Vicky Ge Huang Oct 14, 2021, 10:00 AM
- Frank Mong is the chief operating officer of Helium, which connects IoT devices to the internet.
- Mong told Insider how the network has grown dramatically thanks to crypto miners and early adopters.
- He also shares 3 key factors that affect how much Helium miners can earn with their hotspots.
When Helium (HNT) mining exploded onto the scene a few months ago, Frank Mong, chief operating officer of the internet-of-things startup, was caught by surprise. What didn’t surprise him was how fast the network would grow from there.
Launched in August 2019, the Helium blockchain draws on a decentralized network of individually owned hotspots to connect low-powered internet of things devices to the internet.
These hotspots typically generate enough connection for low-powered devices such as air quality sensors, tracking sensors for scooters, and pet trackers to connect to the internet. For example, bike-share company Lime tracks its bikes with Helium.
Mong recalled that he first realized the power of the network while testing it out with Lime scooters in San Francisco. Lime employees would take the scooters and purposely hide them all over the city for the Helium team to find them through the blockchain network.
“Every single time, we found them. We did this for weeks and I was literally riding on Lime scooters testing the network, testing the coverage, and making sure that it had a useful capacity,” Mong told Insider. “That’s when it hit me that this network could be extremely powerful, with a ton of applications that we haven’t even thought of.”
In just over two years, the Helium network has grown to include 232,193 hotspots in 19,000 cities across 136 countries, as of midday Wednesday. The network growth has seen no signs of slowing, with more than 1,000 hotspots joining the network every single day, according to Mong and the Helium block explorer.
“I think we’ve hit this flywheel effect on network growth and that has enabled a lot of things to happen,” he said.
Most recently, Helium partnered with the city of San Jose, California to finance internet access for over 1,300 low-income households with HNT tokens mined through Helium hotspots. The city will install 20 Helium-compatible hotspots for volunteer residents and small businesses. All the HNT tokens mined will be converted into prepaid cash cards and given directly to low-income families to fund their internet expenses.
How to mine HNT tokens
Helium mining has grown so rapidly because it is easy, low-cost, and environmentally friendly, according to Mong.
Helium mining hotspots use 5 watts of energy to provide long-range wireless coverage, which has a negligible effect on miners’ electricity bills. The cost of mining hardware is typically between $400 and $500, which is accessible, he said.
“This is not a bitcoin miner or ethereum miner that costs thousands of dollars with a need for tons of power,” he added.
There are two ways to mine HNT tokens, which had surged about 1,297% in the past year to trade at $19.37 as of Wednesday afternoon.
One method is to simply install Helium-compatible hotspots on your office window. As long as the hotspots can communicate with each other and prove to the blockchain that they are providing useful coverage, they can mine the HNT tokens through the network’s proof-of-coverage algorithm.
The other way is through usage. Internet-of-things devices or sensors have to pay something called a data credit to transport data through the Helium network. When one data credit, which equals $0.00001, is taken out, a fraction of one HNT token is burned.
The number of data credits users can obtain changes as the value of HNT fluctuates, but one data credit always allows users to transmit one packet of data, giving enterprises the stability to use the network and obtain tokens.
3 factors that affect how much miners can earn
Stories of helium miners generating substantial passive income on the side have mushroomed in recent months.
Brian Fakhoury, a 23-year-old analyst at Underscore VC, said he has made over $150,000 mining HNT tokens over the past two years. James Putra, who oversees product strategy at TradeStation Crypto, said he earned close to $7,000 mining HNT tokens in just a week. Fundstrat’s digital asset strategist Armando Aguilar also mines HNT tokens with a Bobcat miner on the side.
Such profitability may not be sustainable over the long term. One of the factors that affect miners’ revenues is simply the supply-and-demand dynamic. With no pre-mine HNT tokens, the total supply of HNT tokens is capped at 223 million, with a halving event taking place every two years.
“A few months ago, the monthly supply available for mining was 5 million HNT per month,” Mong said. “We had a halving in August. Since then, there’s been a max HNT supply of 2.5 million per month, and that’s split across your performance.”
Despite limited supply, there are more than 1,000 hotspots being added to the network every day, which could reduce earnings per hotspot as well. “The sheer number of hotspots added to the network affects the total potential mining revenue that you can gain because you are now splitting it across more hotspots,” he said.
The location of the hotspot is also critical. Mong said the best wireless coverage is achieved when the hotspot is installed in a place that’s high up and free of obstructions such as trees and metals. It is also important for a hotspot to be near other hotspots so that they can communicate with each other.
Because the helium blockchain rewards people for creating useful coverage, miners could be penalized by the blockchain if they are providing coverage that’s not useful, Mong said.
For example, when multiple hotspots are placed in the same dense area on top of each other or placed in the middle of nowhere, they may not be able to transfer data efficiently.