Hello friends! 👋
A substack created on crypto is incomplete without a post on mining so here we are. But there’s no way I could explain the financial feasibility given I do not mine crypto so I brought in India’s #1 mining solution platform to lay it bare for you!!
We have the Co-Founder of MB Miners [My Blockchain Miners], Sarthak Gangwar, co-authoring this post to answer all the burning questions related to mining and the technical and economic feasibility of doing one at your own place. Before we dive into the conversation, I’ll share a primer on what mining is. LFG 🚀
Think of blockchain as a country and crypto as the native currency of this country. In order to attract citizens (users) to this country, there needs to be security and transparency across all levels among other things. So someone has to take the responsibility and accountability for providing these features and whoever does that would be rewarded by the country. This simple strategy lies at the core of a public blockchain. Miners are those individuals/groups that verify and secure the blockchain to make it usable for users like you and me and in return they receive crypto as rewards. The way to earn this reward is to solve mathematical problems using computers and whoever computes this first earns crypto as a reward. This process of solving problems to secure a blockchain and earning rewards is known as mining. Mining currently works for blockchains like Bitcoin, Ethereum, Helium, Zcash, Monero, etc. So now that we have an overview of what mining is, let’s dig into Sarthak’s story and find out how he created a mining business in India.
Shuvam: Everyone loves a good story and yours is incredible so why not share a little about where you come from and what got you into this whole mining thing?
Sarthak: Sure, I’d love to! So I’m an engineer like yourself and studied Industrial Engineering from Ramaiah in Bangalore. It was during my college days that I heard of something called bitcoin and its price action excited me. Who doesn’t like extra pocket money in college, right? So I bought some and sold when the price shot up. The proceeds funded my parties, haha. However, I got curious when I found a lot of smart people talk about it online and decided to research a little more. One thing led to another and I started mining using the basic graphic cards and laptop I had. Soon we imported more equipments to increase our computational power that would yield greater rewards. Me and a couple of my friends used to sit and operate the rigs until 4 am in the morning alongside managing a full-fledged college schedule. We spent numerous long nights building and managing these systems and spent as little of the rewards as possible because we saw the economic value it could have. That’s basically how I got started.
Shuvam: I wish we had a friend like you back in the day. But I’m sure there must be people who would have dismissed crypto as a scam despite your winnings, no? Also, I’m curious to know what your parents thought about your new discovery and how they reacted.
Sarthak: Yeah, most poeple I spoke to about crypto would dismiss it as a scam and never bothered to take a look at the fundamental offering of this asset. Like all Indian parents, mine too wanted me to work at a great company and I did for a couple of years. But on the side, I kept operating these rigs. There came a point when my parents thought I’d gone insane and they transfered a property to their name which initially belonged to me. They thought I would gamble it all away and the price volatility didn’t help either. So it got stressful for quite some time to be honest. Working on setting up the farm alongside my full-time job was pretty hectic and eventually I had to quit to go full-time crypto.
Shuvam: Wow! I love how strong your conviction was when crypto wasn’t cool. I think post-covid people have come to realise that we can no longer trust large institutions or the so called experts. The idea of sovereign money and unseizable assets make a lot more sense now.
With that, let’s talk about how easy/difficult it is to mine crypto and what returns could one expect on the capital deployed?
Sarthak: For sure. Most people care about return on their investment so I’ll first address that. Let’s say someone invested INR 1,00,000 into mining. The investment amount includes the cost of purchasing equipment and setup. We have a team of engineers who assist customers from picking the right equipments to setting and running the rig to drive maximum returns on their capital. If the equipments are purchased at regular price, one can expect a monthly return of roughly INR 7000 which adds upto ~ INR 84,000 over 12 months. Realistically, one can expect to break even within 12-18 months depending on the market sentiment since price of crypto keeps moving and your returns are in crypto. For someone who belives in the future of crypto, this should be a no-brainer since this is an accumulation phase with an expectation of prices to shoot in the future. Your monthly rewards would linearly increase with an increase in the investment amount. So in case someone is looking to generate a cashflow that covers their living expenses (approx INR 35,000 for bachelors), an investment amount of INR 5,00,000 could help them get there.
I know it gets a little intimidating for newbies which is why we are available to talk to customers and answer their queries and help them decide the best course of action for their goals. Unless someone buys from us, we don’t charge them anything so your readers can get in touch and we’ll help them in any way we can.
Shuvam: Well, thank you very much for explaining the details. I’m curious to know what your day-to-day activity looks like aside from running the mining business you’ve set up. Do you mind sharing?
Sarthak: I’m happy to! Apart from handling business operations, I spend time trading too. I have a small community where we share strategies, ups and downs and simply ideas, mostly for fun but also for profit. Me and my team are also working on bringing new products where we train people to trade crypto, offer personalized consulting services to manage their strategies and taxation. It’s going to take some time but the team is very excited about it and I believe it’s going to be of great help to most people who are already in crypto and even for those who want to get into the space. Apart from work, I do spend time with my family and friends to cool-off. Crypto is a never-ending game and can take a toll on you if you do not manage your time properly.
