

“If equipment is sold to another mining operator, it may continue competing for the same rewards,” said GoMining CEO Mark Zalan.

Mining remains competitive and will become less profitable in about 18 months, when the $BTC awarded from mining a bitcoin block is cut by 50%. Still, it may be cheaper to acquire the coins than buying them at current prices, according to Nick Perchey, Sazmining’s director of revenue.

Earlier this month, Sazmining, founded in 2018, began selling mining boards developed by Jack Dorsey’s Block (XYZ). Each board costs $4,187. Electricity and maintenance cost another $153 a month, plus a management fee of 15% of the bitcoin mined. The company has received nearly 50 orders, with about half coming from first-time miners, Perchey said.