House-hacking with a bitcoin farm

[Ross Bowman]

Not sure why BP deleted my previous post - seems like the definition of an innovative strategy. 

TLDR: I cover my mortgage with a small bitcoin mining farm. 

Let me know if you have any questions. 

[Jason Shackleton]

@Ross Bowman I love that strategy. Nice work! I would set some cash aside for tax time as I believe mining will be seen as a taxable event. Just a thought. keep it up. 

[Ross Bowman]

Originally posted by @Jason Shackleton:

@Ross Bowman I love that strategy. Nice work! I would set some cash aside for tax time as I believe mining will be seen as a taxable event. Just a thought. keep it up. 

 Totally - thanks man! Yeah I have a CPA who is bitcoin friendly and can handle it for me like business income. Plus write-offs, etc...

[Don Konipol]

@Ross Bowman

Not sure how covering your mortgage payment on real property with the profits from a separate business endeavor qualifies as “innovative”. If the mortgage in question is on your personal residence, everyone else who owns their own home covers their mortgage with business profits, investment income or employment earnings. The fact that you have a business mining Bitcoin is no different in this context from owning a clothing store, managing a venture capital partnership, or singing professionally.

If the mortgage is on a commercial or investment property, and either it’s not income producing or has a negative cash flow, then that’s no different then about half our borrowers who need outside sources of income to “feed the alligator”.

Guess I’m just not wowed by the fact that you’ve invested enough in hardware and power to turn a profit mining Bitcoin.

[Ross Bowman]

Originally posted by @Don Konipol:

@Ross Bowman

Not sure how covering your mortgage payment on real property with the profits from a separate business endeavor qualifies as “innovative”. If the mortgage in question is on your personal residence, everyone else who owns their own home covers their mortgage with business profits, investment income or employment earnings. The fact that you have a business mining Bitcoin is no different in this context from owning a clothing store, managing a venture capital partnership, or singing professionally.

If the mortgage is on a commercial or investment property, and either it’s not income producing or has a negative cash flow, then that’s no different then about half our borrowers who need outside sources of income to “feed the alligator”.

Guess I’m just not wowed by the fact that you’ve invested enough in hardware and power to turn a profit mining Bitcoin.

People share about converting part of a home to an ADU for house hacking on here all the time.

Goal isn't to impress the tech-illiterate; goal is to give other people ideas who may be in a similar situation. That's literally the point of this forum. 

[Don Konipol]

@Ross Bowman

Must be tough when your self congratulatory nonsense is exposed and your ego takes a hit. If you actually have an INNOVATIVE strategy I’m sure all us EXPERIENCED investors would love to hear it.

[Ross Bowman]

Originally posted by @Don Konipol:

@Ross Bowman

Must be tough when your self congratulatory nonsense is exposed and your ego takes a hit. If you actually have an INNOVATIVE strategy I’m sure all us EXPERIENCED investors would love to hear it.

 Probably almost as painful as missing out on the best performing asset of the decade. Here's some numbers for ya:

ADU conversion: $50k (approx)

Monthly Airbnb rev: $1500 (approx, after expenses) 

Or 

ADU bitcoin farm conversion: 18k approx

Monthly rev: $2000 (approx, after electricity costs) 

Yearly rev: $24000

Two year rev: $48000 (166% return) 

I don't need self-congratulatory nonsense - frontrunning dinosaurs feels a lot better. 

[Yourri-Samuel Dessureault]

Not quite the same as @Ross Bowman is suggesting, but I too am using BTC mining to off set costs in my primary residence.

I live in an area with expensive costs for electricity and heating fuel, so I did the math and found that mining BTC could yield savings. For me, my BTC mining allows we to heat the 2nd floor of my home during the winter (while making a profit instead of experiencing a cost), get additional exposure to BTC with compounding interest of 4.5% APY via BlockFi, and since I report my mining to the IRS I get to do MACRs on my solar panels (which power my miners and the rest of my house) and the mining equipment as it's a business. Needless to say it's a wonderful way to save money/invest while living in California.

[Ross Bowman]

Originally posted by @Yourri-Samuel Dessureault:

Not quite the same as @Ross Bowman is suggesting, but I too am using BTC mining to off set costs in my primary residence.

I live in an area with expensive costs for electricity and heating fuel, so I did the math and found that mining BTC could yield savings. For me, my BTC mining allows we to heat the 2nd floor of my home, get additional exposure to BTC with compounding interest of 4.5% APY via BlockFi, and since I report my mining I get to do MACRs on my solar panels (which power my miners and the rest of my house) and the mining equipment. Needless to say it's a wonderful way to save money/invest while living in California.

