Intro
Imagine you support a cause dear to your heart and decide to send a small donation to further that peaceful cause. Now imagine that small donation gets your bank account frozen, labeled you as a terrorist and bans you from working in some jobs. Sounds extreme and extremely unlikely yet that is where some people are right now for having supported the Freedom Convoy in Canada. This article is not pro or anti the aims of that group, it’s not my country so I refrain from my opinions on that.
This article does go into how something as simple as a donation, to a cause or charity, can result in your loss of bank account, opportunities and even prosecution. It also points out how all this could have been avoided if the people donating had used hardware wallets and crypto. How does this relate to mining? Well ask the Chinese miners who had exchange deposits confiscated. Miners need to keep their hard mined crypto off exchanges and in hardware wallets where they cannot be seized.
What are hardware wallets.
Hardware wallets do not store your crypto, all crypto is stored on the blockchain, but it does keep your private keys safely offline. The private key is the door to your crypto and whoever has that key can do whatever they like with the crypto. A hardware wallet keeps those keys in a password protected piece of hardware not connected to the internet, for the majority of the time. You only connect it to the internet when you are ready to make a transaction, and some wallets don’t even do this, so keeping your crypto far safer from being stolen or seized.
If you keep your crypto on exchanges like binance, coinbase etc then the government can force those exchanges to freeze and confiscate your crypto or hackers only have to guess your username and password to take all your crypto. Hardware wallets means you are the custodian of your crypto so making it far harder, or impossible, to take your crypto.
What happens if I lose my hardware wallet
That’s ok but don’t lose your seed phrase.
When you set up your wallet the wallet will provide you a “seed” phrase of around 12-24 words. These words are your keys so never photograph them or store them electronically. I always use mnemonic metal by Elipall to store my crypto seed phrases. Then this hard copy of the seed phrase is placed in a safe, safety deposit box or buried somewhere where you can get it again if needed. If someone has these words they have full access to your crypto.
If you lose your wallet or it gets stolen etc your crypto is still safe but you need to get access again for yourself. I would recommend buying the exact same hardware wallet again and then doing a “restore” by inputting your “seed” phrase. You will then have full access to your account.
Hardware wallet use by miners is different
When you become a miner you tend to start mining different crypto currencies. You may start mining bitcoin then add Kadena or siacoin and this can cause problems. No hardware wallet can store all of the crypto types you may want to mine so you may have to get more than 1 hardware wallet or come up with a different solution. For instance we recommend our new miners to focus on 50/25/25 that’s 50% bitcoin miners, 25% established altcoin miners and 25% newer altcoin miners.
The altcoins tend to be less supported by hardware wallets so let’s do an example.
Case Study:
Sandra decides to make passive income from mining at home so she buys a Bitmain Antminer S19 100T and plugs it into her dryer socket at home. Then she hears about the Goldshell KD6 (everyone wants these) but does her research and opts for the better ROI of the iBelink K1+ (which she buys from us of course 🙂 ) and she plugs that into her dryer socket also by buying a pdu from AsicMiningPanels.com. Now her setup is starting to deliver around $100 a day but she is starting to run out of available power so she decides ,after speaking with us, to go for a Goldshell HS5 as that only takes 7 amps. So she is getting over $100 a day ($40k+ a year) from her dryer outlet without much, if any, effort but now she wants to store her crypto safely.
So she has 3 types of crypto she wants to secure with a hardware wallet:
Bitcoin
Kadena
Siacoin
There is a hardware wallet that will, in a months time, cover all of these (please do your own due diligence) and that is the Ledger Nano x but with the siacoin and kadena there’s a couple of extra steps that make it more complicated. She could just use a hardware wallet for the bitcoin and then store the rest on exchanges. That way she could get spy grade hardware wallet for the bitcoin (seriously it has self destructing chips). But the Kadena value will be much higher than the bitcoin value so she could either learn the Ledger Nano X or separate the Kadena between multiple exchanges so as not to be at risk in one place. She could maximize this by using exchanges that do not require KYC and use an anonymous email. Always report your crypto to the IRS it isn’t worth the jail time.
I’d suggest taking a small amount of time to learn the Ledger Nano X and store it all in one place. It’s always worth checking with your miner supplier what they recommend. We constantly advise miners on which miners might work the best for them.
Any questions feel free to drop us a line. Below I’ve linked to a video from a Fantastic Youtuber Channel “The Coin Bureau” which describes different models of hardware wallets. My advice get one and start playing.
