What all do I need to get started?
- Motherboard (Mobo)
- Processor (CPU)
- CPU Cooling Fan
- Hard Drive (SSD)
- Power Supply (PSU)
- Graphics cards (GPU)
- Lamborghini (well, this may come later)
TL;DR: You need a computer with multiple graphics cards plugged into it running mining software. It’s really that simple so don’t overthink it.
What should I mine for?
This is something that will be covered in a later post however I recommend beginners mine for some of the more popular, profitable coins. In some pools, mined coins are automatically converted to bitcoin and paid out to your wallet. Services like NiceHash will pool your GPU hashing power and switch to the most profitable coin based on their market and pay you out in bitcoin. NiceHash is also a great option for those without mining rigs however want to be able to choose what to mine through someone elses hashing power.
What coins are popular and profitable?
The best reference I have found for determining what coins are most profitable is using the calculator at What To Mine. It will show you different GPUs where you can input the amount you have, modify electricity variables/costs, and view what you could be earning in specific coins at that exact moment. This is something that can vary and change over time. While right now Ethereum, Zclassic, and Nicehash-NeoScrypt are the most profitable to mine, it could change to other coins in ten minutes. We’ll cover some options on how to handle this later in the post.
How much power will I consume?
This is very important as high electricity costs can cut into profits quickly as your rig could be running 24/7. If you do not factor in these costs when mining certain coins, you could be potentially losing money. Unless of course that coin rises later in the future. No one can tell you what your electricity costs are. They vary from around the world. Where I live, I currently pay 10.3 cents per kWh however some people may pay only 4 cents or 14 cents; It’s different for everyone. To calculate your power consumption you will need to see how many Watts you are running to the outlet. For every 1000 watts per hour, you’re charged your kWh rate. The best tool I have found for monitoring your wattage usage and even kWh directly from your rig is the “Kill A Watt” monitor shown.
This post covers more on how to calculate your usage rate.
What is ROI and why is it important?
ROI stands for “Return On Investment”. This means how many days it took for your mining to become profits as it has paid for your rig investment. Calculating ROI is simple. Take your total hardware costs, how much is earned each day minus electricity, and divide it. This will give you your ROI.
Daily Profit after electricity: $20
$4000 / $20 = 200 days till ROI is complete.
Your daily profit should be more of an estimate as multiple factors can vary it over time, especially in the next 5-6 months. During this time your mining coin could increase or decrease, shortening or extending your ROI. The good news is that GPUS are used by every gamer meaning you have a resell option after you are done mining.
Dependability and Uptime
Nothing is worse than sitting by your rig while it sits offline due to failure of one component. Every minute, hour, day it sits is costing you profits and potential future profits. When/if your rig goes down, basic troubleshooting should take place to determine what may be the POF (Point Of Failure). Outages of your power and internet can sometimes be more common, but cost you less. 10 minutes of downtime will not account for 2 day shipping from Amazon due to a motherboard failing. I won’t say you should keep an entire rig ready to go as a backup, but having extra essential parts won’t hurt. One of the most common failures I have seen is bad risers which are cheap to replace, but not found at your local Best Buy store. I recommend at least keeping extras on stand by in the case of failure. An extra motherboard with processor and ram is not a bad idea either in case your entire operation were to fail. It is better to get some of your cards back online instead of having none of them.
Some mining pools include alerts you can use to let you know if your miner has gone offline for some reason. While false-positives happen, it’s important to keep an eye on it.
When selecting a pool, you should always pay attention to the fees involved. Some pools charge no fees, while some can charge as high as 0.01 coin. It is important to figure this out early on instead of when you need a payout in the future as it could prolong your payouts to bring your fees down.
How do I lower my fees on high valued coins?
If your pool auto exchanges into a coin of your choice, a nice tip is to exchange it for a popular coin that has low value. For example, if you were interested in Ethereum and the payout fee was 0.001 ETH your payout fee currently would be $1.16. However, LiteCoin has the same payout fee of 0.001 which is currently valued at only 18 cents. Once this is moved to your exchange you can repurpose your LTC into ETH or wait for your balance to build enough for an ETH payout with the same percentage of fees.
Should I convert to FIAT immediately?
Depending on your circumstances, it may be enticing to convert your earnings to FIAT to pay yourself back for your recent investment. However you should consider what mined coins could turn into by holding. While 1 coin today may be worth $1, when your ROI rolls around it may be worth $1.25 meaning you’ve earned your money back sooner. You should assume your own risks though as crypto markets are very volatile meaning it could be $1 today and half that tomorrow.
The best advice I received when looking at investing in crypto through mining was “Do not look at your daily earnings to see where you are. Instead, look at your electricity costs to determine how much you invested to get the coins you hold today.” In other words, determine how much it costs in electricity to mine a certain coin vs if you were to invest directly.