Today I’ll be starting my blog series on the ways I am currently making money with crypto. Now, I’m not an expert in cryptocurrency or anything like that, nor am I a veteran in the field. I’m just a regular guy who jumped on the cryptocurrency band wagon in late 2016.
I’m not a financial advisor, cryptocurrency is highly volatile and you should only risk what you are willing to lose. Having said that, i’m young (ish) and either incredibly foolish or incredibly wise – because i’m literally all in.
Now before I get started, if you have visions of becoming incredibly rich overnight with very little capital to get started then you are in for a reality check. It may be possible, but from my experience it’s not going to happen overnight.
Ok so I’m going to begin this series with how it all started for me – proof of work GPU mining. For those of you that don’t know, proof of work mining is the process of using compute power to solve complex mathematical problems through brute force. GPUs are extremely fast at generating potential solutions to these problems and miners compete to be the first to solve the next block and receive the block reward. That block reward being units of the cryptocurrency being mined.
However, the story does not end there – as more compute power is added to the network, the mathematical problems get harder to ensure that the block time remains constant. The network difficulty is said to have increased.
THIS IS THE MOST IMPORTANT FACTOR TO CONSIDER WHEN GETTING INTO CRYPTOCURRENCY MINING
You see the profitability calculations that you will come across have several variables – they are:
• power costs
• your hash rate
• the network hash rate
• the current exchange rate of the digital asset to your local currency
• block time
• block reward
Take a look below at this profitability calculation for 5 NVIDIA GTX1070’s (whattomine.com – 24HOUR AVERAGE)
Now compare this to the same hardware – this time the calculation is based on the average profitability over the last 7 days.
Now this is a crude example but it does highlight the different variables that are in play when mining cryptocurrencies. Which leads me to the question – is it worth mining?
I WOULD SAY YES – GO FOR IT! DO YOUR OWN RESEARCH BUT BE PREPARED FOR A LEARNING CURVE. FOR MORE GUIDENCE ON GETTING STARTED CHECK OUT CRYPTOBADGERS BLOG ON BUILDING A GPU MINING RIG FROM SCRATCH (http://www.cryptobadger.com/build-your-own-ethereum-mining-rig/ )
Bear in mind that as difficulty increases you will have to add to your hardware in order to mine the same amount of coins as you were previously. Now, if you are going to be cashing out your coins to do this you might find that this is not the most profitable thing to do since the value of the digital asset might increase faster than you are able to mine back more (I have been known to spend 0.18BTC on a single GPU before now).
There is another way earn coins whilst simultaneously benefiting from there appreciating value though. That is known as proof of stake which I will be covering in more detain in the next blog of the series.
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Long live the Blockchain!