Question: the solar thing is really interesting. Any tips there? I was looking into it, but the cost to set up panels that would actually provide me the wattage I need (about 11,000W per month) seemed prohibitive. But I admittedly don't know much about solar. 

[Yourri-Samuel Dessureault]

@Ross Bowman Solar can be quite cost prohibitive and it's highly dependent on where you live if it makes sense. I would recommend a website called EnergySage to get you started. There is an incredible amount of data and info on there. For example you can find your average cost per kWh there and see if it's cheaper (on your time horizon) to get panels. For me the math was easy b/c I'm on propane for all of my fuel needs, and propane is $$$.

I live in the CA mountains of a high desert, so I have an 80+ sun score which yields far more power than I can use. Additionally, with the fire risk in my area we experience a significant number of mandatory power outages to mitigate fire risk, so those panels (plus the back up battery) actually added a significant amount of value to my home. I just had it reappraised to remove my PMI, and the appraiser included 100% of the cost to the home value.

[Ross Bowman]

Originally posted by @Yourri-Samuel Dessureault:

@Ross Bowman Solar can be quite cost prohibitive and it's highly dependent on where you live if it makes sense. I would recommend a website called EnergySage to get you started. There is an incredible amount of data and info on there. For example you can find your average cost per kWh there and see if it's cheaper (on your time horizon) to get panels. For me the math was easy b/c I'm on propane for all of my fuel needs, and propane is $$$.

I live in the CA mountains of a high desert, so I have an 80+ sun score which yields far more power than I can use. Additionally, with the fire risk in my area we experience a significant number of mandatory power outages to mitigate fire risk, so those panels (plus the back up battery) actually added a significant amount of value to my home. I just had it reappraised to remove my PMI, and the appraiser included 100% of the cost to the home value.

 Wow, super helpful info, I'm going to check that out. We get a lot of sun where I live, so it's definitely worth investigating. 

And it sounds like you get some tax benefits from it as well? I report too, so anyway to offset that tax burden is always interesting to me. 

[Bakhodir Ismatov]

I have a crawl space in basement which stays cool around 60F. How many rigs you think will it support until the need for additional cooling? 

Do you get separate Internet line for mining? How do you separate electric usage for mining so you can report as expense?

Thanks

[Yourri-Samuel Dessureault]

Glad I could be informative. Feel free to reach out if you have any questions.

[Ross Bowman]

Originally posted by @Yourri-Samuel Dessureault:

Glad I could be informative. Feel free to reach out if you have any questions.

 Will do - going to research first and then will reach out. Appreciate it sir! 

[Ross Bowman]

Originally posted by @Bakhodir Ismatov:

I have a crawl space in basement which stays cool around 60F. How many rigs you think will it support until the need for additional cooling? 

Do you get separate Internet line for mining? How do you separate electric usage for mining so you can report as expense?

Thanks

Crawl space can be a tricky place for them - although really depends on your climate. You want air flow and you dont want them to risk being flooded somehow. It could also be tricky for you to access them when needed (sometimes you may need to reset a rig, etc). 

As far as how many rigs - really depends on the rig. One thing you could do is buy a small rig just to test it out. You can get used Antminer S9's for a few hundred bucks these days. They arent crazy profitable, but it's a good way to dip your toe in the water and test your systems. 

Internet - nope you can use your existing internet. They dont actually use much bandwidth at all. They do require a wired ethernet connection though. I use a WifI extender for this and just plug them into that. 

Tracking electricity - there's free calculators online that can tell you exactly how much a specific rig cost per month for you, based on your Kw/H (you can find this on your electricity bill). Then just make sure your CPA knows this. 

[Yourri-Samuel Dessureault]

@Bakhodir Ismatov That's a tough one to answer if I'm honest. My home is an A-frame style with an open upstairs area, so there is a quite a bit of ambient air that needs to be heated before i run into over heating issues. I can't really give you a "Yay or Nay" on your situation without knowing airflow, crawl space volume, what's in your rig, etc. Also, I'd be careful of dust as it's a good way to overheat a GPU or ASIC.

I use the same internet line but do not write off my internet as a business expensive. I have a power monitor on my rig to be able to record my power usage.

[Matt R.]

I like the idea and also the heating house part from the other poster.  I wonder how the numbers and effort would compare to some defi staking. Are you saying the all in is 18k? 

[Ross Bowman]

Originally posted by @Matt R.:

I like the idea and also the heating house part from the other poster.  I wonder how the numbers and effort would compare to some defi staking. Are you saying the all in is 18k? 

