Crypto mining, including bitcoin mining, ethereum mining, ASIC mining, and GPU mining has continued to be a very popular topic for people interested te side hustles and entrepreneurial ventures. One of my most popular 2018 articles wasgoed “Is Crypto Mining a Profitable Side Hustle?” which evaluated whether or not wasgoed effective, profitable side hustle and passive income stream.
When I began, back ter early 2018, I had a lotsbestemming of skepticism about the long-term potential, but fortunately my dabbling has paid off tremendously. And it has sated my internal geek.
Ethereum mining has bot my major concentrate, so this postbode will come primarily from that framework of reference.
And this will give away my slant…but let mij just say that I have continued to cautiously buy mining gear overheen the course of 2018 and still into the commence of 2018.
Table of Contents
What has switched ter crypto mining since 2018?
Te my original postbode “Is Crypto Mining a Profitable Side Hustle?” I discuss the details of a few factors that have the potential to derail mining profitability. Those include:
- Network difficulty increases: supply and request of mining and planned reductions ter mining effectiveness
- Price switches: if price of the currency drops, your profitability drops
- Proof of Stake: Ethereum and other coins will eventually switch to a monster that does not require mining ter its current state
See a deeper dive of thesis risks ter my postbode here: What are the risks of mining Ethereum?
So how have thesis concerns held up?
- Very first, there have indeed bot network difficulty increases (see this chart).
- However, that difficulty has bot offset by the massive price increases of Ethereum.
- Last, albeit Proof of Stake will eventually klapper, there are many…many…other coins to mine, and the date for PoS is still unclear. Once this happens, there will be a dilution of profitability spil miners stir to other coins and sell their gear, but I’m not worried about it…as long spil I succesnummer ROI quickly (more on this below).
Fundamentally, there have bot ups and downs, but mining is just spil profitable today spil it wasgoed almost 7 months ago. Almost everyone cautioned otherwise, but most people didn’t expect the massive run up te price either.
The insane Ethereum price chart.
That’s an 11,895% increase ter price. Holy sh#t.
By the way, I wasgoed screaming excited back ter May when it wasgoed a mere 295% increase.
Should I mine, trade, and/or buy-and-hold crypto?
Ah, the money question. Shouldn’t I just buy crypto? Wouldn’t I make more money than if I mined?
This is an significant question and has a lotsbestemming to do with another passion of mine…real estate investing.
- Buying a crypto is a speculative asset play. To realize a build up, the value of that cryptocurrency voorwaarde go up.
- Mining crypto is a metselspecie flow play. To realize build up, you need to be able to sustain profitable operations. Additionally, if you hold your output, the value of the retained asset can go up.
Buy and hold (HODL)
Ter the case of 2018, you would have bot better off buying crypto than buying mining gear te almost every screenplay. That is because of the massive run ups te price…and things could have very well gone the other way.
I am a big fan of HODL and this makes up the main part of my crypto strategy. Here’s my Tesla’s license plate:
Tesla “HODL ETH” Edition
By the way, if you don’t know the drunken-rant backstory on the term HODL, you can read about it here.
Mining has a few unique benefits:
- It takes the guess work out. With volatile price switches, it’s hard to know when to buy. Mining gives you a consistent dollar-cost-average mechanism…permanently buying you into the markets.
- It keeps working indefinitely. While a buy-and-hold may ritme out mining ter a few months or year span, mining should eventually overtake.
- Regardless of the financials, mining is cool…if you’re a geek. Jokes aside, it can be a joy hobby and very interesting for certain people. Will it scrape your intellectual itch?
Another question you’ll need to ask yourself is will you be pulling your mined crypto out on a monthly onderstel and taking the profit ter fiat (like US Dollars)? Or will you be leaving it ter crypto so that you are building your portfolio. Both are options.
The last option is to actively trade crypto. When you do this, you’re moving te and out of currencies hoping to capture short-term gains by timing the market. This is insanely risky.
My main advice here is to see for bad advice from charlatans. When a market goes up almost 12,000%, it’s effortless for ANYONE to be a “good” investor. Will those people do well if the market switches? Will their strategies hold up if they invested ter other markets? Be careful.
The right mix of crypto strategies
Ultimately, I choose a mixed strategy. I think of it spil a percentage spel. My portfolio looks toughly like:
And spil I waterput ter my original postbode, I would only invest money you’re willing to lose. The crypto markets are insane. Many currencies were trading around one dollar not too long ago…and there’s always the potential they’ll druppel right back down.
How much money do I need to mine crypto?
This is a business question! You need to evaluate your miner purchasing decisions based on numbers. The simplest way to do this is to look at current day profitability using a webpagina like https://whattomine.com/
That webpagina is a lifesaver! You can cork ter the GPUs you’ll be using and see up-to-the-minute stats on earnings potential.
Based on this, you can figure out how much money you’re willing to spend to buy those earnings. This is just like any business. You’re investing te the metselspecie flow, assets, and future potential.
The more stable a business, the longer the ROI (come back on investment) you’ll accept. For real estate investments (rental properties), I’ll accept a 3-4 year pauze even.
Mining, however, is much less effortless to predict, so I want a much swift break-even point. Ideally, I can get my money invested back ter 2-3 months.
Looking at whattomine right now, a equipment with 6 RX 570s would televisiekanaal mij $750 vanaf month . So I’d want to build a 6-GPU equipment for $2000 or less te order to kasstuk my ROI target. With some careful purchasing, that’s doable.
