How to calculate mining profitability

 Are you really interested in the world of virtual currencies? If so, you need to know how to make the most of your money and equipment. In this guide we will explain how to extract the digital treasure with the highest possible profitability. Obviously, to make huge amounts of money you need expensive ASICs. If you already have one, you probably know how the process works. However, those with a more moderate budget probably want to build a Scrypt coin GPU mining team, or buy a small ASIC machine for bitcoin ( Bitcoin ) or other SHA-256 coins. In that case, this is the perfect guide for you. 

 Where to start? 

The process of extracting digital coins involves the resolution of complex cryptographic problems. In doing so, the miners are providing proof that they are working, receiving a reward in digital currency. In general terms, there are two hash algorithms to demonstrate your work to this day:

 The SHA-256 and the scrypt. Note that there are some less-used alternatives that we have not mentioned in this guide, for example, the Primecoin. 1. SHA-256 The SHA-256 algorithm favors raw processing power. During the first few days after the appearance of bitcoin, there was the possibility of extracting bitcoins with the CPUs and GPUs (graphic processing units) of normal computers. However, it has been quite a while since, and the level of difficulty in extracting bitcoins is so high that specialized processors known as "Application Specific Integrated Chips" (ASICs) are needed. The use of these powerful processors, coupled with the exponential increase in the difficulty of extracting bitcoin, has led to the creation of a technological "arms race", which means that processors that have just launched into the market soon become obsolete. 2. Scrypt The scrypt algorithm requires a greater amount of RAM and parallel processing power, so GPU-based platforms remain the best choice. On the other hand, ASICs for scrypt have not yet been created, so the difficulty level is not growing as fast as with bitcoin. 

Set up your computer

 Depending on your budget and the type of currency you intend to extract, there are two ways to set up your withdrawal system: 1. A home computer Create your own computer by mounting as many graphics cards (GPUs) as you can afford or connect to your computer. While some people may use a standard PC case, many use special crates, such as beer crates, allowing for greater airflow to ventilate the components. One advantage of home systems is that they allow you to perform both processor-based and GPU mining at the same time. 2. ASICs ASICs are autonomous units that have a USB port and / or Ethernet port, and are usually created by a manufacturer. ASIC mining equipment is generally more expensive than home equipment, and is mostly manufactured in the US. Which means that potential miners from other parts of the world will have to pay extra to receive these equipment in their homes. 

Turn on your computer

 Mining requires electricity - a lot of electricity. If you decide to build a home computer, you will have to buy a power supply yes or yes, so it is best to invest in one that manages energy efficiently. For example, consider the following two cases: a power supply that supplies 860W and 93% efficiency would require 925W (860W / 0.93). Conversely, a 750 W power supply with 80% efficiency actually requires 937.5 W (750W / 0.8) - thus, at higher power, lower power consumption. When building a mining equipment, you must take into account the power requirements of all the components you are going to use - especially all graphics cards. In addition, it is always a good idea to provide some excess capacity to deal with unexpected events and overclocking the system. On the contrary, ASIC systems are capable of carrying out many more calculations consuming less energy, since they are highly specialized devices. And since they have a special power adapter, you do not have to do calculations to find the right adapter. The efficiency of the mining of the different systems can be compared by taking the ratio of the number of hashes capable of performing per second, divided by the power it consumes:

 Hash Speed ​​/ Power Consumption = Mining Efficiency

 Check your invoices 

After the initial investment in a mining equipment, the next thing you should do is check how much electricity you consume. Check with your dealer, or take a look at the latest bill. If the light bill is more expensive than it earns, then it is clear that this is not a good deal for you. 

Combine your efforts

 In many cases, the best option is to join your efforts to that of other miners. This will increase the chances of solving a block, then dividing the benefits among all participants.

 Miners earn a share of the profits if the difficulty level of the blocks they solve is greater than the level set by the group operator. That level is always between 1 and the difficulty level of the coin. Problems to consider Spend to win Inevitably, the difficulty level of all currencies increases with time - a fact that will reduce the chances of your team generating benefits. Therefore, when investing in your mining equipment, it is vital that you buy the best you can afford, as this will ensure you can use it for longer. The volatility of the currency also affects its long-term profitability. If the price drops suddenly, you will have to make the decision to sell at a low price or keep the coins in the hope that they will end up increasing in value. In the first case, you will have to extract coins for longer to recover the investment in equipment and electricity. 

Keep Equipment Cool

Regardless of the mining method you choose, the calculations needed to extract the coins generate a lot of heat, decreasing the efficiency of the process as the temperature increases. For this reason it is vital that you make sure to keep your equipment at the right temperature. As mentioned above, this is the reason why some miners simply use beer cases in order to maximize the flow of air that cools the components. Even a separate desktop fan can help keep your computer cool.

 Power Problems 

When building a home computer, it does not make sense to save money by buying a cheap power supply. Any instability in the power supply could affect performance, or even cause a system failure that will lead to downtime, so you must invest in a high quality drive. 

Avoid downtime 

If your hardware is not extracting currency, then you are losing money. Here are some ways to minimize downtime: Buy the best power source you can afford. Consider using an uninterruptible power supply (UPS), so that if the power supply is cut off for any reason, your system will continue to run on battery power. Set up your mining equipment so that it starts to extract coins automatically after switching it on, so if the system locks up and restarts, it will restart the process automatically. (This applies to both home appliances and ASICs).

 Hidden costs

 It is clear that to extract virtual coins will have to invest in electricity and hardware. However, there are other less obvious expenses: Shipments and customs. These costs are significant, and if you are going to import an item, try to figure out in advance how much you will have to pay. Accessories. Will you need cables, adapters, etc, for the equipment you intend to build? Cooling costs. In addition to the electricity that the equipment will consume, you must keep in mind the one you will need to cool it. 

Calculating profitability

 There are several websites that offer calculators to help calculate profitability. This is only necessary to introduce parameters such as equipment cost, hash speed, power consumption and the current bitcoin price to find out how long it will take for your investment to start to be profitable.