Mark was a sophomore at MIT in Cambridge, Massachusetts, when he began mining cryptocurrencies more or less by accident.
In November 2016, he stumbled on NiceHash, an online marketplace for
individuals to mine cryptocurrency for willing buyers. His desktop
computer, boosted with a graphics card, was enough to get started.
Thinking he might make some money, Mark, who asked not to use his last
name, downloaded the platform’s mining software and began mining for
random buyers in exchange for payments in bitcoin. Within a few weeks,
he had earned back the $120 cost of his graphics card, as well as enough
to buy another for $200.
From using NiceHash, he switched to mining ether, then the most
popular bitcoin alternative. To increase his computational power, he
scrounged up several unwanted desktop computers from a professor who
“seemed to think that they were awful and totally trash.” When equipped
with the right graphics cards, the “trash” computers worked fine.
Each time Mark
mined enough ether to cover the cost, he bought a new graphics card,
trading leftover currency into bitcoin for safekeeping. By March 2017,
he was running seven computers, mining ether around the clock from his
dorm room. By September his profits totaled one bitcoin—worth roughly
$4,500 at the time. Now, four months later, after bitcoin’s wild run and
the diversification of his cryptocoin portfolio, Mark estimates he has
$20,000 in digital cash. “It just kind of blew up,” he says.
Exploiting a crucial competitive advantage and motivated by profit
and a desire to learn the technology, students around the world are
launching cryptocurrency mining operations right from their dorm rooms.
In a typical mining operation, electricity consumption accounts for the
highest fraction of operational costs, which is why the
largest bitcoin mines are based in China.
But within Mark’s dorm room, MIT foots the bill. That gives him and
other student miners the ability to earn higher profit margins than most
other individual miners.
In the months since meeting Mark, I’ve interviewed seven other miners
from the US, Canada, and Singapore who ran or currently run dorm room
cryptomining operations, and I’ve learned of many more who do the same.
Initially, almost every student began mining because it was fun,
cost-free, and even profitable. As their operations grew, so did their
interest in cryptocurrency and in blockchain, the underlying technology.
Mining, in other words, was an unexpected gateway into discovering a
technology that many predict will dramatically transform our lives.
While it’s impossible to estimate how many dorm room cryptominers
exist globally, it’s likely their numbers are growing as cryptocurrency
values continue to balloon. Once they graduate, these students are
poised to play a critical role in shaping the next technology
revolution.
A dorm room operation
Years before meeting Mark, when I was a junior at MIT, I had heard
rumors of my peers mining bitcoin. After its value exploded, and along
with it, the necessary computational and electrical power to mine it, I
assumed that dorm room mining was no longer viable. What I hadn’t
considered was the option of mining alternate cryptocurrencies,
including ethereum, which can and do thrive as small-scale operations.
When mining for cryptocurrency, computational power, along with low
power costs, is king. Miners around the world compete to solve math
problems for a chance to earn digital coins. The more computational
power you have, the greater your chances of getting returns.
To profitably mine bitcoin today, you need an application-specific
integrated circuit, or ASIC—specialized hardware designed for
bitcoin-mining efficiency.
An ASIC can have 100,000 times more computational power than a standard desktop computer equipped with
a few graphics cards. But ASICs are expensive—the most productive ones easily cost
several thousands of dollars—and
they suck power. If bitcoin prices aren’t high enough to earn more
revenue than the cost of electricity, the pricey hardware cannot be
repurposed for any other function.
In contrast, alternate currencies like ethereum are “ASIC-resistant,”
because ASICS designed to mine ether don’t exist. That means ether can
be profitably mined with just a personal computer. Rather than rely
solely on a computer’s core processor (colloquially called a “CPU”),
however, miners
pair it with graphics cards (“GPUs”)
to increase the available computational power. Whereas CPUs are
designed to solve one problem at a time, GPUs are designed to
simultaneously solve hundreds. The latter dramatically raises the
chances of getting coins.
