ANSWERS TO THE QUESTIONS YOUR SPOUSE IS ASKING....





So what is mining?

Check out this great explanation page created by Fidelity --->https://www.fidelity.com/viewpoints/active-investor/beyond-bitcoin

So how does mining crypto currency work?

Everytime crypto currency is traded between one person or another it is called a "transaction", every second millions of people are trading crypto currency which results in million of transactions. These transactions are then grouped together into a "block". Mining rigs then guess the "hash" that will fit the new block full of transactions with the previous block. Mining rigs try to guess the hash that matches millions of times per second (the hash rate) until someone guesses correctly.

This adds a new block to the previous block forming "the block chain" and the process starts over again... for Bitcoin this occurs roughly every 10 minutes. Mining rigs packaging these transactions into new blocks is what keeps the block chain going. As a reward for people using their mining equipment and resources to keep the block chain going, the first miner to guess the correct hash or solve the block is rewarded with newly created coins AND the transaction fees associated with the transactions in that block. Currently for Bitcoin the reward for solving a block is 6.25 BTC.

So if the only person to get the reward and fees is the first person to solve the block, how do I make money?

As crypto currency became increasingly popular and continues to grow the difficulty of mining most crypto currency alone is like trying to win the lottery by buying a ticket every week. Eventually you will likely win but who knows when.

Because of this people started to join together into "pools". A pool is a very very large group of miners working to solve the block together, think of this like a VERY VERY large lottery pool among friends. Buying tickets alone you probably wont win, but if you and 1,000,000 play together it is much more likely that one of you will win. In this pool you agree to split the lottery winnings evenly among each other based on how many lottery tickets each person purchased. E.g. someone who bought 5 lottery tickets would get 5x more money than someone who purchased only 1 lottery ticket.

This same concept applies to crypto currency pools, when someone in the pool solves the block the award is split evenly among the members based on how much "guesses" they contributed to the pool. In this way individual miners are able to earn crypto currency on a regular basis.

So if I mine crypto currency how do I get actual money....like dollars in my bank account?

Well lets cover the basic philosophy of what "money" is as you know it. Firstly, we will discuss intrinsic value and market value. The example I like to use is a home, lets say you purchased a nice home for $325,000. So you paid $325,000 but if you added up the cost of every piece of lumber, nail, drywall, roof shingle it may add up to $230,000. so now let me ask you, what is the value of the home, $325,000 or $230,000? Well the intrinsic value is $230,000 because that is what it cost to make it, however someone was willing to sell it and you were willing to buy it for $325,000 this is the market value. If someone else was only willing to pay $315,000 and the seller agreed then the market price would be $315,000. Don't be fooled this applies to the dollar bills in you wallet as well. According to the US Federal Reserve it cost $0.062 to make $1 bill. So what is $1 worth.....to the Federal Reserve, $0.062, to you $1...to McDonalds Menu 1 cheeseburger.

In this same way a dollar only serves as a place holder for market value. One day you may wake up and McDonalds wants $3 for a cheeseburger instead of $1. If you purchase the cheeseburger you just established a new market price for a McDonalds Cheeseburger...$3. Imagine if you had bought 500 burgers for $1 the day before, you could then sell them to people for $3 each and make $1,500!

So now lets talk about currency some more.....there are two types of currency, crypto currency (obviously) and fiat currency. Fiat currency is what most people think of when they hear "money". Fiat currency is traditional money such as Dollars, Yen, Euros, Pesos, etc. Just as a 1 Euro = 1.20 US Dollars at the time of this FAQ, 1 BTC = 63,259 US Dollars. Currency, crypto or fiat all has an exchange rate, that is what the market feels the equal value between two currencies are. This is dynamic and fluctuates in real time based on so many factors and mass psychology and belief in "value".

When mining crypto currency you will be awarded crypto currency, like Bitcoin. Bitcoin has a no real intrinsic value but on the open market it is worth $63,249. So you can sell your 1 BTC to someone for $63,249.

Ok, I am following but again....how does mining make money?

We can try it in a flow chart

You use $$ to buy a mining rig ---> mining rig gives you BTC ----> BTC is sold for $$$$$$

Yes it is that simple, notice you have more $$$ in the end than when you started?

Ok then why would I pay you to have my mining rigs in your farm, I can have them in my house and keep all of my BTC profits.

Well you absolutely can TRY to put a mining rig in your home but you likely wont be able to fit more than 1, maybe 2 and you really don't want to for the following reasons:

  1. Mining rigs (ASICs) require 240V power, the outlets in your house are only 120V.

  2. In your house you may have an extra 240V outlet, but each ASIC also requires 15 Amp circuit at startup, so you are maxed out at 1-2 mining rigs.

  3. ASICS get HOT. Each ASIC is essentially a hair dryer. It takes a ton of energy and generates a lot of heat. You will end up paying more to keep your house or at least the room you have your miners in cool.

  4. ASICS get loud. The fans are running at 6,000 - 8,000 RPM at times, this makes a fair amount of noise. In my farm, a small mining room is 85 decibels just because of the fans.

  5. Your electricity price is probably higher. The national average for electricity in the US is $0.125/kWh. I charge significantly less which means more profit for you because the electric cost is less. No matter where you mine, electricity is the largest expense. At the farm, my monthly electricity bill is $5,000 and can reach $8,000. YIKES!

  6. My farm has (2) internet services for redundancy. IF one internet goes down for some reason the farm immediately switches over so that the miners are always making money.

  7. I have a commercial crypto farm, I am not worried about the noise and the air flow and cooling keep the space cool. No uncomfortable people to worry about if it gets a tad warm.

Crypto Currency and Bitcoin are too volatile, why get into it?

Check out another great explanation page created by Fidelity ---> https://www.fidelitydigitalassets.com/articles/addressing-bitcoin-criticisms