In one of my previous posts, I talked about how lately people have been asking me about getting started with trading crypto in Canada. In addition to this, I also noticed that people have been taking an interest in mining cryptocurrency. I've actually been seeing more posts on Reddit these days (maybe it's just me though) where people are asking how to get started as all you need is your computer's GPU. I guess this is because of COVID-19 and how we are all stuck at home with more time on our hands. This time is allowing people to look at alternative ways of making money from home as mining cryptocurrencies can be profitable.
Coincidentally, my friend also recently asked me whether or not I knew much about cryptocurrency mining. He told me that he's quite fortunate as electricity is included in his rent and that he now wants to turn that "free" electricity into crypto but didn't know how to get started. So I guess you could say that this post was kind of inspired by my friend who had asked me how to get in to mining. The advice that I shared with him is what I'll be writing about in this post.
I first want to say that my knowledge on cryptocurrency mining is very basic and that I don't have in depth knowledge like some other people in the crypto space have. I personally have never gotten seriously in to it due to the lack of necessary hardware to be profitable. However, I do know where to point others to when getting started as I've researched this stuff myself before as I too had thought about getting into mining a couple of years ago.
What Is GPU Mining?
Mining is essentially using hardware devices, in the context of this article GPUs, to solve complex computer problems created by that particular cryptocurrency. By solving these problems, you're rewarded with some cryptocurrency when a new block is released and added to the blockchain. Now you wouldn't be able to do this independently unless you've got a lot of GPUs, which is why you would need to join a mining pool where you would contribute "hash power" from your GPUs to the mining pool. Based on the proportion that you've contributed to your mining pool's total hash power, minus any applicable fees, that would determine your share of the crypto earned.
How Do I Get Started?
When it comes to mining, there are a number of factors to consider. However I would say that the first, and most important, thing that you'll want to know is whether or not you're going to be profitable. After all, the purpose of mining is to make money (obviously) and it doesn't make sense to mine if you're not profitable from doing it.
For mining, the biggest variable cost associated with it would be electricity as you need to power the GPUs running (more so the fans to cool them down). If you're not sure of how much you pay in electricity already, you'll need to find out exactly how much you pay per kilowatt hour as this will determine your profitability. This information should be public and you can probably find this out easily after doing a Google search.
The next step would be to then find out your profitability based on the amount that you pay for electricity and the graphics cards you'll be using to mine. You can check out the profitability from this website here based on the amount you pay in electricity and based on the GPUs you'll be using. If your card isn't listed there, then use a GPU that's on this site that's comparable. When you go to their homepage, it will look like this:
As I'm not sure if you'll be mining as a hobby part time or full time or whether you'll be running it like a business, but depending on how you want to approach it, there may be some other factors to take in consideration. For example, if you're mining as a hobby on your computer's GPU, there's not much extra to think about. However, if you're starting from scratch and want to do it full time, you'll then need to start thinking more about how much money you've got, how much you can get the graphics cards for, storage space, additional hardware costs such as rig frames, and your time commitment. As everyone's goal and situation is different, there isn't a definitive answer to those questions and you'll have to think about whether the financial benefits outweighs the costs involved for yourself.
Assuming that you've got all the numbers (both costs and revenue), you then want to see just how profitable it can be. You want to make sure that the money that you make from mining crypto will pay back all of those costs within a somewhat timely manner. In addition to that, you want to add in a margin of safety just in case the numbers are wrong or change to be not so much in your favour.
For example, if your total costs are $1,000 for the hardware and your profit is $1/day. That means that it'll take 1,000 days or 2.74 years (1,000/365) just to break even based on the current situation. Keep in mind though that in the future, graphics cards will get better and that the difficulty level will most likely increase and thus your profits will decrease as a result. You also need to factor in your time, maintenance of the machines, and any potential risks of the machines getting damaged or broken. After you've really thought it through then ask yourself if it's worth it to take the chance of spending that $1,000 to earn $1 a day. For myself I probably wouldn't do it unless the payback period was within a year or a maximum of two for that amount of risk.
Which Mining Pool Should I Join?
After you've worked out the numbers and decide to mine, you then need to decide on a mining pool to join. You want to go with one that is reliable, has low fees, and has a server near you. If you look on the website provided, go to the "coins" tab and find the coin you're wanting to mine. When you do that, it'll give you a list of mining pools for that particular coin. However, if you want something very basic and easy to get started with ASAP, check out Minergate as they've got a very simple and easy-to-use app. Some of the people who are more knowledgable than I am may say it's trash though. Again, my knowledge is at a basic level.
My Friend's Scenario
So now that we understand some of the basics of mining, let's take a look at my friend's situation and hopefully it can give you some insight. My friend's thinking about mining on his computer's GPU as a hobby so there's really not much that we will need to consider here. Based on his situation, he's already got a 1050Ti that he's using on his computer, doesn't have to pay for electricity, and doesn't need a separate place to store it. He plans on running it 24 hours a day.
Based on his information, I would then enter that in the website and click the "calculate" button.
After that, it gives some profitability numbers based on the past 7 days. You can change the time frame but I personally want to get as much data as possible. As you can see from the image, my friend would make roughly $0.23/day worth of ETH on this one card alone if he runs it for 24 hours. However, if he mines Ravencoin, he can make $0.3/day and to then sell it for whatever he wants. This is based on profitability for the past average 7 days but things will definitely change in the future though. One thing about mining though is that the noise produced from the cards (fans) can get loud. If my friend mines for 24 hours a day, he may have to hear the sound of the fan running nonstop depending on where his computer is located in his home.
In my friend's case, everything that he mines is all his to keep. He doesn't need to pay for electricity, doesn't need to buy any graphics cards and lastly, doesn't need to pay for storage. Now in terms of whether or not he thinks that the $0.3/day is worth it is up to him. This is based off of his current situation but he can obviously buy some more GPUs and earn more. However, he would then need to calculate the payback period on that investment.
Here's a video for those of you who like YouTube:
I hope that this article has given you a better idea of how profitable cryptocurrency GPU mining can be. I hope that I've been able to answer some of the questions you have about starting out and whether or not it makes sense for you.
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