Efficient mining: how to calculate profitability

Efficient mining: how to calculate profitability

Digital currency mining has shifted from simple entertainment to complex business. It requires preliminary estimations and an accurate action plan. Let’s figure out what affects the profitability of cryptocurrency mining and how to calculate it.

Factors affecting profitability

What affects the mining payback period? What conditions will be the most appropriate for mining? Let’s examine factors having an impact on profit.

Electricity

To make mining pay its way, you should take into account the cost of electrical power. Any cryptocurrency mining equipment operates on electricity. Therefore, if you have an opportunity to choose a region with cheap power, do it. The average price in the Urals is 3.89 RUB/kWh, in the Russian Far East is 4.43 RUB/kWh, and in Central Russia is 4.53 RUB/kWh.

Expenditures for electricity can be calculated using special calculating websites. They allow not only to define profit as of today but also to predict it for a year and a half.

You should choose a hardware model (if you have ASIC) on the website or manually enter power rates (if you have a DIY farm) and specify the cost of electricity in your region. One of such resources is NiceHash. Its forecast is based on the average price of equipment and its output (hash rate) multiplied by the digital currency rate.

Equipment

Cryptocurrency mining devices are the most expensive things. You should choose certain equipment. There are two options:

  • DIY farm. It is designed based on a computer using graphic cards (GPU processors). In order not to overheat equipment, the farm can be created on an unconventional body with better air circulation. The most popular video cards are NVIDIA GeForce GTX 1080 and 1070; they cost about $500-600.
  • ASIC. The device is specially designed for obtaining certain cryptocurrencies. It can be bought from manufacturers, but it will be more expensive that arranging your own farm. The price of one of the best known devices, Asic Bitmain Antminer, ranges from S9 to $900.

Network complexity and reward for block

Mining means the discovery of new blocks in the blockchain network. Miners conduct mathematical calculations and generate new blocks in order to receive the reward. If block extraction involves a huge amount of miners, the process automatically becomes more complicated. Thus, you need more powerful hardware for high complexity.

This factor affects the profitability as well. When selecting equipment, you should consider its capacity and choose the one with longer operational life. Thenextfactoristherewardforablock. Eventually, itcandecrease. For instance, the reward for a block was 50 bitcoins in 2009. Now, it is 12.5 bitcoins.

Besides, you should decide what cryptocurrency to mine and realize the risks of each one. For example, it is difficult to mine such popular currencies as Bitcoin and Ethereum because of their great demand, while little-known currencies can face the rapid drop in the exchange rate.

Pool percent

There is an option for those who do not want to mine cryptocurrencies on their own: unite your resources with other miners and enter the pool. In this case, the odds to discover a block quickly are much higher. However, you will have to share the reward with all participants, which could affect the profitability.

Moreover, some pools charge a fee: MinerGate – 1.5%; SLUSHPOOL – 2%. At the same time, Eligius and ANTPOOL do not have any fees.

BBC Moscow: Efficient mining: how to calculate profitability1

Profitability calculators

There are several websites allowing miners not to mistake in estimations of mining profitability and constantly obtain profit. Online calculators determine a payback period of mining equipment based on all profitability factors.

Online calculator interfaces are convenient and user-friendly in order to perform the task promptly. Key services for calculating crypto profit are the following:

  • WhatToMine: the most seamless mining calculator. It allows to calculate profit both on GPU video cards and ASICs. It supports Ethereum and Bitcoinmining.
  • Profit Mine allows to determine the reward on all algorithms of video cards and ASICs.
  • MinerGate: a mining calculator for pools.
  • 99Bitcoins: a profitability calculator designed for bitcoin miners.

Conclusion

As in any other businesses, there is the risk that cryptocurrency mining won’t be compensated. To prevent this, you should take into account all mining profitability factors and always calculate expanses.

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