Shuvam: Very cool! I think it would be fair to call you an OG and everytime I personally connect with an OG, I ask for advice on setting up the right portfolio 😄. For someone who has INR 1,00,000 to invest, how would you structure their portfolio? Ofcourse, none of this should be considered investment advice.
Sarthak: Great question! If I were to structure my portfolio for that amount, I would split it into 4 categories and vary the allocation percentages.
Low risk (50%) - BTC/ETH (preferably) or Top 5 coins by market cap
Medium risk (~15%) - Coins in the Top 10-50 by market cap
High risk (~15%) - Coins in the 50-100 range by market cap
Degen play (20%) - New projetcs or gambles with high reward/risk ratio
Ofcourse this isn’t a hard and fast method so people should tweak based on their risk appetite and goals.
Shuvam: This brings me to my next question. It’s trite to say DYOR but no one talks about how to do your own research. Would you mind sharing your principles on carrying out research before aping into a coin/token? Also, do you do it from a HODLer’s perspective or a trader?
Sarthak: Sure, let’s first understand why DYOR is important over taking advice from a stranger. Not only reasarching puts you in control of your decisions but also helps you form judgements on when to get in and out. You might take advice from someone to buy but they might not be around to tell you when to exit. This simple flaw can cost you all your returns. Now coming to research, I usually look at the market cap, the trading volume of the coin and price movement from metrics perspective. Apart from these, I look at their products and the traction it has. Social clout matters too. Twitter and Discord usually do a good job at it. If a project has few followers who don’t even rave about the project, it is usually a weak signal. Taking the example of $APE coin - it’s a coin that started trading at $1-$3 and now currently trades at $20-$22 after being listed on Binance so the returns turned out to be great for me. Little bit of research would tell you this coin is linked to the BoredApesYatchClub which is a credible and the largets NFT project in the space.
When it comes to perspectives, I look at coins from both the angles and then make my picks on what to hold and what to trade. For exmaple, Etheruem curently trades at ~$3000 but it’s evident it’ll be $30,000 or $50,000 in the coming years so that’s something I hold whereas I trade other tokens to generate cashflow in my portfolio.
Shuvam: Amazing stuff! I think a lot of readers will now have a fair idea of what it’s like to structure a crypto portfolio. With this, I come to the last question - how does one survive in this space? The bear market is brutal and leveraged trading can wipe out people. You’ve clearly thrived over 5-6 years in this space so what are the key things one should do to avoid being wiped out?
Sarthak: I think it’s a great question that most people don’t ask about. I’ll share my own story here. Back in 2016, I invested almost INR 50,000 that I accumulated from my pocket money over 6-9 months. That 50k ballooned to over 8 lakhs over a few months because we were in a bull market back then. It was a lot of money tbh. We’re talking about 16x in a few months!! But very soon I saw the market crash and it wasn’t what you see in the equity market. The 8 lakhs went to 7 then to 6 and then 5 and I eventually sold at 4.5 lakhs. So that was my first mistake and I realized I need to have a exit strategy in place. Using StopLoss was very important for me. Had I set the limit to 10%, I could have netted 7.2 lakhs instead of 4.5. I think one should always withdraw some amount of money each month based on the market cycle and reinvest once the sentiment is favorable. Most people don’t withdraw in hopes they’ll make more and then get wiped out and never make it back again. So always have a plan to withdraw when you hit a predetermined profit percentage. This will ensure you can stay longer to make more over many years to come.
Another recent example was the crash in 2020, BTC’s price fell by 50% within 24 hours but I was able to check out at a 10% loss since I had StopLoss in place. The crazy part is I was able to buy BTC and other coins at a heavy discount just within the next 2 days. My overall coin holding went up with the same amount of INR invested. Eth was trading at $80-$100 back then, BTC was at $3000-$4000. Post that phase, the bull run fetched me upto 150x in return. It’s funny how we talk about returns in multiples and not percentages, haha! Anyway, Matic was one such coin I bought at 1 rupee. And even in case of MATIC, I kept selling parts of it each time it gained 10% or 20% and so on. I did it so I could take the profit and reinvest into other tokens or my mining business. Even in case of winning bets, I suggest taking out profits to keep your portfolio secure. To round this up, I’d say always have an exit strategy in place before you enter, and take profits from time to time. This will ensure you can survive in this space over the long run and also make money.
Shuvam: This is insane stuff! Personally, I got to learn a lot from this conversation. I once saw my 100x investment go to a 20x and I still feel the pain 🥲. All because I didn’t take profits along the way. Learnt this lesson the hard way. If you’re reading this, please don’t be a fool like me and take Sarthak’s advice!
With this we come to an end for this edition. Props to Sarthak for taking out the time and sharing his experience with all of us. I hope you loved this conversation and if you’d like to venture into mining, please feel free to reach out to MB Miners!
Thank you once again for reading🙏. If you liked it, please consider sharing this post with your friends and family. See y’all next time 🙋♂️