15 July 2022

Setting Up a Lightning Node Step-By-Step With Marija

Marija Riba is a Senior Product Manager at NOAH. Deeply committed to a future in which blockchain technologies (read: bitcoin) ensure equitable access to financial services, she's involved in shaping innovative alternatives to traditional financial products. In parallel, she's a passionate advocate for increased female representation in finance, tech, and crypto, working as a mentor and regularly participating in events.

Setting Up a Lightning Node Step-By-Step With Marija


    First Steps to Setting up a Lightning Node
    How to Set Up Your Lightning Node
    Next Steps

First Steps to Setting up a Lightning Node

What do we do in bear markets? If you’re anything like me, you spend a lot of time thinking about how to participate in the crypto world despite the negative price action. When prices fall and hype dies down, it’s a really good time to start learning new things and building for the future. A great way to do this is by setting up a Lightning node.

I remember hearing somewhere that I'd need a Raspberry Pi. I had actually tried to acquire one back in 2013 only to find out they were sold out for the next six months. What did I do? I gave up. And it turns out that the situation hasn't improved nearly a decade later—demand for the tiny, affordable computer continues to outstrip supply.

Luckily, I’m a bit wealthier than I was in 2013 and could afford to splurge on a Raspberry Pi 4 kit with a microSD card and cooling fan. Thankfully, they were in stock. I needed an external SSD, ethernet cable, and a microSD reader as well to get started. These are quite easy to find online or at your local electronics store.

After some preliminary research and discussions with more experienced colleagues, the unanimous recommendation was to get Umbrel, an operating system specifically designed for running a Bitcoin and Lightning node.

The process is very clearly explained on the website. If you’re using a Raspberry Pi— as I did—the easiest way to get started is to follow their instructions online. Here's an overview of what I did to get things started.

How to Set Up Your Lightning Node

1. Get Everything Ready

It doesn’t appear that earlier models are able to run Umbrel, so you’ll need a Raspberry Pi 4 in any of the three RAM size variants: 2GB, 4GB, or 8GB. While the 8GB is recommended for maximum performance, the 4GB model will suffice for most users, which has been working great for me so far.

The Raspberry Pi came with:

  • The board
  • A power supply
  • A USB to USB-C cable
  • 2 micro HDMI to HDMI cables
  • A 32GB microSD card
  • An SD card reader
  • 3 heat sinks
  • Raspberry Pi case with an integrated fan

Umbrel suggests buying an internal SSD and an enclosure, but having spoken to a colleague, I went straight for the external because it seemed a lot easier to set up. The only remaining loose end was ensuring I had an ethernet cable and a microSD reader compatible with my laptop.

2. Download Umbrel OS for Raspberry Pi

Once I got my Raspberry Pi set up in its new case, complete with the heat sinks and extractor fan, I was ready to turn my attention to the software. The process of downloading the operating system was more complex than it needed to be, but that was because it required circumventing Apple’s security system. If your security settings are different or you’re using a different operating system, this might not be an issue.

3. Download Balena Etcher

I then downloaded the Balena Etcher file, which was straightforward enough despite also being flagged by the security system, and proceeded to install it.

4. Plug the microSD card reader into your computer

Due to the initial card reader’s incompatibility with my laptop, this took me a few days to do, but as long as you’ve executed Step 1 correctly, you won’t encounter this problem. I ran into issues with device compatibility—my kit used USB format whereas my computer used USB-C.

5. Flash Umbrel OS

In this step, you use the Balena Etcher program to flash the Umbrel OS onto your microSD card. Because Umbrel couldn’t locate my node after I’d set everything up, I had to redo this step several times. A word of caution, it's recommended against doing so unless you completely shut down your node before removing the microSD card. This is because if the system isn't properly shut down, it can result in data loss and corrupt the card.

Perhaps this is inconsequential, but I noticed that the Umbrel OS downloads as a .zip file, but also unzips into or downloads a separate .img file – based on the Umbrel illustration, it’s this latter file you want to flash.

6. Insert the microSD card into the Raspberry Pi

Again, stating the obvious, but ensure that the card is inserted the right way up.

7. Connect the SSD

The SSD cable connects to the blue coloured ports on the Raspberry Pi.

8. Connect to the router

Use the ethernet cable to connect the Raspberry Pi to any of the free ports on your internet router.

9. Power up

Plug in the power supply and connect to the Raspberry Pi. Mine came with an on-off switch, but I’m not sure it has any effect—initially I thought not, but now that it’s finally working, I’d rather not try.

10. Aaaand that’s it!

The last step of the Umbrel guide is to load http://umbrel.local/ after five minutes, which will walk you through setting up the node account and issue your seed phrase. I had clearly done something wrong because I couldn’t get to the account registration screen.

My attempts at re-flashing the Umbrel OS onto the microSD and reconnecting the Raspberry Pi proved futile, so I did what any self-respecting amateur technologist would do: I turned it all off, went on holiday for a week, and set it up from scratch once I came back. Voila, it worked!

Have you tried switching it off and on again?

Next Steps

Turns out that setting up the hardware and software is only half the battle. Once you have access to the dashboard, you can top up your integrated wallet via an on-chain BTC transfer or your Lightning wallet via the Lightning Network.

There’s a key distinction to make here because I assumed I’d be able to use the same balance for both on-chain and Lightning transactions, but it wasn’t as straightforward. Because on-chain transactions are recorded in the ledger, while the Lightning Network operates off-chain as a Layer 2, you’ll need to open a payment channel – and pay the relevant fees – before being able to send BTC via Lightning.

The other important aspect to be mindful of is how long it takes Bitcoin Core to synchronize. Mine took a week, though most of my colleagues say theirs synchronized in 3-4 days. Unfortunately, there’s not much you can do until the synchronization finishes and you’re able to turn your attention to apps like Thunderhub or Ride the Lightning to really get started.

Please be aware that: Cryptocurrencies are unregulated in the UK; Cryptocurrencies are not protected under Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS); Profits may be subject to capital gains tax; The value of investments can go down as well as up.

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