Guide to Mining Profitability
When Peter and I first started looking at GPU mining as a way to make residual income profits were HIGH. I’m talking 3 month return on investments for a $3,500 GPU mining rig. Since then, many more people are flooding the market with mining rigs. Anything from turning their gaming computer into a mining rig while they are not gaming (Utilizing Nicehash), to building a dedicated rig. Everyone wants to get in on this action but do you know if it is still profitable? Currently it is, but down the road, who knows? I want to equip all of you with the knowledge to make your own decision and be able to track your profitability.
Is it Profitable?
Finding out if you’re profitable is just simple math:
Income – Expenses = Profit
It may seem simple, however, many people who are new to mining overlook a lot of costs associated with mining. Many make the mistake of seeing that they mined 1 ETH last month. That’s not the case, mining isn’t free money. There are a few factors we have to take into account before calculating profit.
Check out this post.
I’ve listed off equipment that needs to be purchased. Do some online window shopping and see what your equipment cost would be. If you are over $3,500 per rig, see what equipment you can downgrade. You don’t need an Intel i7 or a Ryzen 7 CPU. If you need help selecting computer parts, let me know.
GPU Mining uses A LOT of electricity! Check out my post.
I go over the electrical costs for running your mining rigs.
Most mining software and your mining pool will have some kind of fee, usually 1-6%. That’s profit you are missing out on and with the profitability getting lower due to difficulty changes, that’s profit you don’t want to live without. Go with mining software that has low mining fees like EWFB’s CUDA Miner for Nvidia GPUs or Claymore’s Miner for AMD GPUs.
Check out different mining pools such as flypool, miningspace, or nanopool for Zcash. For ETH check out etherminer, nanopool, or dwarfpool. Do you research, check how many blocks they are mining, see how often they pay out, etc…
Difficulty increase has to be the hardest thing to overcome, mainly because you can’t on your own. As more miners join the pool and the blocks are mined faster and faster, the difficulty goes up. Increase in difficulty means a decrease in profitability. Since there is no way to overcome on your own, you should factor this into your calculations for profitability. Use tools by whattomine and play with increasing the difficulty. Use their charts to do some averaging to make predictions on where the difficulty is heading.
To maximize your income, you need to select a coin that is the most profitable to mine. whattomine can help you in selecting that. Currently Zcash for Nvidia and ETH for AMD. You can also use mining software such as Nicehash. Nicehash selects the most profitable coin for you to mine automatically and switches you back and forth between different mining programs. You will be mining from their pools and they do have fees associated with those pools. You will also be getting paid in BTC instead of the coin you are mining.
Our experience with Nicehash is that it is easy to use and you can be mining within minutes. The program doesn’t always select the most profitable as we have watched it switch from Zcash to siacoin, in which our profitability drops slightly.
New coins come out all the time. New programs for mining come out all the time. In the recent months, we’ve seen dual mining emerge, and hard drive mining. Try to keep up with new mining software coming to market. Us here at TheBitcoin.Pub will also try to keep you updated with the latest mining software.
GPU mining can be profitable if you make the right choices. Your return on investment period is much longer than ASIC mining rigs however, ASIC mining rigs are hard to come by and purchasing them second hand can yield less profits. The typical return on investment period for GPU mining is over 250 days. It’s your choice as to whether you want to throw $3,500 into a GPU mining rig or throw $3,500 into BTC. There are plenty of arguments from both sides and each are correct at times.
I hope this has helped you in making educated decisions on whether you should mine or invest.