Despite the low probability of winning a block reward, solo mining has become a popular pastime for Bitcoiners interested in mining.
Posted July 3, 2023 at 7:42 AM EST.
In this guide, we’ll take a look at what solo mining Bitcoin is, how it works, and show you if you can make money solo mining.
What is Solo Mining?
Solo mining bitcoin is the process where a single miner carries out the Bitcoin mining process alone without being part of a mining pool. Unlike how miners pool together to contribute their hash rate to Bitcoin mining, solo mining does not rely on a third party.
It’s a bit difficult to talk about Bitcoin mining without understanding Bitcoin mining first. So let’s quickly summarize what Bitcoin mining is and how it works.
Bitcoin mining is the process by which the Bitcoin network processes transactions and how new coins come into circulation. It involves the use of specialized mining hardware in combination with the use of computational or hash power to solve complex calculations.
The first miner to solve the complex calculation process wins the Bitcoin block reward, which is currently 6.25 BTC. The block reward is designed to decrease almost every four years, in a process called Bitcoin halving, with the next one sometime in 2024.
You can start mining Bitcoin as a solo miner or join a mining pool. A mining pool allows several miners to pool their computing power and increase the chance of winning block rewards. While most Bitcoin mining has gone through pools, some miners have only ventured out as solo miners.
How does Solo Mining Bitcoin work?
For solo Bitcoin mining to work, miners must first link their mining devices to their own Bitcoin wallet and then start contributing hash power to the Bitcoin network.
If the solo miner completes the entire mining process on the Bitcoin network and finds a block, he will earn the entire block reward. Solving a new block during solo mining depends on the amount of hash power you have. Solo miners therefore need to invest significantly in their home mining setup to generate enough computing power to compete with pool miners.
At the beginning of crypto mining, solo miners were able to generate mining profits because the hashing difficulty was not too high, which allowed early miners to mine using laptops and PCs. Today, however, that is not the case. As the mining community professionalized and turned into an industry, the increasing hashing difficulty has de facto pushed small miners out of the market due to a lack of consistent profitability (despite the massive price increase since the early days of bitcoin).
Solo miners also have to exercise a lot of patience. You can solve a complex block calculation in a short time and get your reward, or you can keep trying for years. In addition to the Difficulties mining Bitcoin is adjusted after every 2016 blocks to keep the rate at which new blocks are added to the network at approximately ten minutes.
Still, solo mining Bitcoin has its advantages, such as winning the entire block reward for yourself without having to share it with other miners.
Can you really make money with solo mining?
The simple answer is yes.
There have been stories of solo miners going it alone, successfully finding new blocks and winning the whole block reward. For example, in June 2023, a solo Bitcoin miner was able to add a new block to the network, earning the 6.25 BTC reward, which was worth more than $250,000 at the time.
While there have been a few lucky solo miners, it’s important to mention that solo mining is not as easy as you’d like to imagine. The initial capital investment required is quite expensive and you also incur operating costs. You also have to take cooling technology, downtime, electricity costs and any repair costs into account.
Solo Bitcoin mining is a gamble. If you don’t have the patience and capital investment required, consider joining a pool if you want to increase the chances of your mining operation becoming profitable.