can running a lightning node be profitable or just a labor of love? \ stacker news ~lightning

can running a lightning node be profitable or just a labor of love?

5927 sats \ 28 comments \ @brandonsbytes 25 Jan lightning

Maybe a naive question. But, is it realistic that a regular bitcoiner could run a profitable lightning node? Or, is it mostly a labor of love to support bitcoin and lightning payments?

I’m not talking making a living, but just profitable. I’ve found SN can be profitable with enough effort, but not a ton. Maybe running a lightning node can too?

I’m aware the answer could be, depends or try and find out.

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1628 sats \ 3 replies \ @nullcount 25 Jan

Routing is a business. It has revenues and expenses. If you can maximize revenue and minimize expense, then you can be profitable.

In mining, a terrahash is more or less the same as any other terrahash. It will be rewarded basically the same so your primary competitive advantage is energy cost.

In staking pools, one token is more or less the same as another token. Investing 10x more into a liquidity pool will yield about 10x more reward. Your competitive advantage is access to capital.

However, in LN, every channel has unique properties. Capacity, routing fees, onchain fee paid, position in the network, relative liquidity flow (sink/source) and many other factors will directly impact the ROI on a channel and each factor presents an opportunity to optimize into a competitive advantage.

You are unlikely to generate passive profit because you will always be out-competed by someone who actively tries to optimize their channels.

Many people think that one day, there will emerge an algorithm that magically and automatically manages your node to achieve maximum profits. Then, LN basically becomes a staking pool where access to capital is the only competitive lever.

I think this senario is unlikely for the same reason that there is no magic portfolio that always returns maximum results. People create algos to trade stocks profitably, but as soon as a critical mass of capital is deployed by the algo, all the arbitrage is depleted and another strategy will outcompete it.

50 sats \ 0 replies \ @orthwyrm 26 Jan

Many people think that one day, there will emerge an algorithm that magically and automatically manages your node to achieve maximum profits. Then, LN basically becomes a staking pool where access to capital is the only competitive lever.

I think this scenario is unlikely for the same reason that there is no magic portfolio that always returns maximum results. People create algos to trade stocks profitably, but as soon as a critical mass of capital is deployed by the algo, all the arbitrage is depleted and another strategy will outcompete it.

Succinctly put. There's this idea floating around that LN will eventually offer a risk-free rate, but that doesn't make any sense for the reasons you outline: If there's an easy profit to be made, then everyone adopts the strategy and income falls back to 0.

331 sats \ 0 replies \ @0fje0 25 Jan

Great answer, thanks.

10 sats \ 0 replies \ @Nuttall 26 Jan

Nice answer for sure. I'll keep an eye out for more of your posts.

937 sats \ 0 replies \ @benthecarman 25 Jan

imo profitable routing nodes will be very few and far between. Most large lightning nodes today only exist because they are providing a service that requires running a lightning node, they aren't doing it for purely routing sake. The ones that are able to profit purely routing have to get an edge from somewhere and normally that is just being extremely well capitalized.

my node is profitable but that is only because of opreturnbot.com, otherwise it would just be a money sink that i do for fun

537 sats \ 0 replies \ @grayruby 25 Jan

LoL and it's not laugh out loud in this case.

296 sats \ 1 reply \ @kr 25 Jan

it can be, i think alex bosworth’s node is a good example of this… but it takes effort (and capital).

when you consider the value of your time, most people don’t make money from their lightning nodes.

41 sats \ 0 replies \ @kepford 25 Jan

I learned some things from that interview you did with Alex, but I agree. I sure haven't figured out how to make a profit and I can do better focusing my time elsewhere. Now, the value of the knowledge I've gained. That is probably worth more long term.

162 sats \ 0 replies \ @Wumbo 25 Jan

My answer: Labor of Love.

51 sats \ 1 reply \ @shyfire 26 Jan

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10 sats \ 0 replies \ @Nuttall 26 Jan

I laughed. Thank you!

30 sats \ 0 replies \ @brandonsbytes OP 25 Jan

Wow, thanks for all the replies. I tried to zap everyone. Will give the responses a more thorough read tonight, but it is sounding like it’s not a side hobby running a lightning node profitably. @Athena_Alpha makes a good point, that maybe my skills are better suited elsewhere. Like building a product that uses lightning so it brings more adoption. I think I’ll go that route. Just gotta get to work and stick to it.

272 sats \ 0 replies \ @Athena_Alpha 25 Jan

The more time and effort you put into learning about the Lightning Network, how routing of payments work, which nodes need new channels or more liquidity and then enabling those things, the more payments you’ll route and the more revenue you’ll bring in and the more likely you’ll be profitable.

