College student cryptominers are finding it harder to turn a profit as costs rise, bitcoin falls

College students are finding it's harder to turn a profit by mining cryptocurrencies. Even with universities footing the energy bill, it's getting more expensive to break into the mining business. Equipment prices are soaring, even as digital currencies fall.

"It's gotten pretty ludicrous now the amount of money you have to spend to get in," Alex Gilarde, a senior at Fairleigh Dickison University said.

Cryptocurrencies are created by a process called "mining." Essentially, computers solve complex mathematical equations. In exchange for lending their computing power, miners get digital coins. They can exchange those for other cryptocurrencies, hold onto them, or cash out.

But cryptomining takes up a lot of energy and computing power. So reliable electricity and hardware are a must.

The price of graphics cards from companies like AMD and Nvidia has skyrocketed alongside bitcoin's rise to the mainstream. The graphics cards have been traditionally marketed toward online gamers, but cryptominers need the hardware to build their mining rigs too. The demand for those cards has gotten so high that miners and gamers alike are struggling to get their hands on them.

Gilarde has been mining cryptocurrencies since 2012. He said he was pretty "tech-savvy" in high school, so when he and his friends heard about cryptomining, they decided to give it a try. At the time, the price of one bitcoin was less than $5.

In total, Gilarde said he spent around $4,000 to $5,000 on hardware to build his mining rigs. From the start, he's been finding ways to stretch his investment.

"When I started mining cryptocurrencies and going onward, I would do it in my parents house and in our own school actually after school. I would leave my laptop in different corners of the school," Gilarde said.

"They didn't really know I was doing it, and since when we first started off it wasn't really a big phenomenon, they kind of just let it go. It wasn't really the electricity sapping phenomenon it is today."

Now, he has three rigs running in his dorm room 24/7, and another still back at his parents' house. Gilarde said he takes out anywhere from a couple hundred to a thousand dollars from his digital wallet every couple of months. That's enough for him to pay for part of his tuition and diversify his investment portfolio.

But the price of bitcoin has been falling this year. The digital currency has lost more than half its value since its peak in late 2017. And other cryptocurrencies are following suit.

Luc Roberts, student at Fairleigh Dickinson University works on his computer in his dorm room.
CNBC | Jaden Urbi
Luc Roberts, student at Fairleigh Dickinson University works on his computer in his dorm room.

Not everyone's made as big a profit as Gilarde.

Luc Roberts is a sophomore at Fairleigh Dickinson University. He started mining in 2017, right around the time bitcoin's price hit $21,000.

"How much I made was probably around $30. How much I could have made was probably more than that," Roberts said.

Roberts also built his own computer in high school, but he didn't put it together with cryptomining in mind. He built it for gaming. But when bitcoin's price kept hitting record highs, Roberts said everyone was talking mining. And since he already had the computer for it, he figured he should give it a shot.

Roberts set up shop in his bedroom at his parents house, and started mining digital coins using a program called NiceHash. But since his computer wasn't designed for cryptocurrency mining, it wasn't equipped with enough processing power to mine massive amounts of cryptocurrency. If he left his computer running for 24 hours straight, Roberts said he was only mining about .00027 bitcoins a day, so he stopped.

"It would have taken me about I think 10 years to mine a full bitcoin with my hardware," Roberts said.

He's not the only one finding it hard to turn a profit. Fundstrat's Tom Lee recently said bitcoin is hovering around its break-even point. And if people aren't making money from mining, they may just stop doing it until the price picks back up.

Gilarde on the other hand was thinking about cryptomining from the start. So he bought the best parts and invested in the top of the line algorithms to make sure he could mine for years to come.

He even teaches others on campus how to set up their own mining systems. But no matter how efficient they build their rigs, they've all discovered that mining rigs generate a lot of heat.

Gilarde points a fan at his computer and always runs his AC to keep the temperature in his room down. When Roberts was mining at his parents house, he noticed the heat too.

"I just opened my window and would turn a fan on even at night and I'd still be sweating in my room. It'd be really hot in there," Roberts said.

Student shows cryptomining monitoring system on his computer.
CNBC | Jaden Urbi
Student shows cryptomining monitoring system on his computer.

But the temperature isn't the only thing miners have to monitor. Gilarde strategically spreads out his graphics cards so they don't use too much power and trip an alarm. He constantly monitors his energy usage with a cloud-based tracking system.

Not many colleges have clear-cut rules on cryptomining in the dorms.

As of March 2018, an FDU spokesperson said there is no specific policy language addressing cryptocurrency mining, though the University is considering it going forward.

It's acceptable use policy is a little more vague.

FDU's Acceptable Use Policy prohibits individuals from using the University's computing resources for revenue-generating advertising programs which pay users when the programs are run, and also prohibits activity that incurs additional cost to the University. FDU also blocks the mining of cryptocurrency at the firewall level and will probably add some specific language prohibiting mining cryptocurrency to the next version of the Acceptable Use Policy.

Right now, students aren't really clear on whether there are rules against cryptomining on campus. And for the most part, the students we talked to at FDU don't think it's is a big issue yet.

"I'm sure if a lot of colleges found out that a lot of students are doing that, I'm sure they'd put rules in place because their bills are going up," Roberts said. "But I don't think it's a huge problem here I don't think it is at other schools."

As schools work to establish their stance on cryptomining on campus, students are figuring out how to stretch their dollar. The more cryptocurrency that's created, the harder the mathematical equations to mine it become. That means even more energy will be needed to mine a single coin. And with the price of bitcoin falling, it remains to be see how people will continue to make money.

Gilarde is graduating this year and leaving the days of free electricity behind. But to the next class of cryptomining students, he warned "be cautious."