Helium is an incredibly cool blockchain network designed to provide a decentralized wireless network for connected devices that are a part of the Internet of Things (IoT). IoT devices are smart devices that connect and exchange data over a network. Smart home products are a familiar application of IoT devices in the consumer market, but there is a broad spectrum of devices that are being applied to commercial settings as well. Everything from sensors in parking garages to remote blood pressure monitors in hospitals can be made more efficient and effective by the Internet of Things.
One of the most difficult components needed to effectively deploy IoT devices is the wireless network used to connect them. Traditional WiFi has range issues and cellular networks are similarly limited in coverage and can be expensive to use. Helium aims to address key issues like monopolistic wireless providers, invasive data collection, and poor coverage by constructing a decentralized wireless network that uses long-range radio waves to reach broad areas. Since Helium is built using blockchain, people can set up Hotspots that serve data to devices and function as Helium miners. By helping expand and support the network, miners are compensated with Helium Tokens (CRYPTO: HNT).
Free Helium mining has been a hot topic in the crypto community this year with many miners earning thousands of dollars every month for simply purchasing a Hotspot and plugging it in. However, as the network grows profitability will inevitably fall and we can find many examples of Hotspots earning less than they may have previously. I still get asked often whether someone should invest in a Helium Hotspot, and the answer remains similar to several months ago: it is incredibly location-dependent.
In this article, I will revisit two Hotspots that I compared in July and discuss the factors that contribute to their change in earnings. I will then discuss several factors that make for a good Hotspot location going forward and show some real-world examples of Hotspots that are performing well.
Once you have installed your Hotspot, it begins to connect to other Hotspots around it and participate in the network. In most cases, your Hotspot won’t be earning much from actually serving data to devices. The largest portion of a Hotspot’s earnings comes from Proof of Stake challenges. Proof of Stake is a unique version of Proof of Work that blockchains like Ethereum and Bitcoin use to validate transactions. Instead of hashing cryptographic data, Hotspots routinely challenge other Hotspots around them to prove to the network that surrounding Hotspots are doing what they say they are.
Challenges consist of three roles: the challenger, challengee, and several witnesses. Hotspots initiate challenges to random neighbors frequently, and the challenged Hotspot must relay the proper data to prove it is operating properly and in the location it claims. To verify the whole process goes as expected, other nearby Hotspots witness the challenge by checking the information being relayed is what is expected by the challenger. Out of these three roles, being a witness is by far the most lucrative.
This challenge system is a big reason why location is so critical to Helium mining. A Hotspot that can reach many other Hotspots is going to be able to participate in far more challenges than one with only a few neighbors. However, Helium is designed to encourage broad coverage rather than extremely dense coverage. The general rule of thumb is that there should be a Hotspot every 300 meters. Inside 300 meters your Hotspot will be competing with others for roles in challenges and earn less HNT as a result.
To discourage overly dense coverage and encourage network expansion Helium employs a metric called transmit scale. A Hotspot’s transmit scale is a number between 0 and 1 that serves as a multiplier for rewards earned from challenges. If a Hotspot is located too close to several other Hotspots, they will have their transmit scale reduced and will earn less HNT from challenges. This is an important metric to pay attention to when assessing an area’s need for additional Helium miners, and we will discuss it further in our examples below.
It has been several months since my last article about Helium mining and the network has grown significantly during that time. When I wrote my first Helium article in July there were under 60,000 Helium hotspots globally, and today there are nearly 240,000 Hotspots connected to the network with 58,000 Hotspots being added in the last 30 days! This kind of rapid increase means that the landscape of the Helium network changes dramatically each month.
Helium is designed to reward the expansion of the network, which means that adding a Hotspot to an already saturated area will result in decreased earnings. Smaller towns and more spread-out suburban areas still have lots of growth to take place, however, many urban centers have long been saturated and are seeing large decreases in mining revenue. To showcase how the network rewards mining, let’s take a look at several Hotspots in Colorado Springs, Colorado. Colorado Springs was the focus of my last case study of two Hotspots since it is a medium-sized town that is quite spread out; I think it will be valuable to see how things have changed since July and see what Hotspots are succeeding today.
In July I took a look at two Hotspots in Colorado Springs: Polished Ceramic Capybara (PCC) and Ripe Pickle Bat (RPB). PCC was in a central location with more Hotspots to interact with, and as a result, it was earning nearly double the HNT per month of RPB. Here are their stats from back in July.
Now let’s take a look at our Hotspots on October 19th. It is important to remember that there was a halving since July, which reduced the amount of HNT being produced by half. Even accounting for the halving, our Hotspots have changed quite a bit.
We can see that PCC is still able to connect to many Hotspots around it, however, it is earning significantly less HNT than it was in July. This is likely due to many new Hotspots being added nearby. There are now four additional Hotspots within PPC’s hexagon that are competing for challenges; this is why PCC’s transmit scale is only 0.36, which greatly reduces the rewards it earns.
