Crypto Intermediate

What is Helium mining?

Crypto mining has been around for over a decade now and has become an integral part of the blockchain industry. It involves miners solving complex mathematical problems to validate transactions on the network and create new coins. In return, they receive rewards. Recently, a new form of mining has emerged in the world of crypto with the Helium platform. In this article, we will discuss what Helium mining is, how it works, and the potential rewards and challenges of participating in this type of mining.

Understanding the Helium network

Helium is important in the world of crypto because it is a network designed to control devices remotely. The Helium network provides coverage where traditional cellular networks may not be available or are too costly. It thus has the potential to revolutionize industries such as logistics and supply chain management and to create smart homes.

How does the Helium network work?

The Helium network operates on two types of consensus mechanisms—Proof of Coverage (PoC) and Proof of Stake (PoS). Under PoS, those who stake HNT tokens become network validators. Validators are responsible for verifying transactions and maintaining the integrity of the network.

But the Helium network also needs hotspots to offer coverage for Internet of Things (IoT) devices. So it offers HNT rewards to those who create them.

However, the Helium network, which began in 2013, did not always work this way. The PoC and PoS combination was introduced only in 2021.

What makes the Helium network different from other crypto networks?

The Helium network is unique because it is designed specifically for IoT devices. It provides them with long-range, low-power connectivity.

The PoC and PoS combination is also unique. The PoS mechanism makes it less energy-intensive than other mining algorithms used in crypto. And Helium mining, which is part of PoC, is unlike the mining that goes on in other crypto networks. Since it does not require specialized equipment or technical expertise, it is very accessible and inexpensive, too.

Why is Helium important in the world of crypto?

Helium is unique because it allows IoT devices to communicate over long distances with very little power. This makes it ideal for applications that require low-power, long-range connectivity. For instance, it can be used for asset tracking, agriculture, and industrial automation. As the demand for IoT devices continues to grow, the need for a network like Helium becomes increasingly important. By participating in Helium mining, individuals can help to build and expand this network and earn rewards for their efforts.

Introduction to Helium mining

As the IoT market continues to grow, Helium mining presents an opportunity to earn passive income while supporting the network’s expansion.

What is Helium mining?

Mining is an activity that some users engage in on the Helium network. Unlike the Proof of Work version of mining, Helium mining is all about providing proof that one has offered coverage for the network’s IoT devices. Simply put, the miners do this by setting up and maintaining a wireless hotspot. In exchange for the service, the network rewards miners with Helium tokens (HNT).

Helium mining is made possible by the Proof of Coverage (PoC) consensus algorithm. The algorithm confirms the location of hotspots and the coverage they generate.

When a device sends data to the network, the hotspot receives and forwards it to the nearest validator. The hotspot uses LoRaWAN technology to communicate with the devices and other hotspots. Validators then verify the transaction and add it to the blockchain. And the provider of the hotspot that did the relaying goes home with the HNT reward.

How to participate in Helium mining

To participate in Helium mining, individuals must set up and maintain a hotspot. The hotspot device can cost up to several thousand dollars, depending on the model. They will also need to have a stable internet connection.

In addition, miners on Helium should have a fair understanding of basic networking concepts.

Those with all of this can begin the process of setting up their hotspot.

The process of Helium mining

Setting up a Helium hotspot involves two things:
connecting the device to a power source and the internet, and
registering it on the Helium network.

For the first step, one needs to ensure that the device is WHIP-compliant. For the latter, the miner must deposit HNT. The amount of the deposit depends on the number of hotspots in the area.

Once the hotspot is registered, it will relay the IoT device signals to the nearest validators. Miners can track their earnings and network activity using the Helium app or other third-party tools.

The equipment and software required for Helium mining

To begin helium mining, one needs a few essential pieces of equipment. The first and most crucial equipment is the Helium hotspot. Next comes a stable internet connection.

Another vital piece of equipment is the mining device. This device should be compatible with the Helium hotspot and network. Because not all mining devices are compatible with the network.

In addition to the hardware, there are several software requirements as well. These include a Helium Blockchain Explorer, a Wallet, and mining software. The explorer is used to monitor the network and track rewards, while the wallet is used to store HNT after mining. The mining software runs on the mining device and performs the calculations necessary.

Rewards of Helium mining

One of the most significant benefits of mining is the potential rewards. Miners on this network earn HNT rewards for their efforts. The HNT tokens can be exchanged for other cryptos or fiat.

The potential returns of Helium mining

The returns of Helium mining are known to be significant. But they depend on several factors. The density of hotspots in the area is one of the main ones. The rewards decrease as the number of miners increases.

Factors that influence the Helium mining rewards

Several factors influence the rewards. The location of the hotspot, the density of hotspots in the area, the number of miners, and the amount of HNT being mined are some of the main ones.

The location of the hotspot, in particular, is crucial as it affects the stability of the internet connection.

Challenges of Helium mining

Despite the potential rewards, mining on the Helium network comes with several challenges. The first and most significant challenge is the initial investment required. The cost of the equipment can be significant, and it may take several months for the investment is recouped.

Competition in Helium mining

With more miners joining the network every day, the competition is increasing. This makes it more challenging to earn rewards, especially in areas where there is a concentration of hotspots.

And as more miners join the network, the rewards decrease.

Moreover, mining requires a substantial upfront investment in equipment.

Additionally, the cost of electricity required to power the mining equipment can be high. This can affect the profitability of the venture.

The environmental impact of Helium mining

Another challenge of Helium mining is its impact on the environment. It requires a significant amount of energy to power the hotspots. This energy consumption can have a negative impact on the environment.

However, some miners are exploring alternative energy sources, such as solar power.


Overall, Helium mining can be a profitable venture for those willing to put in the time and effort. However, it is important to understand the challenges before getting involved. While the potential returns can be significant, the competition and environmental impact are also factors that you should take on board.

Final thoughts on Helium mining

As IoT devices gain in popularity, the potential for Helium mining is expected to grow. Miners, therefore, need to be prepared to adapt to the changing landscape. They should also consider the environmental impact of their operations.

Besides, it is always important to approach investments with caution.


Is Helium mining profitable?

Helium mining can be profitable, but it depends on factors like mining equipment costs, location, network coverage, and the number of devices you deploy. Research current earnings, costs, and network conditions before investing in Helium mining.

What are Helium Hotspots?

Helium Hotspots are devices that create a decentralized wireless network for Internet of Things (IoT) devices. They use the Helium blockchain to validate and reward users for providing coverage. Hotspot owners earn Helium (HNT) tokens for participating in this network and expanding its coverage.

What is the future outlook for Helium mining?

As of my last update in September 2021, Helium mining had gained attention for its unique approach to building a decentralized IoT network. The future outlook depends on factors like network adoption, technological developments, and market trends.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered investment/financial advice from CoinSwitch. Any action taken upon the information shall be at the user’s risk.

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