What does it take to mine a cryptocurrency? Useful tips.

One of today’s popular businesses is cryptocurrency mining. Investing in mining as of 2020 has become profitable for those who understand the intricacies and details of the process. However, there are so many nuances to consider – that one can drown in them, and filling up the “lumps” by ourselves – we risk bankruptcy in the process of finding “the very” way of profitable mining. This article is for those who want to understand the intricacies of the mining process, which will help both in the choice of devices and in understanding the characteristics of mining and investments in it.

What to look for when choosing equipment
The first thing a novice miner needs to decide on is the cryptocurrency you want to mine and the equipment to mine it. Cryptocurrency, in fact, is mined by two types of devices: farms with video cards, and special devices for mining cryptocurrencies – Asic.

If to consider the first one, it is a farm of 3 to 9 cards in a system, which are connected with central processor, common motherboard, and main memory. The cards can be chosen so that the cryptocurrency mining system works efficiently. This method is suitable for mining any cryptocurrency, but it is most profitable to mine a currency that does not have an asic. In terms of profitability, the most suitable coins for video card mining are: zcash, monero, ethereum. Now let’s look at the main advantages of this type of mining:

Minimisation of risks due to a fall of any of the cryptocurrencies, flexibility. Considering that mining via video cards is not tied to any coin, we can flexibly adjust to the market situation. With video cards, there is no dependence on any cryptocurrency, giving us the ability to mine any. Replacing one type of cryptocurrency with another gives us the ability to adjust to fluctuations in exchange rates, which helps to increase profits – this also reduces the payback time.
Demand from trading venues for video cards. Again, the financial cushion is to minimise potential risk. If the equipment fails to pay off in the long term – it can simply be sold at a bargain price, with little loss. There is always demand for video cards.
There is no need to specially adjust the space for mining, selecting the right conditions for the equipment. It’s easy to work in a flat. Even powerful video cards that are combined into a mining farm are suitable for mining cryptocurrencies in a regular apartment building, as they do not make much noise, consume a small amount of electricity, and do not require a specialized ventilation system.
However, there is a disadvantage. The disadvantage is that it takes a relatively long period of time to recoup the investment in the equipment you have invested in this way. The payback period of a video card farm is on average 12 to 14 months.

Now let’s look at mining cryptocurrencies with asics. There is equipment specifically designed for mining certain coins. Hash mining on these devices is much faster than on cards. It is not economically feasible to mine cryptocurrencies with video cards, for which asics were created specifically. Thus, a special device (Asycis) mines cryptocurrencies based on the following algorithms: Quark, Qubit, Scrypt, SHA-256. These are coins such as: Bitcoin, Litecoin. Asics have such performance, which exceeds the efficiency of video cards – only due to the high concentration on computational processes. That is, the Asic device is configured to perform only one task – mining cryptocurrency solely on a specific algorithm. For this reason, asics quickly lose their relevance in use and, as a consequence, become obsolete. That is, if the equipment does not pay for itself in the planned time frame, it loses its residual value. The price of ashik devices falls by a factor of 2 to 3 after just one year. This is not the only disadvantage that can be noted. Even professionals find it difficult to give any guarantees for the equipment payback, so be prepared for financial risks, considering the considerable price of the equipment and power consumption (from 1kW). Asics also generate a lot of noise and heat, so running a farm like this requires special measures, such as soundproofing and a special ventilation system to insulate them properly. But despite all that, there are still certain advantages, why many professional owners of mining farms choose Asic devices for mining coins rather than video cards.

Asic devices have a faster payback. There is no guarantee about that, but most of the time asics are many times more efficient and faster, compared to video farms. One can calculate the average period: 6 – 9 months, subject to competent forecasts of the miner’s owner and a certain amount of luck.
This equipment is much easier to use and administer. When it comes to industrial scale – it’s much easier (and time-saving) to plug an ashik into the network and start working that way, than to spend time and configuration every time to collect equipment to start mining cryptocurrency.
Asics are more energy efficient.

