So you are interested in mining crypto, but you don’t know exactly where to start? Well, you came to the right place! There are some good opportunities in mining that can allow for you to be very profitable depending on your set-up. However, there a few factors that you must consider in order to quickly meet your return on investment (ROI) and become profitable.
Hashing Algorithms
In the crypto world, graphics processing units (GPU) and application-specific integrated circuits (ASIC) have the ability to solve and authenticate encrypted algorithms using hashing power. Even your central processing unit (CPU) has the ability to solve these algorithms. That’s right, you don’t need any fancy equipment on your desktop or laptop to start hashing certain coins like Monero ($XMR) or Electroneum ($ETN). Below are some of the common algorithms:
-SHA-256 (ASIC)
-Scrypt (ASIC, CPU, GPU)
-X11 (GPU)
-CryptoNight (CPU)
-Dagger-Hashimoto / Ethash (GPU)
It’s important to know which hashing algorithms are compatible with your hardware in order for you to be the most profitable. WhatToMine.com is a good resource that allows you to input your mining rig specs so you can check how profitable it is to mine selected altcoins in comparison to Ethereum or Bitcoin.
Hashrate
The speed in which your mining rig can solve the mathematical algorithms needed to validate transactions is called hashrate. Obviously, the higher the hashrate the more rewards you will yield, but it is important to understand that there is a lot more to buying a rig than just picking a build with the highest hashrate. Rigs that can generate a lot of hashing power will have a very high price tag on the front end and also use more electricity to operate, thus making it even tougher to hit your ROI.
BuriedOne.com is a great resource that gives you hashrate expectations from different GPUs.
AMD RADEON RX 580 SPECS
Electrical Costs
Each mining rig operates at different levels of efficiency and can consume varying amounts of electricity. Some miners can work a maximum load while drawing around 100W. More elaborate and powerful miners can push to well over 1000W. It’s important to know how much your electricity company charges per kilowatt-hour (KWh). The national average is 12 cents per KWh. The more wattage you use and the higher electricity cost could be detrimental to your ROI regardless of your hashing power.
Cryptocompare.com allows you to calculate your estimated profits while factoring in your wattage and KWh costs.
Mining Difficulty
The mining difficulty of a coin is measured by how difficult it is to solve the algorithm for a specific coin. The higher the difficulty, the smaller the reward you or your pool will receive, regardless of the amount of energy your miner expended. As a coin becomes more popular and more miners join the mining network, the difficulty will increase. The more difficult a coin is to mine, the less profitable your rig becomes. Speculative mining is becoming more popular because it allows the miner to mine a less popular coin with low difficulty before it moons.
Coinwarz.com is a great way to keep up with past and current mining difficulties for different coins.
As always do your own research before you get started on building or purchasing your rig so you can be as profitable as possible! Make sure to give me a follow on twitter @CoachCryptos. Happy Mining!
