How Does Helium Work?
Helium uses a new work algorithm called Proof of Coverage (PoC), and rewards miners in HNT — Helium coin like ETH is to Ethereum — for using radio waves to validate that hotspots are actually providing wireless coverage to devices. Much like Ethereum uses graphics cards to crunch cryptographic hash codes that provide the proof of work needed to validate transactions, Helium miners verify that wireless hotspots aren’t lying about their service by using radio waves to “interrogate” hotspots about their activity.
Radio-Frequency and Proof of Coverage
Proof of Coverage only works because of several key properties of radio-frequency (RF) that allow miners to produce proofs that meaningfully prove the legitimacy of hotspot activity:
- RF travels at the speed of light, which means it has effectively zero latency.
- RF can only travel a limited physical distance.
- The strength of an RF signal can be used to determine how far away it originated.
These three characteristics are fundamental to Proof of Coverage functioning since they allow the blockchain to constantly check if hotspots are working properly via a “Challenge”.
Proof of Coverage Challenges
A challenge is the actual unit of work that must be completed to satisfy the PoC protocol. Challenges involve three roles: challenger, transmitter, and witness. Each role serves a specific function to verify the data transmitted by a hotspot.
- Challenger
– The challenger is the hotspot that created the challenge. This happens every ~200 blocks. - Transmitter
– The transmitter is the hotspot being challenged. It is responsible for sending (“beaconing”) the packets of data that pertain to the challenge. - Witness
– Witnesses are hotspots close to the transmitter that can verify the transmitter is sending the challenge packets as it should be.
At any time one of your hotspots could be performing any one of these roles, and each one is rewarded HNT by the network. So setting up a Helium miner in a window of an area that has existing Helium network activity will start to earn more HNT than an area that has no coverage. I will link more in-depth documentation on the inner workings of the Helium network in the Resources section; for now, let’s dive into determining your potential mining profits.
How to Determine Profits
Determining HNT mining profits isn’t as simple as Ethereum or other Proof of Work blockchains. With HNT, your profits can vary considerably depending on the state of the Helium network in your area.
As we discussed, miners can earn HNT for serving the wireless hotspot, initiating/completing challenges, and witnessing challenges. This means that if you live in an area without any other miners, you will earn less HNT than an area that allows you to interact with other hotspots. However, it is a balance since there is a point where more hotspots don’t help to witness or initiate more challenges — a saturation point. The network favors broad coverage over extremely dense coverage. So, once there are enough hotspots to cover an area and issue/witness challenges, additional hotspots will start to reduce profits.
Coverage Map
The best way to estimate your potential earnings with Helium mining is using their coverage map. The coverage map makes it easy to look up your neighborhood to see if there are any nearby hotspots. You can click on nearby hotspots and see how much HNT it earned in the past 24hrs or month.
If your area isn’t very densely saturated, adding a new hotspot could increase the HNT earned by new and existing hotspots since they would be able to participate in challenges. One of the more profitable hotspots in my area — Handsome Hazelnut Crane — seems to be making more HNT than others because it is slightly more centrally located and has filled the witness role of multiple challenges each day.
This particular hotspot earned 105.62 HNT in the past 30 days, which despite the crypto market dip is currently worth roughly $2209. That means this miner is likely getting close to tripling its initial cost in the last 30 days of operation.
Unfortunately, we can’t find a couple of metrics to get a pretty close profit estimate as we can with Ethereum. However, you should be able to get a pretty good understanding of your local HNT mining profitability by looking at the recent earnings of hotspots near your home or office.
What Hardware Do I Need?
When most people think of cryptocurrency mining, they think of hardware like graphics cards since that is how Ethereum and Bitcoin work. As we have discussed, Helium doesn’t use Proof of Work and instead uses a Proof of Coverage system that relies on radio waves to validate the network activity around it.
My favorite aspect of Helium mining is that the miners run on next to no electricity, which means they also generate no heat or noise. Powering a radio antenna is extremely low power, which means that you don’t have to take electricity costs, heat, and climate change into account like you do with Ethereum mining.
Which Miner is the Best?
If you are interested in trying Helium mining for yourself, you are probably wondering which miner to try to purchase. Luckily, aside from weatherproofing for outdoor miners, the internals are usually quite similar. It is also currently quite difficult to find them since the profitability is quite high. The brands that are certified by Helium are Nebra, Bobcat, Rak Wireless, and Syncrob.it, sensecap etc. One popular miner is the Bobcat Miner 300.
Where Do I Put My Miner?
If you get an indoor miner, they are generally meant to go next to the highest window available in your home. You also should remove any metal mesh on the window you are using as it will disrupt the signal.
Generally, height is the only constant when it comes to improving the signal on your new miner. The higher up, the better since the radio signal will generally be interrupted less up high. If you have multiple spaces to choose from, pick the one that has the least nearby metal, electronics, or concrete. However, if you only have one suitable high window in your home, it will most likely work just fine.
Where Do I Store HNT?
HNT is best stored using Helium’s official wallet app. They are available on iOS and Android stores. The apps are well made and let you manage your hotspots along with your HNT coins safely and securely.
The wallet will provide you with your private key, which you should be very careful to store offline and in two locations. If you aren’t familiar with how cryptocurrency wallets work, contact us.
Selling HNT for Dollars
HNT isn’t supported by some of the larger exchanges, like Coinbase. However, there are reputable exchanges like Binance US and crypto.com that allow you to sell HNT.
To sell your HNT, simply move it from your Helium wallet to your crypto.com wallet and then sell it for dollars.