Investment. The choice of mining devices, taking into account small and large budgets.
From a beginner’s perspective, the process of mining itself may appear to be a perfectly easy job, requiring no work on the part of the individual, on the principle: turn the device on – make a profit. But it is not always that smooth and pretty. Some of it may be true – mining does not require deep knowledge, special education or a lot of experience, but it does require some time and effort to learn the craft. The main advice from professionals is to delve deeper into learning by practicing cryptocurrency mining, but working with small amounts and medium-powered equipment. This is the most reliable option for those who want to start investing in mining, but are limited financially.

Experienced users recommend that you start mining with video cards. As an option, let’s take a farm of 4 video cards with 4 gigabytes from 2 different manufacturers with average cost: Radeon™ RX 470 from manufacturer AMD, or GEFORCE GTX 1060 from Nvidia, which is about $1000 – $1500. The average revenue per day would be $3 – $5. That is, the payback of such a farm is about 9 – 12 months. This kind of installation can be assembled even in a flat. It will not create any discomfort and is easy to monitor and maintain. During the administration of such equipment, just for the payback period – the owner of the mining farm will understand all the intricacies of cryptocurrency mining and will get necessary experience, which will help him to develop in this area for more profitable projects.

But in case a $1000-$1500 contribution is not much of an interest, there is an option to go straight down a shortened path, starting with mining on an industrial scale. That is, using asics, or video cards with high performance.

Let’s take for example a situation where an investor is willing to invest millions of hryvnias. Consider a budget of $33000. For that amount of money is supposed to buy at least 40-50 high-performance graphics cards, plus what is included in the kit, and build some number of farms of cards. Here comes another nuance: you need to be able to use your time to search and buy equipment on the secondary market, and it’s good if the process lasts a couple of weeks, not longer. Of course it is possible to take all at once in one shop without expenditure of efforts, but in this case financial overpayments are not justified. The administration, collection, maintenance of the mining farms will require time, effort and costs from you.

Also consider the second option – acquiring asics. At $33,000, there are 12 to 13 Antminer s9s. They are so easy to administer that even an inexperienced owner can cope with the maintenance, finding a room with suitable conditions, as long as there is internet and electricity. According to 2017 data, about $180 could be mined every day from such a farm of 12 Antminer s9s. However, the net profit was many times less, if we subtract electricity costs from it, because if the equipment operates 24/7 – the average power consumption is 13000 kw per month.

Anyway, before you decide to purchase any mining devices – you need to calculate the payback period with a miner profitability calculator (for any miners). An important factor influencing the decision is that the payback period must be less than 12 months, otherwise the risk may not be justified and the costs may not make sense.

Where to place the mining equipment
There is a limited number of locations where mining equipment can be placed. It is possible to place a mining farm or Asic in your home, or in a garage, or rent a small room for your devices. We will now look at the most common places to place your mining farms or asics.

In a room at home
Mining farms or asics can of course be placed in the room of your house, but there are pitfalls to consider before making this decision:

1. one of the main inconveniences of mining farms is the noise from them. If you own a small farm, for example, with 4 medium-powered video cards, you won’t have a problem with noise. But if we are talking about more powerful equipment – you will have as much trouble with noise isolation as it is possible in a flat. With noise from the devices, you are unlikely to be able to rest or do work that requires silence. Also, the intense noise from the asics can create unfavourable living conditions that make it impossible to stay in the room. And if you live in a house with thin walls and have not taken care of the noise insulation of the devices, it may cause inconvenience to the neighbours.
2. Mining farms and asics can worsen the usual microclimate of the house, as the heat generated will affect the humidity in the air. But if you have air conditioner or if you are going to buy one you won’t have such problems. But don’t forget that buying an air conditioner will affect the payback period of the mining farm.
3. the load limit on the house wiring. Often the designers of houses calculated the highest electric load per 1 flat from 10 to 15 kilowatt. But the facts show that these numbers are much lower. And if you live in an old house, these figures can be even lower. If you own a mining farm with 20-30 video cards, the constant load on your wiring might be 3 – 4 kilowatts, and that’s a minimum. Also consider that in addition to the farm, there are other appliances in your flat that create additional load, which can cause problems. If you live in an old house, and you haven’t changed the wiring in it, it is better not to place large mining farms in it, and you shouldn’t place more than two asics, because there is a big risk of losing expensive equipment or losing your house to a fire at all.