Now let’s take a look at RPB, which has faired better than PCC since July.
RBP is also earning less than it was in July, however, it has remained more profitable than PCC has. This is why location is incredibly important as the Helium network begins to fill up. RBP has gained more connections and doesn’t have another Hotspot in its hexagon to lower its transmit scale and compete with for challenges. Despite RBP being in a somewhat suboptimal geographic location, which I discuss in more depth in my other post, it has benefited from the network growing around it. It could probably be making significantly more HNT if it was higher off of the ground than 3 meters.
In every cluster of Hotspots, there tends to be one or two that are vastly outperforming their direct competition. In the image above, we can see that one hexagon has six Hotspots, but one of them is making 35 HNT per month — nearly $800. How is a Hotspot that is in such a bad spot performing so well? If the section header didn’t give it away, Skinny Blonde Eagle (SBE) is much higher off the ground than its competitors. It’s 50m above the ground, which is much higher than most of the buildings in Colorado Springs. Because of this, it can reach many more Hotspots, even some that are quite far away as we can see in the map below.
SBE is connecting to a ton of other Hotspots spread all across Colorado Springs. Due to its extreme height, the radio signal can travel much farther without issue. Although many people aren’t able to mount their antenna this high, getting an antenna that you can mount on something like your chimney can potentially make a huge difference in the performance of your miner. But please don’t fall off your roof in your quest to earn more HNT!
There is one more significant difference between SBE and our original two Hotspots, and that is the antenna gain. Take a look at the image below to get an understanding of how gain affects the signal.
Each of our Hotspots uses a different antenna, but the 3dbi antenna used by SBE is going to have a much broader signal with a less effective range than the 5dbi and 8dbi antennas used by PCC and RPB respectively. This goes to show how important height is since un-obstructed radio waves can travel quite far even when using a lower gain antenna.
It is difficult to provide a general rule of thumb for what kind of antenna you should use since location plays such a large role in making the decision. If your Hotspot is lower to the ground, a higher gain might help improve the signal strength through obstructions like trees. In an urban setting, a lower gain antenna can improve connection since there are likely to be Hotspots in many more directions. Overall I would worry about location and height before thinking about antenna changes.
We have seen in this post that Hotspots in areas that aren’t yet overly saturated are making decent revenue from Helium mining. However, I would spend time thinking critically about several factors before ordering a Hotspot to install in your local area.
It still takes several months to receive a Hotspot
Obtaining a Helium miner has been quite difficult all year, and that hasn’t changed. Especially with the current chip shortage and shipping crisis, getting miners hasn’t been improving as many hoped it would. Bobcatt miners are still estimated to ship 12–20 weeks after an order is placed, which makes planning a smart purchase tough. Because of these long lead times, those interested in purchasing a miner will have to gamble a bit, but that doesn’t mean it’s impossible to make a somewhat educated decision.
Looking at a town like Colorado Springs we can see that certain areas are much more densely covered than others. There is no way to perfectly predict where new Hotspots will come online, however, there are more sparsely covered areas that will benefit from new Hotspots much more than others.
The outlined zones in the middle of Colorado Springs are ideal for future coverage since they will expand the network and have many other Hotspots to connect to. A town like Manitou Springs circled on the left is an interesting prospect for someone facing a long lead time on a new Hotspot since there is a lot of development left to take place there. It is just important to remember that your Hotspot will need neighbors to participate in any challenges.
Many people may get to this point and feel frustrated that they aren’t able to predict how the landscape of Hotspots will change in the coming months. However, if you live in a competitive area you may still be able to successfully mine Helium if you are willing to optimize your setup.
A couple of months ago it was feasible to place a Hotspot in a one-level home and make a decent return on investment from mining Helium. However, as the network has grown and become more competitive this has become less viable as we saw with Polished Ceramic Capybara. My first recommendation to the owner of that Hotspot would be to do whatever they can to get the antenna further from the ground and away from obstructions. Even if you are fortunate enough to avoid direct competition for nearby miners, raising your Hotspot off the ground can massively improve profitability. The Hotspot selected below is in a great location and has no neighbors lowering its transmit scale, but it is very low to the ground and is only able to connect with a few other nearby Hotspots.
If the owner of Creamy Blue Lobster was able to move the antenna to a second floor or mount it on their roof it could be earning much more HNT than it currently is. A 1.2dBi antenna is also more suited to a high location and would not be my first choice for an area like Colorado Springs which has many obstructions this low to the ground.
If you are unable to compete with nearby Hotspots, you can always move it for a small fee. Moving it to your office or a friend’s house might be simpler than spending a lot of time and effort on different antenna setups.
Helium is a cool application of blockchain technology, and it has been really interesting to see it growing so quickly in 2021. While it may not be as insanely profitable as earlier this year, Helium mining can still have a good return on investment, especially in an area that is still in need of growth. I am eager to see how the Helium network can be used by IoT devices as it continues to increase in coverage.
