There are many options to participate in #cryptocurrencies. I personally would say that mining your own #Bitcoin #Litecoin or #Etehereum is „the real thing“. Though it has to be seen as „mid-term“ investment as it will take some time until you achieve return on investment (ROI)
Even though more than 80% of actual Bitcoins have been mined as of today and Hashing-Power (that’s the measurement used to define the capacity of a machine) all over the world has been dramatically increased, the #goldrush has not yet ended.
Profitability of mining is a science in itself and decreasing quickly for the old currencies as complexities increase. Also the rewards for mining a full block are reducing.
This is the perspective of the large Coins.
At the beginning it was really easy to mine Bitcoins on your PC at home. Complexity was low, speed of the machines sufficient and the rewards were high.
As you mine blocks successfully, you get paid with coins you are mining. So Bitcoin mining will ultimately create Bitcoins for you. The initial reward was 50 per block.
While currently Bitcoin Mining is calculated at 12,5 BTC per block, it will soon only be half of it as after 250,000 blocks. Today there are further 120,000 blocks to be mined before we get down to 6.25 finally no more Bitcoin will be rewarded. This will be a large hit that might not be covered by steadily increasing network fees. This is, by the way, the second stream of incline for miners.
If all coins are mined which is expected for 2024 may be even 2022/3 with current speed of Hashing Power growth, the only profit left will be fees. If this remains a valid business model I doubt unless you operate a large hosting centre with extremely low power cost in Antarctica where heat is not an issue.
Complexity.of Ethereum has also been rising steadily which increases the required power to mining one block. Rewards are currently at 3.0 but a reduction is expected, too.
ASIC Hardware availability and selfmade rigs
Now lets assume that you are still convinced and want to get your hands on some mining hardware.
ASIC are special chips that were developed as people found out that using graphics processors was more effective to mine the specific algorithm for Bitcoin.
As even I was thinking about this, we have reached a status of "housewife market" as the experts say. A stage where even people that missed out the big hype are jumping on the train.
The mining hardware market is totally overheated as of today i.e. it is simply very hard to get your hands on one of those miners. There are various reasons for this:
- the most efficient miners are manufactured by one company in china BITMAIN, production output had not been high enough to match demand
- buying a different miner, relation of power draw to hashing power is usually not good enough
- a shadow industry has been establish that cleans stock of batches before others are able to purchase, as in times of gold rush, they are not speculating on gold itself but money you have to spend to buy the equipment
Because of above reasons recent prices of miners on the Black-Market (I tend to call EBay this way as it kind of reflects what happens…) have risen to ridiculous niveau up to $6.000 which is approximately triple of original prices from Bitmain.
Honestly, at this price those miners will merely be profitable, so I personally would keep my hands away from them. Also many offers are for miners that haven’t even been produced yet. Those that are freely available look closely as they might have been in use.
Lately Bitmain introduced a 1 piece strategy starting January 2018 to prevent traders to clear entire stock and make the miners broadly available again.
As always in Crypto, be sure to watch out for scam and fake offers, be extremely careful and validate shops and sellers before hitting the purchase button. At least send an email to official email addresses to validate response times and service.
I tested with a German website, customer service and sales emails were not reachable!
Building your own rig out of Graphics cards and special accessories like Mining-Boards, PCI-e riser cards a bunch of cables and (mostly wooden) stands is a science in itself.
There are some great articles about this here on steemit listing the graphic cards that are best for which algorithm so I will not cover it here. It has to be said though that prices for Graphics cards have also been exploding due to the high demands of mining. So this might also be an expensive exercise.
Profitability and feasibility
Profit
There are various people that believe that getting the coins is the buyproduct of assisting to keep the concept of Bitcoins and Cryptocurrency alive. In their view this is worth operating a miner at home.
The majority of miners are aiming for profit though. Here comes the catch of what I have written above.
Profitability strongly relies on 7 components:
- Price of the coin
- Cost of power
- Cost of air-condition and infrastructure
- Mining equipment (cost, speed and hash power)
- Mining complexity
- Block reward
- Pool fees
I might have missed out some smaller points here but this is basically it. There are nice tools that I have also explained in a separate article (see cloud mining perspective). These will give you a good indication of what to expect.
As with cloud mining the rising complexity and reduced block rewards are what are „killing you“ over time. The best equipment might be worthless (unless you resell it to somebody that has advantages in above 7 points) after a short period of time.
I have added two charts from my favourite Mining website www.coinwarz.com that indicate the expected profit based on a specific configuration. There are a lot of videos on YouTube and D-Tube for this also. Take your time to get a good picture.
Be more sceptical than euphoric though!
This clearly shows that the time for large Bitcoin mining profits might soon be gone, unless complexity is reducing significantly (unlikely though!)
As of today (30.01.2018) Ethereum would be more profitable than Bitcoin, but there are other Altcoins that would even make more sense to mine.
Before buying one of these loud, power hungry tools, be sure to check the perspective. Also calculate the complexity increase into your evaluation.
I you just want to do it because it is missing in your life-tick-in-the-box then go on!
Well, before you go on, consider two things:
Feasibility
- These things are REALLY EXTREMELY loud, I have seen many videos of people holding them in their living room. You honestly don’t want this
- They are creating a lot of heat. Imagine a LAN-Party times 10 (if anybody of you still remembers what that is anyways…)
At least the machine does not smell like a LAN-Party, which is good.
If you and your family are not ready for this, then you should reconsider your decision.
A good option is to look at a hosting center next to you. Some might be profitable even if you have to pay for a collocation rack since power will most likely be cheaper.
Cloud Mining perspective
I covered this in one of my recent posts:
You do not have any impact on mining complexity, that can not be cared enough by you! Also you have no clue which machines are operated in these centres. In fact you do not necessarily have to worry since you are paying by TH/s.
Many providers charge maintenance fees for their services, especially for Bitcoin Mining that will take a large bite of profits, too.
The availability of legit providers is limited be sure to do some intense research before you throw in your money.
Just recently prices at Hashflare have increased a lot, also Genesis Mining has been increasing prices for their contracts.
Do your math before investing and remember that you do not own the miner! Once the contract ends and it is not profitable for you, you can not even try to sell the miner itself.
Today, there are still some contracts that could give a theoretical profit over a years time. In this case you get the coins, so you can also store them and wait for the big price increase to finally sell.
This brings me to the last consideration for cloud mining. Most of the companies have introduced minimum payouts that are pretty high. You need a nice amount of Hashpower to be able to reach that limit in a decent time.
Altcoin-mining
As mentioned above, mining Altcoins is still interesting, since most of them are far easier to mine as the large coins. See some examples here:
Of course there is no safety that any of these will be the next Ethereum or Bitcoin, so it might be that you mined a pice of data crap for a while. There is still a chance that the prices are rising significantly so it is worth a try if you have some spare money.
Conclusion
Mining still offers some nice potential if your environment and infrastructure is right. There is a good reason why many miners have moved to Iceland as power is cheap and it is often cold.
Be sure to do decent calculations and remember that whatever you do, it will not be profitable forever. Assure that ROI time is shorter than the time where mining gets too complex.
I would say that you are mining against coin-complexity-inflation. Almost the same as your bank account. If inflation is higher than interest rates then you loose money.
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