I am long overdue for a crypto post so I thought I should tackle a topic that is often debated about as far as profitability goes…. MINING. I tried to keep the video fairly conversational and not repeat what is below but watch the video to check out the beautiful miner we have (yes, “we” – that thing was a freaking investment and ya girl can’t afford one of those bad boys on her own).
Note: This is just an overview of mining and the factors that play into it. There are 100X things to consider with mining and when planning to purchase a miner, but this is just to inform some users out there about mining as a whole right now in 2018!
Mining crypto currencies has caught a large swing in popularity, especially in 2017 as crypto was becoming more mainstream. In the beginning, it used to be that anyone with a standard computer and power could mine cryptocurrencies. Now it requires much much more to mine (specifically, more capital investment on the miner’s behalf). Which bleeds into the running question in 2018: Is mining still profitable especially since the market has been essentially cut in half?
Quick tidbit for the beginner: What the heck is mining?
In simpler terms and how I understood it at first - When you buy something with your credit card that transaction must be documented and mining does just this. Mining adds transactions to the blockchain to keep a record of purchases made.
Now, there are a lot of factors that tie into this very large question. Today, what I do want to share with you all is an analysis of the current conditions of mining and make my best assessment off what we know today.
This article is going to focus on GPU mining and altcoins, specifically considering the individual who wants to explore the idea of mining maybe as a hobby or a way to supplement some of their income. Not necessarily the individual who is looking to quit their day job and mine cryptocurrencies full-time (it can be done and I’ve seen this attempted and I have seen it go both good and bad).
Largest Factors to Take into Consideration for Mining in 2018:
Difficulty (HIGH)
Out of the gates I would argue that the increasing difficulty of what it takes to mine a cryptocurrency is the largest factor that we have at play. It is hard to account for as we know that it will only get harder, but we don’t know is how fast it will. Today a series of rigs could be pulling in 40k a year. The next month that same series of rigs could be pulling in 20k (this sounds extreme, however it’s very realistic). The difficulty to mine can increase so much that to continue to run your computer to mine can sometimes lead it into costing more than revenue earned. This is intertwined with the #2 factor below – hardware cost – because as time goes on, equipment that we have today can become less efficient and in some cases, obsolete as the difficulty increases.
Hardware Cost (HIGH)
With the surge in the crypto market near the end of 2017, we saw the demand of GPU’s and mining as a whole shoot up with it. You could walk into a Fry’s electronics center and the GPU shelves would be dead empty. So you could say getting your hands on GPU cards has been no easy task! Even up to this point, demand has only tapered off slightly. With the combination of demand and scarcity people are paying astronomical prices for their GPU’s. Heck, cards on Amazon are even being scalped for upwards of 40% of their retail price. For example, a 1080ti Graphics card that would normally sell for $800 can be found currently for $1,200. (This is the graphics card we use FYI).
This is the picture of Fry's electronic center
Markets (Currently: LOW)
Markets change as we all know and the status of the crypto market plays a huge roll in a miner’s bottom line. The less a coin is valued in pair with a higher difficulty, the less a miner takes home at the end of the day. So, currently coin values are about half of what they were in December but there are more miners coming online every day. So now cards that were bringing in $3 a day each… are truthfully maybe getting half of that.
Ongoing Expenses
Electricity Cost is a major factor that should be considered and it’s different for everyone based off where they live. If you live in a country with high electricity costs your profitability will be affected significantly more than someone who has a low electricity costs.
A good way to calculate this is to use a mining profitability calculator. A popular one is whattomine.com, where you can enter in the number and type of graphics cards that you have in pair with the cost of your electricity. This gives you a “fair” idea of what your return might look like on a given day!
Other ongoing expenses you must consider is the wear and tear of your equipment itself. Running a machine 24/7 puts a lot of strain on the variety of components that keep your computer processing those blockchain transactions.
Other Things to Think About:
- PoW (Proof of Work) vs PoS (Proof of Stake): Mining is essential to the success of PoW currencies so as long as they are around, mining will be around.
- Your Mining Strategy: Are you holding for the long term? Are you going to have to sell off your coins for power or to maintain your rigs? What coins are you going to mine to begin with? Figuring out what you’re going to mine and how you’re going to go about doing so is a large task so it’s important to come up with a long-term profitable strategy.
- How Many Miners Are Currently in Play: Remember to do your own research. Normally, miners are not incentivized to encourage you to mine because the more miners out there, the more the difficulty goes up for everyone.
- Your Motivation to Mine: Is it to make a quick buck? Is it because you want to fully immerse yourself into everything crypto? Is it because you want to make some passive income?
The Answer to the Big Question: Is it Still Worth it to Mine?
The answer that always is frustrating to hear… it depends! Despite the increase in recent difficulty and slash in mining profitability, I believe that as long as you can get a fair rate on your equipment it’s worth looking at. Also to repeat the point above, I believe that as long as there are crypto currencies that require proof of work, there will be miners. Ultimately it comes down to each individual’s situation.
I believe that it is still worth it to mine if you have the right perspective going into it. It isn’t all “printing money” (definitely clear on that if anything right now with the down market haha). Look at it as a hobby! In some cases, an expensive one. Look at it as a privilege to be able to participate in the mining process for now. While you can, because truly no one knows where it’s going to go or how long it’s going to last.
Why I Believe in Mining?
Simply, because I believe that cryptocurrencies are the future and as I have mentioned in other posts, I believe in the real-world problems that they solve. I don’t know the longevity of mining and how long it will be profitable but I assume we have at least another 5 years to a decade ahead of us. New, “mineable” coins are added all the time, so if the equipment is profitable, I will keep going.
Miners out there – what are your thoughts on this? Would you encourage newcomers to join?
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