Most of the dorm room miners I spoke to mined alternative currencies
with personal computers and graphics cards. Some used their desktops,
while others built their own computers. A few of them even used their
laptops. Pretty much everyone already had graphics cards for gaming or
other purposes before realizing that they met the hardware requirements
for mining.
“It just so happened that at the time I was reading up on mining, I
was building a personal computer for purposes of video editing…some AI
stuff, and whatever I throw at it,” says Arjun Singh Brar, a recent
graduate of Singapore University of Technology and Design. With access
to his dorm’s free electricity, he thought, “Why don’t I just give
[mining] a try.”
Free electricity and massive amounts of heat
By Mark’s estimation, four of the other 35 residents on his floor
also have homegrown rigs. Unlike his setup, most just use a single
desktop with one or two graphics cards.
None of them really know what MIT’s policy is on their
profit-generating activities, so they take precautions to avoid getting
caught. “I have a lot of experience with exactly what outlets in my room
can pull what amounts of current before I trip the breaker,” Mark says.
He knows it trips if he ever
overclocks
any one of his computers by running its CPU at a faster speed than it
was designed for. That causes his entire operation to shut down, which
could draw the scrutiny of the university’s facilities department. (MIT
did not respond to request for comment.)
So far, everyone on Mark’s floor has flown under the radar. MIT
monitors electricity use by building rather than by individual, and the
miners almost certainly don’t pull enough power to make their dorm’s
electricity use look anomalous. All of the other miners I spoke to had
similar experiences;
(SUTD and Stanford did not respond to requests for comment. Babson
College said it didn’t “have anything to add on this subject.”)
Mark figures the university owes him, anyway. “The only thing that
I’m concerned about is if somebody at MIT comes after me for
unnecessarily using their electricity, which I think is kind of silly
considering
to go here,” he says. James Spann, a sophomore at the Rochester
Institute of Technology who also mines crypto, echoed Mark’s reasoning:
“The electricity and internet are part of the tuition.”
What dorm miners don’t pay for in electricity, they pay for in
discomfort. Even without the radiator running in the middle of a Boston
winter, the temperature in Mark’s room is well above desirable. His rig
is “essentially a 2,000-watt heater running at all times,” Mark says.
“All chocolate I accidentally leave here melts, but it’s not horribly
uncomfortable.” This is even after he moved his two most efficient
mining rigs to his girlfriend’s room three floors below because the heat
in the summer was unbearable.
Other miners described how they handled the massive amounts of
heat—and what their significant others and roommates put up with. Rahul,
a Stanford class of 2015 electrical engineer, drew his girlfriend’s ire
for his rig. “It was very loud and blew a lot of hot air. My girlfriend
was very upset that it had to be on at night,” he laughs.
When Nicholas Abouzeid, a senior at Babson College in Wellesley,
Massachusetts, began mining from home in high school, he ran the
software off his Macbook Pro and kept his bedroom window open to
regulate his laptop’s temperature. “It would get to 35 degrees in my
room, and I was shivering in bed, but my computer was very happy,” he
says. A few months before leaving for college, when he built his own
computer to mine crypto more efficiently, he surrounded it with fans to
disperse the heat.
Patrick Cines, a recent college graduate who mined in his dorm room
at Penn State University in State College, Pennsylvania, was
particularly innovative. To regulate his room’s temperature in the
August heat without air conditioning, he hacked together a ventilation
solution out of Home Depot dryer tubes. “The ones that people usually
connect to their dryers in their houses to put out all the heat,” he
explains.
Fast gains and faster losses
In the fast-paced, unregulated world of crypto, a fortune gained one
day can be quickly lost the next, not just because of the market’s high
volatility. Lack of regulation increases susceptibility to fraud and
security breaches.