But witness out, you can lightly spend $Five,000 building a 6-GPU equipment. Figure out your numbers and go from there.
>,>, If you want help analyzing a business, check out my free course which includes a business analysis device.
And let mij voorstelling you what I mean with prices…looking on Newegg the other day, you can find cards ranging from $269 to $539. Be patient. Did I say that before?
Should I GPU mine or ASIC mine?
If you toevluchthaven’t already, make sure to get with some friends and set up your own crypto “master mind” group.
I mention this, because I have a lotsbestemming of miners te my circle of friends. The benefit is I get to observe a broad multiplicity of results and build my practice by proxy. Based on this, I have some recommendations.
ASIC miners are specialized chunks of equipment that are optimized for a particular coin (or ter reality, a hashing algorithm). Thesis are boxes you ass-plug ter, do some minor configuration, and then let them run. They are effectively plug-and-play. But they aren’t designed to do anything speciaal from mine that particular algorithm.
Head overheen to whattomine and click on the ASIC tabulator to see the coins you can mine.
The big problem with ASIC miners is suppliers can flood the market with them. This increases the supply of miners and can massively reduce the earnings. Worse, a company could come out with a fresh device that mines 1,000x more efficiently and it would render everyone’s devices worthless. The Antminer D3 wasgoed a excellent example of this. It wasgoed advertised spil having insane profitability. But once they were released, they flooded the market, shocked request, and profitability tanked. Thesis devices mined the X11 algorithm, which is used by few coins.
ASIC miners are also largely managed by a single Chinese manufacturer.
From everything I’ve seen, you need to get te very early on any fresh ASIC release, otherwise you’ll end up holding the bag. There are a few exceptions, but I personally see ASIC miners spil very risky for the average person.
GPU miners tackle a different set of algorithms that are intentionally ASIC resistant. Instead, you are using standard rekentuig parts, namely graphics cards to do the mining work.
Fresh graphics cards don’t necessarily translate to better mining. Ter fact, one of the best GPUs for mining is the Radeon RX 470, which wasgoed released ter 2016. Two generations of Radeon cards forward, you’ll find the Vega series which presently doesn’t come close to matching come back on investment.
GPUs are effortless to specimen from a numbers perspective. Head overheen to whattomine and look at the GPU tabulator. Here, you just ass-plug ter the type and quantity of cards you’re going to use and you’ll get your profitability. Nice.
Plus, the cards you buy have other utility. If you zekering mining, you can sell the cards or just have a killer gaming machine.
What are the risks of crypto mining?
The risks of crypto mining have not switched since 2018. You can find utter detail ter my article here: What are the risk of Ethereum mining?
At a high level, they remain:
- Price of the coin you’re mining can druppel, suppressing the entire market and resale price of your gear.
- Difficulty can increase to spil unacceptable point.
- Proof of Stake will klapper and profitability across other coins will druppel spil miners flood them.
To give you perspective on difficulty, my original postbode wasgoed ter May of 2018. Price has gone up about 6x since then and profitability has stayed about onveranderlijk. Had prices not gone up, profitability would have shrunk potentially by 6x (tho’ you may have had fewer miners diluting the network).
How do I find equipment to mine crypto with?
Much like any business, you need to shop smartly! Don’t rush.
When I buy a real estate investment, I don’t buy just any house. I wait very patiently until I find a good overeenkomst that meets my specie flow targets.
The same goes for buying mining gear. This stuff is te brief supply. You need to buy cautiously and wait for deals. If you don’t, you’ll end up spending 2-10 times more than you need and your ROI will be shoved out dramatically.
I just go this shipment of RX 570s:
This means you need to scour the internet and potentially local stores. I’ve purchased cards from Ebay, Newegg, Amazon, and Best Buy (te store!). Know your numbers, don’t rush, and you’ll steadily build up a profitable operation.
Also, if you are observing a crunch on movie cards, you may only be able to order one at a time. Typically that means you just need to wait 48 hours inbetween orders.
Personally, I’ve found the best deals on the RX 570 series of cards.
Spil for other equipment, you shouldn’t have any issues finding parts. Here’s a good guide on Reddit for the surplus of the mining hardware you need.
What coins should I mine?
You might think you should just head overheen to whattomine and pick the highest coin on the list. Here’s the thing however, coins with smaller market caps tend to be very volatile. They may be very profitable today and a total loser tomorrow. Sticking with the fatter coins produces a more consistent result.
You can also dual mine, which means you run to complimentary algorithms at the same time. I’ve had mixed success with this personally. Te general, I find my systems to be considerably less stable while dual mining. Eth-only mining gives mij near flawless uptime.
Ethereum has bot consistently high for AMD cards. Zcash has bot excellent for Nvidia cards.
Additionally, you can mine to Nicehash. This permits you to lease your mining power. Nicehash utilizes your power to mine optimally across numerous coins. You’ll find Nicehash profitability alongside coins on whattomine.
Where can I find information on how to mine?
I spent a lotsbestemming of time Googling every detail when I very first embarked. Reddit proceeds to be one of the best resources with the most up-to-date information. This guide is a superb commencing point: Reddit Ethereum Mining Wiki Index
I love mining and it proceeds to be very profitable. Mining will maintain its spot ter my overall crypto portfolio.
What has your practice bot? What questions or tips would you like to share? Let mij know ter the comments below!