Running a Lightning Node can absolutely be done profitably. There’s many forum posts or videos from fantastic node runners that are already turning a profit right now not to mention huge companies doing the same thing. That being said, we’re not going to sugar coat it as it’s a hard slug to get to where they are now. Just like with Bitcoin, it takes Work. Here’s an excellent post outlining someone who’s done a ton of work and still is having troubles returning a profit.

Our recommendation is that you should think hard about whether you’re willing to put in the many months of learning and experimentation required to (hopefully) turn a profit one day. Maybe your skills are better suited to something else which is OK. Maybe your Internet connection goes down all the time and so it’ll just never work no matter how much you try. Maybe you don’t have enough Bitcoin to fund enough channels. Or maybe you don’t care about being profitable as you want to just learn.

Whichever way you go, just know that it takes lots of work and know this going in. This is especially true right now as the mempool is more full and has higher fees together with a higher Bitcoin price in general. The best time to start running a Lighting Node was 2019, the second best time is now.

We've gone into more detail (6 pages or so) in this piece: Bitcoin Lightning Node Profitability: ROI & What To Know Before Investing

62 sats \ 0 replies \ @Catcher 25 Jan

Based on my calculations my love cost me ~300k sats in 3 years. Also, what do you call a profit, like raspberry pie is approx 4W of power, which is approx 1 EUR per months where I live. So yes, you can technically have more than 3000 sats per months in fees and .... profit!! ( if let's say you got pie for free and opened your channels at 1 sat vB) so a lot of nuance. I think right now it's a game of liquidity, to have real profit you must open several 0,5 - 1 BTC channels

62 sats \ 0 replies \ @Atreus 25 Jan

ahahahhahaha "Labor of love" is putting it mildly!

42 sats \ 0 replies \ @OT 25 Jan

Has potential to be profitable if you go big and stay with it long enough.

41 sats \ 2 replies \ @m00ninite 25 Jan

Running a profitable lightning node is a pipe dream. It's like dreaming of being a rockstar.. Possible, but so few people succeed at it.

Mostly, people should be setting up their nodes so they have plenty of LN liquidity for when fees are high, as opposed to trying to make a profit off routing. The system is quite literally built to be a race to the bottom on fees

20 sats \ 1 reply \ @brandonsbytes OP 25 Jan

why does a node help with liquidity outside of just having a lightning wallet with sats?

41 sats \ 0 replies \ @m00ninite 25 Jan

Lightning wallets are just managing liquidity for you and you'll often get surprise high fees depending on what you're doing.

41 sats \ 0 replies \ @nicosey 25 Jan

Like mining it will be a hard business with a few winners and the majority who a losers...

41 sats \ 0 replies \ @KLT 25 Jan

Personally it’s a labor of love for me. It took me many hours of video watching, forum reading over the course of 6 or so weeks for me to break down step by step how to get this node setup. Once it was up and running, I saw I started to earn routing fees and I was like oh that’s cool, but yea. Happy to do this to help my normie friends and family onboard to a lightning wallet for the initial wow this is amazing test and getting them to self custody. Also happy to help the lightning network in any way I can.

41 sats \ 0 replies \ @justBrian 25 Jan

Labor of love...and by love i mean costly, frustrating and time consuming. You will have less sats from start to end if ur a normie like me just fucking around. If i were you id look into a small private node, blixt wallet is a great mobile node option, where you can open a few private channels to vendors you like to buy things from. That has been a more approachable and enjoyable experience for me when running my own node.

41 sats \ 0 replies \ @beorange 25 Jan

It can be profitable... it will be most likely a labor of love.

20 sats \ 0 replies \ @leo 25 Jan

It can be profitable, but few are able to make that work. We'll need a lot more Lightning users before this can be a proper business model. People who run nodes today may be enthusiasts, but like other entrepreneurs they might simply be making a bet on the viability of their business in the future.

31 sats \ 0 replies \ @Nuttall 26 Jan

Great question. It's a very serious business and I'm always humbled by it. I look at as a more sophisticated good deed of node running. I want the knowledge and there is certainly a lot of hard work.

How I got in is I met a friend online in a Bitcoin group and he recommended start9 to me. I've messed up a few times and they were very helpful. I also donated sats to them when they helped me.

Bitcoin full node is easier. Lightning is something else. I never lost bitcoin until I got into Lightning so there is that.

I really like the smart responses here. I wish I could hang out with someone who was very practiced in the lightning world. I'm here to learn. I keep going because I don't like to give up.

21 sats \ 0 replies \ @Coinsreporter 18 Feb

This might help you find the answer mate

0 sats \ 0 replies \ @hyperfree 26 Jan

Haven't met a guy with a lambo who said he makes millions with LN routing. Yet.

0 sats \ 0 replies \ @TheBTCManual 26 Jan

Unless you have an application paired with it, or a community backing your node, basically an LSP you are going to have a tough time. Fees would need to go way way up on-base and on LN before enough people can make anything on routing and also hope that users follow the incentive towards LN and start making regular payments.