- Idan Abada posted a video of himself using free Starbucks electricity to run an $875 mini bitcoin mining rig.
- The post has since gone viral on TikTok, with 2.6 million views and counting.
- But with today’s bitcoin prices and electricity prices in Los Angeles, he’s actually losing money.
Idan Abada is on a mission to democratize bitcoin mining. As far as he’s concerned, minting new coin isn’t just for the pros.
His message appears to be resonating with the masses.
Abada, who lives in the San Fernando Valley in Los Angeles, posted a video of himself using free Starbucks electricity to run an $875 mini bitcoin mining rig. The post has since gone viral on TikTok, with 2.6 million views and counting.
The rig looks a whole lot different than a warehouse packed with rows of whirling ASICs – an image which has come to be synonymous with crypto mining.
Instead, Abada’s miner is relatively simple: it consists of a multi-port USB hub, a mounted mini fan, and ten USB-sticks, each containing two Bitmain-manufactured ASIC mining chips.
“It’s one of the easiest miners to set up and run, because all you need is a computer or a laptop,” explained Abada. “It’s powered by USB, and that’s pretty much it. Everyone can become a miner and be a part of the crypto world.”
Computers in a warehouse near one in Iceland where Bitcoin-mining machines were stolen. Iceland’s cheap electricity and chilly weather, which helps keep the computers cool, have made it a premier location for cryptocurrency mining.Egill Bjarnason | The New York Times
Abada started mining bitcoin in his room in a shared house in 2015 – where he agreed with roommates to pay extra for electricity – and in 2017, he opened up his own shop.
“I noticed it was really hard to buy equipment for mining bitcoin, so I created BitcoinMerch.com,” said Abada. “At first, it was just me selling some cables and very basic equipment.”
The company now offers customers all the hardware you would need to get into mining.
Research firm Technavio expects the overall market for global crypto mining hardware to grow by $2.8 billion from 2020 to 2024. Abada says his business has grown exponentially in the last four years, as interest in crypto has ballooned.
Abada says Bitcoin Merch sales have hit $428,000 so far this year, up 355% from 2020.
One of the top sellers on Bitcoin Merch is the NewPac – the main component of the rig featured in Abada’s viral TikTok video.
“We have sold thousands, and when we get more, they run out quick,” he said.
Abada says that Missouri-based GekkoScience took apart a big miner from China and re-purposed the parts for the NewPac. Each of the mini-USB rigs has two ASIC chips, so all in, the $875 rig has 20 chips.
However, even though this consumer-grade rig was made from parts harvested from a Chinese miner, Abada says the two are fundamentally different.
For one, his budget rig is a lot quieter than the industrial-grade bitcoin miners.
“It’s not loud, so you can run it next to your desk. That’s a huge benefit,” explained Abada.
“With industrial miners, you need a warehouse, you need power lines, you need the cooling, it’s a whole thing. If you try to run one out of your house, it’s going to be so loud you won’t be able to sleep in that house anymore,” he said.
But his rig is also a lot less powerful.
Two important factors when determining the output of a rig are how much power it consumes and how much hashing power it produces. Hashing power, or hashrate, is an industry term used to quantify the amount of computing power a rig contributes to the overall bitcoin network.
“The downside is that this rig has a very low hashrate,” said Abada. That means this machine will trend toward producing less bitcoin than competing rigs.
“These USB miners tend to be much less energy efficient than a traditional ASIC,” explained bitcoin mining engineer Brandon Arvanaghi.
It may look cool, but Abada is the first to admit that his rig of TikTok fame doesn’t make money.
“It’s actually hard to make a profit out of this unless you have free electricity,” he said.
Roughly every ten minutes, 6.25 bitcoins are created. In order to mint these new tokens, a global pool of miners are all contributing their computing power to running a hashing algorithm known as SHA-256.
The exact same code runs on every single bitcoin mining rig on the planet, including the one featured in Abada’s Starbucks TikTok post.
But these miners aren’t running the SHA-256 algorithm in a vacuum. They’re competing against each other to see who can unlock each batch of new bitcoin first.
To win, you almost have to join a team of other miners, which is exactly what Abada has done with his rig. But even with the help of this so-called mining pool, the proceeds from his small rig are pretty minimal.
Abada says his mini miner generates 0.0002478 bitcoin per month, minus a 5% mining pool fee. At today’s prices, that’s worth $9.35. Because he’s mining in Los Angeles, where the cost of electricity is 22 cents per kilowatt hour, if he runs his rig 24 hours a day, he pays $15.84 in total electricity cost.
So Abada actually ends the month in the red to the tune of roughly $5.88.
It should be noted that these numbers change by the minute and depend on the price of bitcoin and the global hashrate.
These kinds of operating margins are why Arvanaghi says that it’s almost always a rule that buying bitcoin directly is cheaper than mining, unless you’re running rigs with “outrageously cheap electricity or at scale.”
“Everything is about breakeven cost when it comes to crypto mining,” said Arvanaghi.
“USB miners like this could be attractive for people who don’t have to pay for their own power. Maybe kids in public places, college dorms, buildings that share electricity prices, employees stealing electricity from their company,” he said.
The most practical use case for this miner? A fun hobby for those dabbling in crypto.
“I think they’re a cool novelty item, and they help educate people about bitcoin mining,” said Whit Gibbs, CEO and founder of Compass, a bitcoin mining service provider.
Gibbs heads up a company that’s also in the business of offering the uninitiated an opportunity to get their skin in the mining game.
However, Compass customers don’t custody their mining rigs. Instead, Gibbs and his team help patrons buy mining hardware and install it at various data centers which host the hardware, pool it with other rigs, and handle the day-to-day logistics. It’s more of a hands-off approach to mining.
But for Abada, it’s all about being as close to the mining process as possible.
“I now devote myself to teaching and helping beginners around the world to mine cryptocurrencies in their own homes,” he said.