Chapter 1: The Landscape of Cryptocurrency Mining

In light of a government crackdown initiated in 2017, bitcoin mining is currently prohibited in China. Nonetheless, there are indications that Beijing might explore cryptocurrency ventures in Hong Kong before fully engaging in such industries.

Despite the lack of a definitive stance from the Hong Kong government on legalizing cryptocurrency mining, interest has been shown by various Chinese financial institutions in exploring potential opportunities in this sector.

Using a Virtual Private Server (VPS) for cryptocurrency mining represents a cost-effective strategy that avoids the hefty expenses associated with physical hardware. This method involves renting a remote virtual server to leverage its computational power for mining activities.

Concerns surrounding the environmental repercussions of mining, coupled with the financial risks involved, prompted the Chinese government to impose restrictions on cryptocurrency mining. Consequently, many miners have migrated from China to countries with more favorable regulations.

Given Hong Kong's "one country, two systems" framework with China, predicting the implications of these changes on the territory is challenging. Many bitcoin mining operations were previously based in adjacent regions of mainland China, suggesting that the ban could indirectly impact Hong Kong's economy.

Currently, ASIC miners dominate the cryptocurrency mining landscape. However, the profitability of home-based mining is rapidly declining. While VPS mining remains an option, it may be more complex than one might expect. This article delves into the viability of mining through a VPS.

Recent studies highlight the volatility of the bitcoin mining sector. A significant portion of mining is executed by ASIC miners, while the value of cryptocurrencies continues to fall. Experts caution against investing in mining hardware at this juncture, as the prices of cryptocurrencies are comparatively low relative to the cost of ASIC miners.

Despite recognizing the improbability of success, we explored alternative methods for mining cryptocurrencies that do not necessitate purchasing hardware.

Chapter 2: Financing Cryptocurrency Ventures

The primary incentive behind bitcoin mining is profit. A miner, akin to any other laborer, invests in equipment, sets it up, and operates it. This encompasses not only the purchase price of the equipment but also ongoing maintenance costs and the physical space it occupies monthly.

Section 2.1: Mining Without Equipment Investment

Two primary strategies exist for cryptocurrency mining. One option involves "cloud mining," where individuals rent hashing power from a mining facility, earning coin rewards based on the power they acquire. In this scenario, operators manage initial setup and routine maintenance, with miners only needing to be aware of the costs associated with the hashing power they wish to rent.

Before transferring any funds, it is crucial to verify the legitimacy of the service providers. We examined various options for renting essential infrastructure, specifically a VPS, for the purpose of mining bitcoins. By opting for this route, you can avoid extra costs for setup and maintenance, provided you possess the necessary knowledge to manage the process.

Both methods allow you to mine cryptocurrencies without the burden of expensive mining hardware or concerns about potential power outages. Monthly costs will likely be higher than simply using electricity.

Section 2.2: Choosing the Right VPS

For our initial foray into mining in early 2022, we selected one of AWS's Accelerated Computing packages. Ultimately, we opted for the EC2-p2.xlarge plan, which offers four Intel Xeon E5–2686 v4 virtual processors (operating at a base of 2.3 GHz and a turbo of 2.7 GHz), 61 GB of memory, and a single NVIDIA Tesla K80 graphics card featuring 2496 cores and 12 GB of graphics RAM. Remember, the K80 comprises two GPUs, meaning your server will have access to half of one.

Section 2.3: Mining with Monero

We utilize Nanopool as our mining pool, and XMRig as our mining software. Our server operates on Ubuntu 18, with XMRig-Nvidia 2.10.0 installed, alongside the latest version of the CUDA Toolkit (10.0). The installation and configuration of the mining software presented no significant challenges. Given that ASICs are not viable for mining Monero, GPU mining stands out as the most effective method.

While this experience has been enlightening, it's clear that the current low prices of cryptocurrencies present challenges. The future remains uncertain, and conditions may change.

The reliability of these servers (and any VPS) is perhaps their most significant advantage. They are employed to host websites, ensuring they remain accessible to users at all times.

As mining expenses decrease, pursuing this avenue makes increasing sense. Should prices drop further, it’s likely that fewer individuals will engage in mining, subsequently reducing difficulty levels, allowing miners to earn more coins for similar efforts.

Section 2.4: Shifts in the Mining Industry

In recent times, numerous Chinese bitcoin enterprises have sought stability and opportunities in Texas. Shenzhen-based BIT Mining has announced plans to invest $26 million to establish a data center in the state, while Bitmain, based in Beijing, is expanding its operations in Rockdale, Texas.

Predicting the responses of individual companies to changing governmental policies is complex. If China moderates its stance on crypto mining, some companies might decide to return to China or broaden their operations there. Conversely, firms may opt to maintain their activities in Texas or other locations where they've already committed resources. Ultimately, each company will need to assess the costs and benefits of different locations and make informed decisions based on their unique business requirements.

# Disclaimer

This publication is not intended as a source of financial, legal, medical, or accounting advice. The information contained herein may be subject to regulations in the United States and other jurisdictions. We recommend carefully reviewing the relevant terms of the services/products before applying them to any potentially regulated activities. We assume no responsibility for decisions made based on this information. This article is not intended as financial advice; use your own judgment.