Bitcoin Lightning Node Profitability: ROI & What To Know Before Investing (2023)

Athena Alpha

Living the dream while your Lightning Node earns you that sweet, sweet passive income has been an idea ever since the Lightning Network started. So after running our own node for multiple years now, we’re going to discuss whether or not running a Lightning Node is profitable, what Lightning Node profitability you can expect, analyse its return on investment capabilities and finally give you a full run down of what to expect with this investment strategy.

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What Is A Bitcoin Lightning Node?

A Bitcoin Lightning Node (also sometimes called a Lightning Network Node or a LN Node) is just a computer that runs special software that allows it to connect to the Lightning Network. It can send and receive Lightning payments as well as route other peoples Lightning payments. For example, you could use your Lightning Node (and Lightning Wallet) to purchase a coffee if the store accepted Lightning payments.

The Lightning Network is a Layer 2 network that sits on top of the Layer 1, Bitcoin Network and uses the same currency, BTC or bitcoins. We won’t go into too much detail about the Lightning Network as we’ll cover that in its own dedicated piece soon, but it allows for instant and near free payments that are final (like cash), is completely borderless and can even send payments as small as 1 Satoshi.

Lightning is Bitcoin with even more super powers! – The Little Hodler

It’s common for those that run a Full Bitcoin Node to also install the software that enables it to become a Lightning Node. There are numerous pre-built and configured Lightning Nodes out there such as:

You can also just use any old or new computer and install various free software packages yourself. Many people run their own Full Bitcoin Node and Lightning Node on a Raspberry Pi 4 8GB or a small form factor PC such as a Dell OptiPlex or even Mac Mini with:

Benefits Of Running A Bitcoin Lightning Node

So why would anyone go to all the trouble of running a node? Well besides being able to refer to yourself as a “Node Runner” (who doesn’t like Blade?) there’s other core benefits including:

  • Help Secure The Bitcoin Network: By running a Full Bitcoin Node you help increase the decentralisation of the Bitcoin Network and become a fully fledged self sovereign individual
  • Increased Security & Privacy: As noted in our Advanced Bitcoin Security and Advanced Bitcoin Privacy guides, running your own full node gives you the best level of security and privacy. It’s your node, running the code you choose and no one can take that away from you, spy on you or feed you false information
  • Accept Lighting Payments: When you run your own Full Bitcoin Node and Lighting Node you can accept both Bitcoin and Lightning payments from anyone, anywhere in the world at any time. You can receive payments for a business you run, accept donations like we do or do anything else that involves sending or receiving payments. You’re your own bank and payments processor now!
  • Increase Lightning Networks Liquidity & Reach: As the Lightning Network is a network, its usefulness and liquidity increases each time a new node is added. Just like a new telephone increases the usefulness of the telephone network for everyone, adding another node increases its reach and amount of value that can be transferred
  • Host Lightning Wallets For Friends & Family: You can setup your friends and family with their own Lighting Wallet that connects directly to your Lightning Node. This gives them the best privacy and security without them having to setup anything
  • No Trusted 3rd Parties: As your Lightning wallet connects directly to your Lightning Node, you don’t have to trust any third parties to custody your bitcoins
  • Learn About Lightning: Through setting up and managing the Lightning Node you will gain experience and understanding of both the Bitcoin and Lightning network. This could be used to help others, get a job in the industry or just expand your knowledge

Last, but not least, is that you can actually earn money (bitcoins) by running a Lightning Node and routing other peoples payments through your channels. For example, if you route a Lightning payment that’s worth 100,000 sats you might charge 0.05% as a fee meaning you’d earn 50 sats.

This all happens automatically once the channels are setup and could be considered a somewhat Passive Income stream. You can open hundreds of channels, connect to hundreds of other nodes and route thousands and thousands of payments per month if you’re dedicated enough, potentially leading to some decent returns.

How To Run A Lightning Node

Umbrel Lightning Node Example
Umbrel’s Excellent Lightning Node App

Running a Lightning Node is itself, a pretty deep rabbit hole we must admit. While the custom built full node solutions by makers such as Umbrel have made the setup part as trivial as buying and plugging in an iMac, there’s a lot more to it.

When you first boot up your Lightning Node you’ll need to first wait for the Bitcoin Blockchain to fully download and sync. After that’s complete you’ll need to setup one or more Lightning Channels. These are links out to other Lightning Nodes on the network. It’s these channels that payments are sent and received over similar to how you send an email over your Internet connection to Gmail.

How you configure these channels and who you peer with is more of an art than science. There are major players you can connect to such as ACINQ, Bitfinex or River that run huge Lightning Nodes with hundreds of peers. Or you can simply connect to other plebs, your family and friends or even random strangers you find on forums.

In time we’ll be adding full guides on how to setup your own Lightning Node, step-by-step instructions on how to configure Lightning Channels and even reviews of the various different Node Software that’s out there. Suffice to say, running a Lightning Node can span from simple to highly complex. But. Is it profitable?

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