The wide variability in both amount of BTC spent and the resulting returns from STX mining is pretty stark. This gives us an insight into why such an opportunity (in terms of profit) persists in this market: STX mining is a numbers game
Because of how the probability to win a PoX block works, miners need to be able to get the law of large numbers on their side in order realize the profitability that exists in the market. STX mining works by combining the amount of BTC each miner spends with a Verifiable Random Function. The more BTC spent, the higher the chances of being selected as the winning miner, but winning a block is always a matter of probability and never a sure thing. (more info
To put it another way, STX miners need enough BTC that they can continue mining long enough to let probability run its course. The variability in returns observed by miners who committed less than 5 BTC across the first 5000 blocks is a direct result of this. The variability is
the randomness, as these miners did not commit enough BTC across enough Stacks blocks to let probability play out.
Based on talking to current STX miners, looking at the network data, and Daemon's own anecdotal experience, we estimate an STX miner should have between $45,000-55,000 USD worth of BTC in order to mine STX sustainably and realize the expected profitable return. Conclusion & Next Steps
The first 5000 blocks of the Stacks 2.0 show a mining market that is still very much in the early stages of developing. With almost 100 BTC committed and the Stacks chain functioning as intended across this initial period, there is a lot to celebrate. As the data highlights, however, there is still much work to be done.
STX mining needs to become more competitive. The data above draws a sharp conclusion for how: we need to work to lower the capital requirements to sustainably mine. Daemon's previous focus has been creating the STX Mining Bot
, which was shipped for mainnet a few weeks ago. While the Mining Bot helps lowers the technical barrier to entry to STX mining, it does nothing to shift the capital requirements.
To address this, Daemon Technologies is changing Part 3 of the Mine to 1 Million STX Challenge
to focus on a series of bounties to incentivize STX mining pools. The bounties will focus on both infrastructure to enable the creation of mining pools, as well as the successful operation and growth of pools. Each bounty will be for 100,000 STX tokens. More information to come soon.
For now, we thank you for reading and hope you found this valuable. If you're interested in STX mining or contributing to future analyses, please reach out to [email protected]