Stacks Mining: Some Early Observations

Stacks mining kicked off approximately one month ago, and the Stacks blockchain has been making headway ever since. We’re now close to 5,000 STX blocks. We wanted to take a moment to highlight some observations we’ve seen related to mining in the last 30 days.

We’ve seen >76.4 BTC sent through the Stacks network to mine STX in the first month of mining. Side note, a majority of that bitcoin was sent to participating Stackers, who earned rates were as high as 27% APY for the first cycle and were around 20% for the second cycle.

These last 30 days have demonstrated there is significant profit opportunity in mining on the Stacks blockchain. There are 75 independent miner addresses registered that won a block. There are several larger miners that have seen a large amount of profit. The largest two miners have made an estimated >$550k and >$450k profit reflecting 63% and 62% profit margins respectively.

Over the 1000 block snapshot, 80% of miners saw profits, with some miners experiencing >50% profit margins. A few were in the negatives, but overall the average profit margin for miners was ~12%. These numbers are estimates and do not take into account all of the dynamic components around Stacks to BTC price ratios or other expenses a miner may have, and we encourage folks to dive deeper and perform their own analyses given open source tools.

You can view a snapshot of 1000 blocks taken as of Fri. 2/19 and data since the beginning of mining on the network up until Wed. 2/17 in the charts available here, but all data was sourced from this mining tool by @friedger, @psq and other community members.

We anticipate that additional players may enter the space given the ongoing initial mining bonus resulting in >2000 STX in block rewards per block that runs for the next 6-8 weeks. After that point block rewards will be 1000 STX per block plus transaction fees, and tapering down slowly from there. From what we can tell, mining has offered the highest profitability to those miners who’ve consistently participated over time.

While some folks seem to be making a fairly large profit, we’ve noticed a subset that haven’t always profited as much. Sharing some relevant takeaways for folks below:

  • Mining software continues to improve and miners should be proactive in keeping their mining software up to date. Most patches since the release of 2.0.0 have been directed towards mining improvements.
  • Stacks mining can be variable based on the bitcoin block rate. We’ve seen fast-produced bitcoin blocks that don’t have a corresponding Stacks block pay rewards to the next block winner, so some blocks are 2-3 times more valuable than others. Miners should participate for longer stretches of time in order to smooth out the variance.
  • The network also punishes miners for leaving and re-entering. For miners with a large disparity between theoretical win % and actual win %, spotty participation rate is a likely culprit.
  • In general, folks that are able to put more resources toward Stacking may reap a higher ROI as they pay less in transaction fees per block mined over time.

Stacks mining is still in its infancy. We’re all learning together and are thrilled to see tools like the mining calculator and an incredible amount of engagement in the mining discord channel and GitHub. There are some consistent large players that seem to have a high level of profitability over spend, and we hope to see more competition as time plays out.