On Dec. 6 last year, for example, hackers penetrated NiceHash, the platform that introduced Mark to mining, and
whisked away 4,736.42 bitcoin,
worth more than $60 million based on the day-of price. Mark had
returned to NiceHash after mining ether, but fortunately only lost
roughly $300 of unpaid bitcoin. He immediately switched to using a
different cryptomining marketplace. NiceHash froze its operations for
two weeks
While Mark’s encounter with bad actors left him relatively unscathed,
Rahul, the Stanford graduate, suffered a much greater loss. In
December, 2013, he spent a couple thousand dollars on an ASIC to mine
bitcoin. Within the first three months, he mined what was at the time
worth $10,000, he says. (According to CoinDesk, the price of bitcoin
during that time averaged around $800.) Confident that the price would
rise, he purchased another $10,000 of bitcoin with his own money and
placed all of his holdings on Mt. Gox, then the largest and most trusted
bitcoin exchange in the world.
In February of 2014, Mt. Gox got hacked and lost
740,000 bitcoins.
The Japanese exchange declared bankruptcy and Rahul lost every penny.
Despite joining the subsequent class action lawsuit, he told me he still
hasn’t seen any of his investment returned.
“Our BTC, plus the additional investments we made, would have been
worth well over six figures at today’s prices,” he says. “I got burned.”
Ahead of the curve
Though dorm room mining may seem trivial, it’s creating a new
generation of cryptocurrency experts. Many miners say their experiences
taught them crucial lessons about the technology, and some have already
substantially profited as well.
Abouzeid at Babson, for example, was introduced to crypto in December
2013 while he was still a junior in high school. His friend showed him
the lighthearted, meme-obsessed subreddit for
dogecoin, a new bitcoin alternative, named after the
viral doge meme. “I was like, ‘Oh this is fun and kind of silly. I’ll buy in,'” he says.
He began dabbling with mining doge (the dogecoin unit of currency) on his Macbook Pro. In January 2014, the subreddit
pooled together $30,000, or 26.5 million doge, to send the Jamaican bobsled team to the Sochi Winter Olympics. Two months later, it
pooled together $55,000, over 100 million doge, to sponsor a driver in the NASCAR Sprint Cup Series race. Both stunts made Abouzeid realize the
power of crypto.
Invigorated, he dug into understanding bitcoin and built his first
specialized mining computer at home. “It ran for three months until my
mother got our electricity bill,” he says. Once he arrived at Babson,
the university’s free electricity gave him unfettered freedom to dive
deep into the crypto world.
“I don’t know if I could justify my interest in it initially,” he
says. “Of course now I can look back and go, ‘Wow look, I know more
about bitcoin than most people! This is totally a good investment.’ But
at first it was just fun.” The experience has inspired him to work in
the industry in the future.
Akash Nath, a class of 2016 Boston University graduate, began a bitcoin derivatives trading platform called
Alt-Options
with a few other classmates several months after he began mining in his
dorm room as a sophomore. He and the other founders sold the company
for an undisclosed amount in April 2016, earning a neat return before
even graduating from college. “It worked out pretty nicely,” he says.
Now 23, Nath runs a company unrelated to crypto, but maintains his
network in the crypto and blockchain community. If he returns to the
crypto world, he plans to educate new users. There are “very few clear
resources to properly direct and educate newcomers,” he says.
An impending revolution
No one yet fully understands how cryptocurrencies will change how we
transact business with one another, but many experts predict they will
spark a revolution. That thinking was reflected in 2017 when bitcoin’s
price rose 1,000%, yet still fell short of the
top 10 cryptocurrency gainers of the year; when Estonia announced that it would pursue plans to
launch a crypto-token, making it the first country to do so; and when major Japanese and South Korean banks began
trialing blockchain-based payments (paywall).
“I fundamentally believe that blockchain technologies are going to
improve the world,” says Abouzeid. “I don’t know when, I don’t know how.
I don’t know if it’s going to be bitcoin or ethereum or whatever coin
is coming up today or tomorrow, but I enjoy it and it’s fun.
“It’s fun to be part of the ride.”
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