On the balcony
A common way to eliminate noise and high temperatures in the home is to move equipment to the balcony. This is a fairly popular method both in Ukraine and elsewhere in the world, where mining is popular. A well-glazed balcony is essential to protect your devices from the weather because rain or snow can be a major problem. You may need an air conditioner or standard fans to maintain an acceptable temperature. The downside of this solution may be that installing large farms will not be possible, and the scale of cryptocurrency mining may stop at 20 – 30 cards.

In a summer cottage or in a garage
One of the common options for placing the devices are premises that have not been visited by the owners very often before. Often, most garages in Ukraine do not have electricity meters, which makes this option very attractive for mining. Installing equipment in a country house can also save money on electricity, as connecting to the network, bypassing the meter will not be a problem. But do not forget that this manipulation can lead to problems with the law, which can result in heavy fines. These two items have another major disadvantage – that you will not have quick access to them, which can lead to equipment problems that need quick intervention. While asics don’t need as much constant supervision, the opposite is true with video card farms – they need constant supervision.

Industrial-Scale Mining
Suitable places for mining – any, most importantly, that contribution to cryptocurrency mining would not be more than $33000. However, you will need a separate room in any case in order to set up your own mining business. When choosing and equipping a room, you need to consider the following factors: ventilation, possibility of high load on the power grid, security of the building, rental fees. Usually, massive mining farms will be housed in what used to be a manufacturing facility in an industrial area. But sometimes it is more profitable to rent a small office right in the city. This choice is only influenced by the amount of rent payment.

Where to start the process of mining
A beginner who has just embarked on the path of mining needs to know 2 things: how to mine and what to mine. Let’s look at cryptocurrency mining options.

NiceHash.com. This option is the most convenient and easiest. You only need to register a wallet Bitcoin, install a miner from this site, enter the address of the wallet in this program, and activate it by clicking “start”. After a certain time, the cryptocurrency will come to your wallet. The convenience is that nayshare automatically, without your intervention, intelligently selects algorithms and selects profitable currencies for mining. The payout calculation depends on the average calculated price of each individual coin, which is updated once per minute. The NiceHash service was developed precisely to facilitate the mining process, where you can do everything you need to mine a cryptocurrency in one program. This mining method is the most convenient and is great for beginners.
Cryptocurrency mining in a pool.

Let’s define the concept of a “pool” – this is when several miners join together, thereby creating a common computing power for mining one particular cryptocurrency. Once a pool has decrypted one block, a reward comes in, which is distributed to everyone, relative to the power each miner spent on mining it. This type of mining is even more cost-effective than mining a currency with Nyshash. However, the method is suitable for more experienced mine owners who mine professionally. But if you’re feeling empowered – find the right pool with the optimal fee to start with. The downside of mining in a pool is that it is not up to us to change algorithms and currencies if profitability changes.

Solo mining.

This method belongs to the owners of the miners who mine the cryptocurrency themselves. I.e., he does not share the reward, and it would seem to be the most successful choice. However, there are almost no guarantees and chances to decrypt the block by yourself. The network of the same ether, or bitcoin, is so complex that industrial scale mining farms with global processing power are mining in pools.
How to sell the mined currency, How to withdraw the coins into fiat
Whatever we have mined via any of the services or pools is deposited to bitcoin wallet or whatever currency you are mining. After that you will need to convert that into fiat, and only after that you will need to convert that into money. You can do this with the services described below:

Locallibitcoins.com. This site is a marketplace with private cryptocurrency intermediaries. Here you can very quickly find someone willing to exchange cryptocurrency from wallet to real money in various ways, such as through Yandex, WebMoney, QIWI, as well as in cash.
Bestchange.ru. This service is a collection of reliable exchangers. He captures the information of the exchange: the rate, the amount that can be withdrawn to the maximum, where the currency is withdrawn. All information, including exchange services, is always checked. Any fraud is practically excluded here, but sometimes there can be problems with identity verification. This exchanger sometimes asks for scanned documents to confirm the identity. The disadvantage of using this service is time, which takes hours. But for the sake of reliability, you can wait.
Selling cryptocurrency through an exchange. The longest option, but also the most profitable. As an option, bitcoins that we have mined are deposited directly to a wallet in the best cryptocurrency exchanges, and sold directly there.

