How Exactly Does This Helium Hotspot Produce $2,000 Every Single Month?
Earnings in Helium sometimes have an air of randomness about them; to illustrate this, let’s look at two real-world cases with drastically diverse earnings.
One of my favorite ideas introduced by the blockchain is helium. By giving connected devices access to a decentralized wireless network, one can solve a number of significant problems that now exist in the technological world, such as monopolistic wireless carriers, intrusive data collecting, and a lack of coverage availability. The idea of a decentralized wireless network is not a new one; nevertheless, an implementation of such a network that is both efficient and reliable has not yet been realized.
When it comes to the construction of a decentralized wireless network, Helium is doing a lot of things right. The Helium network encourages individuals to purchase approved hardware in order to set up their own Hotspots and mine Helium tokens by utilizing blockchain technology with its innovative Proof of Coverage work model. This encourages people to purchase approved hardware (HNT).
Helium mining has recently become highly profitable, with some Hotspot owners earning well over a thousand dollars each and every month from their operations. However, these high figures are only being earned by a select few Hotspots. A great number of people, even those working in comparable fields, will earn a lot less. I just recently published a piece that explains how mining rewards are structured, and in this post, I want to elaborate on the concepts by providing a case study of two actual Hotspots that exist in the real world. Because I have always found it helpful to learn from other people’s experiences, in this article, we will examine the data collected at two Hotspots that are very similar to one another throughout the month of June and analyze why one of them made almost $1,000 more than the other.
A Presentation of the Competitors
For the purpose of our comparison, I decided to pick two Hotspots that are located nearby in Colorado Springs. The density of hotspots in Colorado Springs ranges from low to medium, making it a potential prime location for HNT mining. Our two competitors are the Polished Ceramic Capybara (Capybara) and the Ripe Pickle Bat, so let’s take a look at them (Bat).
It is clear to us that the two Hotspots are located relatively close to one another. They are even connected to a different Hotspot using the same connection. Bat, on the other hand, is only connected to a little more than half as many Hotspots as Capybara is. This fact alone provides a solid clue as to the reason why Capybara earns twice as much HNT per month as Bat, but there is a great deal more information to uncover regarding these two Hotspots.
Background
First, let’s go over some of the fundamentals of the helium mining industry. If you have read any of my other writings or if you are already familiar with Helium, you are welcome to move forward to the section titled “Analysis.”
A Breakdown of the Payout
Payouts for mining Helium are processed very differently compared to those of other blockchains. You can get a more in-depth explanation of how they operate by reading this post, but I will cover the fundamentals here. Take a look at this table, which provides a breakdown of where all newly created HNT will be sent in the future.
Stakeholders of HNT, as opposed to miners, are awarded the HNT that is compensated for Security Tokens. Also, Network Data Transfer accounts for up to 32.5% of newly minted HNT but now amounts for very little of what a miner earns; when the network grows and more devices start using it, Data Transfer should play a larger role in a Hotspot’s job, but for now, it only accounts for very little.
The Proof of Stake Challenges contribute the lion’s share of a Hotspot’s total revenue. PoC challenges represent the real labor that needs to be done in order to fulfill the requirements of the PoC protocol, which is an alternative kind of Proof of Work. There are three distinct roles that make up these challenges: the challenger, the challengee, and the witnesses. Hotspots will, on average, issue a challenge to another random Hotspot once every three hours; however, this frequency may vary depending on the network in that particular location. The Hotspot that issued the challenge is referred to as the challenger, while the Hotspot that accepted the challenge is called the challengee. The challenger is now responsible for sending data packets that are relevant to the challenge. Other hotspots in the area will take up the role of the Witness and ensure that the correct data is being transmitted.
As can be seen from the table, the function of the witness in PoC challenges is by far the most profitable one to perform, while the one of the challengee comes in second place. The role of the challenger is the one with the lowest potential reward because Hotspots that are in close proximity to one another will automatically launch challenges rather frequently.
Guidelines for the Location in General
Throughout the course of this piece, we are going to talk about how location and placement are extremely important to mining income. This is primarily due to the fact that a favorable location and proper antenna positioning are the most effective ways to connect with other Hotspots. When there are more connections, there are also more difficulties to participate in and observe.
The rule of thumb is that there should be at least 300 meters between two Hotspots in any direction they may be facing. When your Hotspots are closer than 300 meters to one another, they will compete with one another for roles in PoC challenges; when they are further than 300 meters away, they will not connect. Because the network prioritizes comprehensive coverage, it is generally preferable to be further than 300 meters away rather than too close to the access point.
If radio waves have a clear path from their source to their destination, they will travel further. Because of this, experts advise positioning your home Wi-Fi hotspot in the room with the highest window in your house. It is expected that your Hotspot will be able to make a greater number of connections if it is situated higher up and further away from any potential impediments. It is essential that you make every effort to keep trees, concrete, televisions, and refrigerators at a safe distance from your Hotspot. These dense objects have the potential to significantly alter the signal.
Analysis
After going over the fundamentals of HNT mining earlier, we can now circle back around to discussing Capybara and Bat. Let’s take another look at where they are located, shall we?