 DeFi staking - different approach, but I get what you mean. I'm wary of that myself until the space matures (see recent hack). Mining is really just an alternative to DCA - you just pay for btc in electricity instead of cash, and get more of it long term. For example: for $250 in electricity, I get $1200 in BTC. Whereas if I paid USD, it would be $1200 for $1200. When DeFi staking matures, I'll do some of that too. I just don't really want my bag there, the way it currently exists now. 

18k - for me it was, yes. That's rigs plus paying an electrician to come optimize the circuits where I plug them in. You can't run them on regular 120v plugs.

Price of rigs varies a lot - I planned this out in advance and bought my rigs when bitcoin was "dead" during the last dip to 29k. That's when rigs get more affordable. When bitcoin is up, they can literally double in price (or more). Like most things, it's best to buy when other people aren't (if that makes sense). 

There's a lot of considerations to mining, but like real estate it can be very profitable if you know what you're doing. 

[Steve K.]

This is cool, cheers to your success and thanks for bringing up a fascinating topic! I guess I have to agree with @Don Konipol however, in that as interesting as it is to compare the numbers of BTC mining to having roommates, I think we're talking about totally different businesses here. I'd put mining more in the category of using a bedroom as an office to trade futures contracts, or growing weed or something: higher risk, hopefully higher reward, and completely separate to being a landlord.

Investment opportunities are weighed on a scale of risk/reward and I don't think BTC mining and house-hacking are even close to being equal in terms of risk. House-hacking/having roommates is a tried and true method of building wealth as old as the hills, within which the property owner has a lot of control, low risk, and reasonably quantifiable returns. Mining is a niche within a volatile industry that has been a roller coaster ride over the past few years and also has some big variables that are uncontrollable: global regulation, hardware costs, technological advances in mining equipment and techniques, energy prices, and of course the price of bitcoin to name a few big ones. 

However, BTC mining and having roommates doesn't have to be mutually exclusive so I like the fact that you brought this topic up. One could have roommates in part of the house and mining gear in the basement/garage, etc. 

This could be especially useful in areas with occupancy limits. For example my town only allows 3 unrelated people to occupy many rental units, so we have a lot of extra bedrooms that can't legally be rented, which could be perfect places to set up BTC mining rigs. 

[Judy Parker]

This is a fascinating, informative thread!

[Matt R.]

Originally posted by @Ross Bowman:

Originally posted by @Matt R.:

I like the idea and also the heating house part from the other poster.  I wonder how the numbers and effort would compare to some defi staking. Are you saying the all in is 18k? 

 DeFi staking - different approach, but I get what you mean. I'm wary of that myself until the space matures (see recent hack). Mining is really just an alternative to DCA - you just pay for btc in electricity instead of cash, and get more of it long term. For example: for $250 in electricity, I get $1200 in BTC. Whereas if I paid USD, it would be $1200 for $1200. When DeFi staking matures, I'll do some of that too. I just don't really want my bag there, the way it currently exists now. 

18k - for me it was, yes. That's rigs plus paying an electrician to come optimize the circuits where I plug them in. You can't run them on regular 120v plugs.

Price of rigs varies a lot - I planned this out in advance and bought my rigs when bitcoin was "dead" during the last dip to 29k. That's when rigs get more affordable. When bitcoin is up, they can literally double in price (or more). Like most things, it's best to buy when other people aren't (if that makes sense). 

There's a lot of considerations to mining, but like real estate it can be very profitable if you know what you're doing. 

 Cool and I hear ya. Defi staking requires a certain level of applied knowledge to minimize 3rd party risk. Definitely not a whole bag deal. 

As far as numbers go it appears defi could earn upto 50% less vs mining on a monthly basis. Sort of anyways as you have to account for the defi principle being liquid somehow. And add variables it could be 10% or 90% monthly depending. 

I almost want to do an 3 year experiment 18k mining vs 18k defi. The defi is compounding daily or hourly in some cases. I guess the mining is not compounding although the new mining funds could be allocated to be compounded. 

I did well on the btc mining stocks. So there is that angle for comparison too I guess. None of these are either or we can understand. 

Lastly, how loud are the miners? Like a vacuum cleaner loud or? 

[Luke Rorech]

Damn. @Don Konipol is coming in hot. 

@Ross Bowman congrats man. Love your outside the box thinking here.  

[Tanner Crawley]

@Ross Bowman
@Yourri-Samuel Dessureault

I would love a detailed write-up/ case study. I have a few spaces where this might work.

[Allen L.]

Mods, pls delete this cringy post. 

- not a computer illiterate dinosaur

[Max T.]

@Allen L.

No way! This was one of my favs in a while.

[Taylor L.]

What's the ROI with the cost of devices these days? Have you looked at mining other coins?