$75 Bet Yields 3 Bitcoin as Hashrate Rentals Draw Solo Miners Despite 1-in-28,000 Odds

Hashrate rentals lower the barrier to Bitcoin mining

Small outlays are producing occasional Bitcoin windfalls

Odds of success are about 1 in 28,000

Supporters say the model can curb concentration and reinforce decentralization

A mining model that lets users rent external computing power, or hashrate, to mine Bitcoin without buying expensive equipment is gaining traction. The approach is making it easier for individuals to participate in Bitcoin mining with relatively small sums.

The odds of success are extremely low. Even so, interest is growing because a small upfront payment can still offer a shot at a reward of about 3 Bitcoin. According to Bennet, a website that tracks solo miners, 21 individual miners successfully validated blocks over the past year and collected a combined 66 BTC, or about $4.8 million. That was 17% more than a year earlier.

Examples have continued to emerge. On July 2, an individual miner who rented about 230 terahashes per second of computing power produced block 943411 and received the full 3.125 Bitcoin reward, according to the cryptocurrency industry on July 8. The odds of success were estimated at about 1 in 28,000. In another case last month, a miner spent about $75 and generated a return of roughly 2,600 times the initial outlay.

Hashrate rentals ease mining entry barriers

Bitcoin mining uses a proof-of-work system. The participant that first solves a complex hash calculation creates the block and receives the reward. The current block reward is 3.125 BTC, worth about $226,000 at current prices.

The probability of mining a block rises with computing power. But network difficulty has continued to increase. As a result, the mining industry has been reshaped around companies with high-performance ASIC, or application-specific integrated circuit, machines and large-scale power infrastructure. For individuals, equipment costs and electricity bills have made direct participation difficult.

Hashrate rental services are designed to address those constraints. They allow users to buy external computing power and mine without owning equipment themselves. One representative model is a marketplace in which users bid for hashrate through a real-time order book at prices they choose. That structure lets them adjust cost and speed depending on market conditions, then immediately connect the purchased hashrate to a solo mining pool in pursuit of a reward.

The model also frees individual investors from constraints such as power contracts, hosting arrangements and hardware maintenance. In the past, they had to buy ASIC equipment costing thousands of dollars. Now they can begin mining in about a minute with little more than an email registration and a small Bitcoin deposit.

Some investors are also using APIs to reallocate computing power in real time and pursue arbitrage strategies based on profitability differences across mining pools. Braiins and NiceHash are among the best-known platforms.

Supporters say it can help restore Bitcoin decentralization

Broader participation by individuals in mining has implications beyond potential profits. It also affects efforts to restore the decentralized character of the Bitcoin network. The mining market has long been dominated by large pools, drawing criticism that influence is concentrated among a small number of companies. That creates the risk that mining pools could intentionally exclude certain transactions or exert outsized influence over protocol updates.

Technology aimed at improving that structure is also emerging. One example is DATUM, a protocol from decentralized mining pool OCEAN. Under the existing system, mining pools provide blocks containing selected transactions and miners only perform the computation. DATUM was designed to let individual miners choose for themselves which transactions to include in a block.

Industry participants say combining that technology with individual mining could significantly strengthen the distribution of the Bitcoin network. Bitten, a podcast focused on Bitcoin, said individual miners using DATUM could disperse a meaningful share of network hashrate. It added that the system could become a powerful tool to prevent domination by large pools and capital.

Paolo Ardoino, chief executive officer of Tether, which has been allocating hashrate to OCEAN since last year, said decentralizing mining is central to the stability of the Bitcoin network. Protecting the network from concentrated influence is important.