How to calculate the profitability of crypto money mining
Are you serious about crypto currency mining? In this case, you need to know how to find the best application for your money and equipment. In this guide we will show you how to mine digital treasures in the most beneficial way.
How do I get started?
Choose your currency
The process of crypto money mining involves solving complex cryptographic problems. As part of this process, miners provide “proof of work”, which is rewarded with digital currency. If not talking into details, now there are two workflow algorithms: SHA-256 and scrypt. Let’s note that there are a few less popular alternatives (for example, Primecoin), which we will not consider in this manual.
The SHA-256 hashing algorithm uses only computational power. At the beginning of the bitcoin era, users were able to extract them using the CPU and video card that any home computer has. This time came, and now the level of the Bitcoin network complexity is so high that special processors, known as the Applicion Specific Integrated Chips (ASIC), are required for bitcoin mining. The use of such powerful processors along with the increasing level of complexity of the Bitcoin network in the geometric progression gave rise to a technological arms race. This means that even recently developed chips can quickly become obsolete.
The scrypt hashing algorithm requires a significant amount of RAM and the ability of parallel computations. That’s why rigs, based on the central processor of the computer, are popular. In addition, ASIC processors for scrypt are still popular, as the level of complexity of these currencies does not increase as dramatically as in the case of bitcoin.
Correct cryptocurrency mining rig
Depending on your budget and the type of currency you intend to mine, there are two ways of installing a mining system:
Mining-rig «Do it yourself»
It can be built on your personal computer using as many video cards as you can or how much you can afford. While some people use a standard computer case to connect them, many use unusual “packages”, for example, beer boxes, which can increase the flow of air to the components. The advantage of the Do-It-Yourself system is that you can simultaneously process both the processor and the video card.
ASICs are autonomous devices that connect to a computer via a USB port and / or an Ethernet port. Usually they are supplied by the manufacturers in a completely finished form. ASIC miners are significantly more expensive than DIY rigs and are mainly manufactured in the US, so users in other parts of the world will have to wait until the goods are imported.
Mining requires electricity. A lot of electricity. If you built the Do-It-Yourself rig, you need a power supply unit (PSU) in any case, so it makes sense to invest in the most effective purchase you can get.
Consider the two following options. For example, power supply unit A has a power of 860 watts and an efficiency of 93%. This means that it will consume 925 watts (860 watts / 0.93) from the outlet. On the contrary, a 750 watt power supply and 80% efficiency takes 937.5 watts (750 / 0.8) out of the grid – spending more electricity, but giving less.
When building a mining rig, you should take into account the power requirements for all components that you use, especially for video cards. A good idea is to create excess production capacity in the event of unforeseen events and system failure.
On the other hand, ASICs can perform much more calculations with much lower power consumption, since they are narrow-profile devices. And since they come with a suitable power supply, you do not need to worry about self-calculation.
The efficiency of mining in various systems can be compared with the following factor: the number of hashes per second is divided by the consumption of electricity:
Hashing speed / electricity consumption = mining efficiency
Rather than acting alone, it is much more meaningful to join a pool in which you can unite your resources with other miners. Entering the pool, you earn the shares of coins, obtained by all members of the pool, and you get more chances to calculate the transaction block.
Miners earn a reward if the complexity of the blocks they calculate is higher than the level set by the pool operator. This level is always between 1 and the level of complexity of the crypto currency.
Problems to be aware of
Spend to earn
The level of complexity of all crypto currency will inevitably increase with time. This fact will reduce the chances of your equipment to earning coins or mining shares. As a result, it is important to start dealing with the best equipment that you can afford to make mining profitable for an extended period of time.
The unpredictability of the extracted currencies also affects long-term profitability. If prices suddenly fall, you will have to either sell the currency at a low cost, or hold it until the value again grows. In the latter case, you will have to engage in crypto money mining for a long time to recoup the costs of equipment and electricity.
In all kinds of mining, it is always a laborious operation, which is accompanied by a large volume of excess heat. With increasing temperature, the efficiency of mining falls, so make sure that your cryptocurrency mining rig has adequate ventilation and cooling. As already mentioned above, that’s why some builders of mining rigs use beer boxes, rather than the computer case, to maximize the air flow to the components. Even an ordinary desktop fan will help to cool the equipment.
If your equipment is not engaged in mining, you lose money.
Set up your cpu mining so that the production of the crypto currency automatically starts immediately after the computer is booted. If the system hangs and reboots, then the mining will automatically start again.
Calculators of profitability
To help miners in the necessary calculations, there are several sites that offer services of profitability calculators. You can enter parameters such as equipment cost, hash value, electricity consumption and the current bitcoin rate to find out how much time you will “repulse” your investments.