I’ve got good news and bad news. Here’s the good news, it is still profitable for the average person to mine cryptocurrencies for a profit. Now the bad news, Bitcoin mining isn’t profitable for everyone. In order to get around this, I like to mine cryptocurrencies such as Ethereum, Monero, and Dash and then convert my profits into everyones favorite: Bitcoin.
This page will answer every single possible question about cryptocurrency mining, in terms easy enough for a 10, actually no, a 5 year old to understand. Lets get started.
What is Cryptocurrency Mining?
Cryptocurrency mining is the process of a computer or other device adding transactions to blockchains of cryptocurrencies. In order to add these transactions, your computer must solve complex math functions to encrypt transaction information. These transactions are compiled into a hash. Hashes are a sort of ID for blocks. These “ID’s” contain all the neccesary information needed for a block to be added to the blockchain. Once the hash is complete, it is added to a block and the miners are compensated for their efforts. The current Bitcoin block reward is 12.5 Bitcoins. This website provides a countdown on the estimated block reward halving for Bitcoin. Even if this sounds complex, you don’t really need to know the in and outs, thats what your computer is for. Depending on which cryptocurrency you are mining, you will need a certain program/software.
How Do I Mine Cryptocurrency?
In order to mine cryptocurrency, you will need a GPU/ASIC or CPU. I do not reccomend mining with a CPU as it isnt nearly as profitable as GPU/ASIC mining. GPU stands for graphical processing unit and is one of the key components to any mining setup. ASIC stands for application specific integration circuit and is used mostly in Bitcoin mining. A GPU will be more than fine for the mining of Ethereum, Dash and Monero. Although it many not seem like it, your computer is doing hard work when mining and should be cooled. Learn more about cooling setups below.
You will also need electricity, preferably cheap electricity to power your miner. This website is great for determining an estimate on electricity costs.
Can I Profit Mining Cryptocurrency?
The three main factors that determine mining profitability are electricity costs, hardware costs, and hash rate. For the most part, there is a direct correlation between hash rate, hardware cost and electricity cost. This basically means that the more expensive hardware you are using, the higher your hashrate will be. The higher your hash rate is the more electricity you will use. This isn’t necesarily a bad thing as the most efficient miners have the highest hashrate. For example, the Antminer S9 has a whopping 13.5 Terahashes a second. This is a lot. Learn more about the Antminer S9 here.
Once you have determined your electricity costs and hash rate, you can plug the numbers into a calculator such as CryptoCompare to determine your profitability.
I reccomend using Whattomine to determine the best coin to mine.
If I were to mine using the GTX 1060TI which has an estimated hashrate of 21 MH/S, I would earn around $45 a month. With an upfront cost of around $299, it has an expected payback period of 6 months. After that, all earnings are pocketed. You can see how on even a medium scale of say 5-10 GPU’s, mining is more than profitable. These earnings are also amplified by increases in price of the coin you are mining. Some of the most profitable currencies to mine such as Monero and Ethereum are expected to only increase in price over the years.