First profit from a mining farm. How to calculate the payback
To get the first coins you need to start up your mining system, and already after a few hours to days you will see the first profit. For example, it is possible to withdraw 0.001 bitcoins from nayshares, that is about 115 hryvnias as of today. The same amount is earned for 1-2 days if you mine with video cards.

And the next question, when it will pay off actually, mining farm, that this business in principle showed profitability. This payback period depends on the following factors:

The cost of the mining devices.
The profitability of the farm in the reality of 1 day.
The network complexity parameter and its growth. The amount of merged hashrate grows over time for any cryptocurrency and hence the complexity increases. That is, there is always competition for a certain amount of reward. Profits fall due to increasing complexity.
However, the above is compensated for by currency appreciation. For example, the complexity of bitcoin mining has increased by a factor of 7 from 2017 to today. But the exchange rate has also not remained in place, jumping from $1,000 to $5,300.
An important factor that affects net profits is the price of electricity. There is only one item of variable cost in this type of business – the payments made for electricity. The equipment will pay for itself faster if the cost per kilowatt is lower.
All of these parameters are taken into account in a mining income calculator, where you can calculate the average payback of a particular piece of equipment.

Tips for the novice miner
Dependence on the exchange rate, given the increasing complexity
A business like mining is popular worldwide among investors. As a result, the competition is growing, and with it, the complexity of cryptocurrency mining. As the complexity increases and the hash rate increases, so does the income, proportionally to that. This is the reason why you need to plan for daily and monthly revenue declines, when buying equipment. With the data that we have today on bitcoin, analysts forecast an average 5% increase in complexity every week.

As of today, it is only possible to recoup mining equipment in a short period of time if the cryptocurrency to fiat exchange rate steadily increases. However, this is not always the case, so the opposite situation is also possible, when the complexity increases but the rate does not. In this case, the payback period could be 1.5 to 2 years. Taking all that into account, one can conclude that owners of mining farms are fully dependent on the exchange rate when making investments in mining. No one can accurately predict the exchange rate. Although some leaders of major cryptocurrency mining companies claim that bitcoin could rise to $1,000,000 within the next 10 years. But there are also other views that equate cryptocurrencies with pyramid schemes, foreshadowing the likelihood of bankruptcy.

Don’t overpay for hardware
You should never pay too much for equipment. Every hryvnia you save on buying devices will help you reduce the payback period of your mining farm or asics. Before you buy all the equipment you need, don’t be lazy to fully research the market of your city and look through all the offers. On the popular Avito marketplace, you can often find offers to sell asics or already fully ready-to-use mining farms made of cards that can pay for themselves in 15 to 20 months. There’s a lot of demand for them, so there are always buyers. We also advise you to bargain with the seller, it may save some money, which will affect the payback period. But there are always those who have studied the market thoroughly, and in terms of outbidding such a person is extremely difficult to beat. With a little luck, you can find sellers who urgently need money and bargain with them effortlessly, knocking the price of equipment down to 30%.

Don’t miss out on news from manufacturers

The best time to start mining cryptocurrencies is when they are growing, when the difficulty of mining them has stabilised. More often than not, cryptocurrency spikes are influenced by news at the legislative level, which is responsible for regulating the currency. There is one example that illustrates this. In China, there have been cases of false news spreading that cryptocurrency exchanges could be banned, causing a 30-40% drop in exchange rates in just a couple of days. News about the clarification of the legal status of decentralised currencies has had the opposite effect. If the major nations of the world provide clear and well-defined laws that affect the circulation of cryptocurrencies, the exchange rate will begin to rise in the long term.

ASIC manufacturers are starting to deliver their pre-order devices several times over the course of the year. These developments, as expected, are reflected in the difficulty of mining currencies and the cost of equipment. This means that the former goes up sharply and the latter goes down.