Beginner Guide to Bitcoin Mining: Cloud Vs. Hardware

Hello Fellow Steamers!!

If you've been following me, you know that I started the cryptocurrencies Mining earlier in the year. I got in before the 100-500% gains, but still not soon enough to get wealthy. This is a follow up to summarize what I've seen in returns from Genesis Mining and my new venture with NiceHash via some mining hardware I've bought on eBay.

GENESIS MINING...

Cloud Mining Contracts (No equipment at your house).
I've been with them since June of 2017. To Summarize, I've paid them $335 for 3 contracts: Bitcoin (0.9 TH/s); Ether (4.0 MH/s); and Monero (100 h/s). The last two months, I've received payouts in Bitcoin. In August, I got $27.60. For September, it was $26.32. They pay each week. At this rate, I'll have a return on my investment in about a year. After that, assuming the difficulty rates don't get too bad for their miners, I'd be making $20-25 a month. When I started, I was looking at a 10 month return on investment (ROI). That tells me that eventually the contracts will become unprofitable- at which time, Genesis will cease payments. When that ends I walk away and have no equipment. With Genesis, the cost of entry - based on the hashpower you're buying is usually very equal to the price you'd pay for home mining equipment. HOWEVER, you don't pay for electricity at home, no equipment to break down, they automatically let you use the newest equipment, etc. But you don't have any equipment to sell later, which could reduce your ROI (read on...) If you are interested in trying this, I encourage you to fully READ my first post about the Beginning Mining back in June. It will tell you everything to get started.

HOME MINING EQUIPMENT....

If you've read my last few updates, you'll know I bought some equipment for mining. There are three types: GPU (graphics processing units) - like what you'll find in a gamer's computer; ASIC - which is a dedicated unit only for mining one type; and CPU mining. CPU (like intel celeron) mining is not powerful enough compared to the other two to consider here.

I am using ASIC miners. The entry price compared to monthly income is higher than GPU mining at this (10/03/2017) time. An ASIC miner costs $1,500 USD (plus $100 power supply) from Bitmain at the moment. An equivalent unit with GPUs would cost over $4,000 USD. The Bitmain units bring in between $300-$900 per month. That same $4,000 GPU unit would bring in about $170-300/mo (with 3 GPUs inside).

I bought two ASIC units on eBay: Baikal Mini & Baikal A900. They cost $2,000 together. I'll likely not get an ROI before they become unprofitable- but I will sell them as they get close to that for about $1,000. That cuts my ROI in half. They are a year old and the owners sold them for what they paid for them. Together, they use 260 watts per hour and my electric rate is 0.09 per kWh. They hash 1050 mh/s in the X11-15, quark and cubit algorithms (I.e. Dash coin & others). Right now, they bring in about $90 a month profit. Why did I pay more - instead of buying the Bitmain units that are 15 times more powerful at only 1200 watts? Because when Bitmain goes on sale, they are hoarded and sold out in minutes! I'm learning, and I figured getting these low powered, already set up units would be ok. Your electricity cost is a huge factor. At 9 cents per kWh, 1200 watt unit will cost me an additional $80-$90 per month. You have to be prepared for that.

NiceHash has a good profitability calculator (but I think it's a bit on the "rosy" side. Check other calculators online for more realistic estimates. HTTPS://www.nicehash.com/profitability-calculator

I finally got lucky enough to buy a few new Bitmain Antminer D3's & an S9 last week. But they don't show up until December.
Here's a chart from NiceHash (mining pool my miners are connected to) showing the last three days average income per day (about $3.50/day).

HERE'S THE SCARY PART....

1. As coins are mined, they get harder (difficulty) to mine.
2. New hardware is invented each year, sometimes increasing processing power by 15 times!
3. There is a cap on coins. After they are all mined - it's over.
4. If cryptocurrencies crash along with the stocks, when they do, it's over.
5. ASIC equipment is only useful for mining. It cannot do anything else.
6. You have to figure at least spending money on upgraded electrical circuits to safely mine the higher wattage miners.
7. The D3 went from bringing in $3000 a month, to $900 a month after the first two batches of D3's hit the market and turned on.

The UPSIDE:

1. Higher coin prices.
2. Not buying coins with your bank account = no record of where they came from.
3. New algorithms replacing old algorithms.

My opinion at this point is that if your going to mine, you better have an equipment plan that cycles through your machines as they come out. Or buy them reduced on eBay to cut your ROI. Do much planning and consider how your going to power them and cool them.

If I'm useful, please upvote or comment. Thanks!! Steem On!!