It is not hard to understand the factors contributing to Capybara’s success. When compared to Bat, it has eleven recent connections. Bat only has two. Why is this the case? The establishment known as Capybara can be found in a very central part of Colorado Springs, far away from the hills that have varied elevations. Bat is located in a region with a low height that is surrounded by hills. My best assumption is that Bat is not located exceptionally high up, and as a result, it does not access a large number of hotspots. When it comes to helium mining, a less-than-ideal location can be tough to compensate for. Some adjustments, such as moving the antenna to a higher location or purchasing one with a greater range, can help to enhance an area that is less than perfect, but Bat would probably benefit the most from the development of new Hotspots to its west.
It is important to note, as can be seen in the first figure above, that Capybara has never transferred any data, despite the fact that it has earned twice as much HNT as Bat. Soon, a graph will show how little of Bat’s revenue came from data transfer, so stay tuned for that. There is a significant amount of incentive to assist in expanding coverage because Helium is currently in the process of creating the network. Mining rewards will start to decrease in regions that are more saturated unless additional devices start using the network; however, regions like Colorado Springs need to develop quite a bit further before they reach that position.
Completed Revenues
During the month of June, I downloaded all of the data that was available for each Hotspot. The Application Programming Interface (API) that Helium provides makes it possible for anyone to quickly retrieve the reward history for any Hotspot during a date span of their choosing. When a Hotspot successfully completes one of the duties that we outlined in the table above, the owner of the Hotspot receives a reward. These are what I refer to as “events.” When compared, the number of incidents that occurred for Capybara was approximately twice as high as that of Bat, which was 126. Let’s take a look at how much each Hotspot made from the various types of rewards:
This really drives home how much more lucrative it is to be the witness as opposed to any of the other roles in the PoC challenge. It would appear that the primary reasons for Cap’s successful month were that he was the challenge and the witness. It is important to keep in mind that every few hours, a Hotspot will send a challenge to another Hotspot that is within range. This indicates that in order for a Hotspot to take on the role of the challenge, it needs to have additional Hotspots in its immediate vicinity. It is not surprising that Capybara made a substantially greater profit from playing the role of the challenger than Bat did because Capybara has a significantly larger network from which to launch PoC challenges.
Income Produced From Rewards
Although we are aware of how much each sort of reward contributes to the total profits of each Hotspot, let’s also have a look at the distribution of the amount of HNT earned among the various types of rewards.
It should not come as a surprise that the earnings per event increase in proportion to the total earnings. However, it is fascinating to see how the payoff for being a witness can change depending on the circumstances. The smallest payment was 0.25 HNT, while the greatest payout was greater than 2.5 HNT; this indicates that witness rewards can fall anywhere within a wide range. I was also taken aback when I saw that Capybara had some challenger awards that were around twice as valuable as the typical reward for Bat. These variations are probably just the result of Capybara being able to examine a bigger sample size of incentives. Nevertheless, it is fascinating to observe that if there are sufficient rewards, some of them will probably be far greater than usual.
Locations
Location is the primary contributor to the significant disparity in the amounts of HNT earned by these two Hotspots. On the other hand, as we will see, Capybara also does not have the most ideal location. Once you have an understanding of why Capybara is still making substantially more HNT, you will have a better understanding of the most critical aspects that contribute to the earnings of a Helium Hotspot. Let’s take a more in-depth look at the factors that are preventing Bat from establishing relationships.
Do you notice that there is another Hotspot located directly next to Capybara? As a direct consequence of this, its reward scale is half that of Bat’s, which is full. Capybara is still able to participate in numerous challenges as a result of its central location, despite the fact that another Hotspot is located directly next to it. This more than makes up for the decrease in earnings that was brought on by the presence of some competition. You do not need to be in close proximity to other Hotspots in order to witness challenges as long as your connection is strong and Cap does not have any Hotspots located inside the 300-meter radius.
In addition, Cap enjoys a wonderful geographical position in the city of Colorado Springs. That long highway that runs down the middle is called Interstate 25, and the terrain to the left of the highway is somewhat mountainous. Bat may be found in the middle of a small valley that is surrounded on either side by hills. Because of this, it is going to be very challenging to send a strong signal to a significant percentage of the city. In a scenario such as this one, you would want to make sure that your Hotspot is positioned in such a way as to make the most of the sightlines that are available to it; in this case, I would want to optimize the strength of my signal going up the valley.
In contrast, the terrain in this area is very flat for a considerable distance in all three directions. Because of this, it is much simpler to site a Hotspot since there are open connections in pretty much every direction. It is possible that Cap is situated advantageously high up because it is able to connect to a large number of other Hotspots in a variety of directions.
Wrapping Up
I really hope that being able to witness some examples of Hotspots in the real world has helped clarify the aspects that influence the success of HNT mining. Helium is a sophisticated blockchain network that operates in a manner that is radically dissimilar to those of conventional networks. It is quite encouraging to see how quickly the network is expanding, and I am really looking forward to seeing Helium continue to advance throughout this year. The number of available hotspots is increasing at a breakneck pace, and the network is scheduled to receive several significant enhancements later this year. The remainder of 2021 is going to be a highly intriguing year for aficionados of cryptocurrencies thanks to Ethereum and Helium.
