How To Optimally Mine HNT Tokens
One of the most frequently asked questions in the Helium community is “How to increase my HNT Token earnings?”. To answer this question, we should understand the following three important concepts.
1. How HNT mining works
2. Ideal placement of Hotspots
3. Analyzing POC activity of Hotspots
How HNT Mining Works
Helium Hotspot owners are rewarded with HNT tokens for establishing coverage for the network. By placing a Helium hotspot in a location, we are providing a Longfi network coverage for a 1-to-3-mile radius depending on the location we place the hotspot and the antenna set up.
In return for providing this network coverage, the Hotspot mines HNT tokens with different activities. Helium currently mines 5 Million HNT/month (goes down to 2.5 Million HNT/month from Aug 2021) and about 66% of this 5 Million mined HNT are rewarded to hotspot owners.
Of the 6 reward types shown in the above table, we can skip 3 of them for the following reasons.
Security Tokens are allocated to early Investors of Helium and hence Hotspot owners do not benefit from them.
Consensus Group tokens will soon move to Validators via Staking once HIP25 is implemented and hence we can skip it for now.
Network Data Transfer is very minimal currently since the network is in its early stage and hence most hotspots do not participate in data transfer activity unless the hotspot is located in big cities. The good news though is that unused data transfer rewards are proportionately allocated to Challenger, Challengee & Witness activities.
As can be seen from the above table, hotspots have to participate in Challengees & Witness activities in order to earn higher number of tokens. Let’s take a quick look at how these two activities work.
Challengees — This is referred to as “Challenge Activity” in the Helium app in which the hotspot transmits an RF signal (also called as beacon challenge packet in technical terms). If this transmitted challenge packet is seen (also called as Witness) by any of the surrounding hotspots, it is considered as a successful challenge and the hotspot is rewarded for the Challengee activity. This transmitting of beacon challenge happens randomly and, on an average, happens 4 to 5 times in a day.
Witness — This is referred to as “Witnessed a Challenge” in the Helium app in which the hotspot tries to hear (Witness) beacon challenge packets transmitted by other hotspots in the surrounding area. The hotspot is rewarded with tokens for each successful witness of neighboring hotspots. As you can imagine, if there are more hotspots in the area, there would be more witnessing by the hotspot since each hotspot in the area will transmit beacon challenges 4 to 5 times a day on average as explained in the Challengees section above. Also, witness activity has been allocated the highest percentage of rewards currently at 21.24%.
Ideal Placement of Hotspots
Now that, we understand how hotspots earn tokens, let’s look at how a new hotspot owner or even existing hotspot owners can place their hotspots in ideal locations to increase their token earnings.
Start with Helium.Place to identify ideal placement locations for the hotspot. Go to Helium.Place and type in the address you are planning to place the hotspot. The result would show a red hexagon as shown in the below picture.
The black dot at the center of the hexagon is the selected location and any blue dot inside the hexagon are existing hotspots in that location.
The following are some important factors we need to take into account while selecting a location for the hotspot and setting it up for optimum token earnings.
1. We should place the hotspot in a hexagon with no other existing hotspots within that hexagon. There are two main reasons for doing this:
If there are more than 1 hotspot within a hexagon, rewards are scaled down for all the hotspots within that hexagon causing a reduction in token earnings. This is done to avoid cluttering of hotspots in the same location so that coverage can be expanded globally.
The second reason is that any hotspots within the hexagon will not witness each other since they are considered too close for witnessing and hence the hotspots do not benefit from each other for being in such close vicinity.
2. The second factor to consider while selecting a location for hotspot is to make sure there are many hotspots outside the hexagon and within a 1-mile radius. At least 4+ hotspots within a mile radius would help in increasing the token earnings. From our experience, the stock antenna that comes with the hotspot is able to witness other hotspots which are only within a mile in most locations where there are a lot of buildings and tress around the hotspot.
3. The next important factor is where the hotspot is placed in a given location. Ideal placement is as high as possible with the antenna open to sky. If it is feasible, highly recommend keeping the hotspot outside in a weather proof enclosure since RF signals travel great when there is line of sight. If it is not possible to keep it outside, place it in a window that doesn’t have a mesh and in the direction of other antennas in the area.
4. The last factor is to upgrade the stock antenna to increase the chance of witnessing hotspots that are beyond the 1-mile radius. This is especially useful for locations that do not have enough hotspots within a mile radius. We have seen very good results with this antenna RAK Fiber Glass LoRaWAN Antenna (8dBi Gain) and mount Black (Domed) Magnetic Mount — RP SMA Plug Connector and have witnessed hotspots that are as far as 20 miles away with this set up. Keep in mind that the hotspots that are transmitting the beacons should also have a decent set up in terms of placement for witnessing to happen successfully.
Analyzing POC Activity of Hotspots
Once a hotspot is placed in a good location, the next step is to monitor its POC activity using Helium Explorer and Helium Hiker.
Start with Helium Explorer by entering the hotspot name to see the POC activity details of the hotspot. The first section gives a pictorial representation of witness activity as shown in the picture below.
The purple dot indicates the searched hotspot and all the yellow dots indicates neighboring hotspots that have witnessed the searched hotspot. The blue dots indicate nearby hotspots that have not witnessed the hotspot.
Another important thing to note in this section is the reward scale number which shows as 0.75 in the above example. For maximum token earnings, this number should be close to 1.0 which can be achieved by placing a single hotspot in the hex location as explained in the previous section.
The next section shows the various POC activities the hotspot has participated in with a green check mark. As mentioned earlier, the two important activities that are required for token earnings are “Witness a Challenge” and “Participating in a Challenge”.
The next important section to look at is the Activity section which shows each individual activity the hotspot has participated in. Click on the Witness link to see other hotspots that are witnessed by your hotspot. To maximize token earnings, the hotspot should witness quite a few unique hotspots.
The last step to analyze the POC activity is to use the Helium Hiker app to analyze the challenge and witness activities of a hotspot. Go to Helium Hiker’s Dashboard, search for a Hotspot and click on Challenge Analysis.
The result is divided into 2 parts. The first part shows the “Challengee” activity of the hotspot and it shows the number of times the hotspot has transmitted beacons in a given day and a summary of valid & invalid witnesses for the transmitted beacon.
This section also shows the details of all the surrounding hotspots that are witnessing the hotspot which shows up as “Challenge Activity” in the helium app.
The second part shows the “Witness” activity of the hotspot wherein it shows the number of times the hotspot has witnessed other hotspots on a given day.
This section also shows a breakdown of the number of times each hotspot in the area is being witnessed by your hotspot and this activity shows as “Witnessed a Challenge” in the Helium app.
Ideally, the more Witness activity happens with a hotspot, the more tokens the hotspot earns.
By understanding how mining works in the Helium network and placing the hotspot in good locations, Hotspot owners can get off to a good start. From there on, monitoring the POC activity and upgrading the antenna if required would help in optimized token earnings for Hotspot owners.
The article is meant for education purpose only and should not be treated as financial or legal advice. Please perform your own due diligence.
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