Why It’s Time to Start Mining Monero
If you’re reading this, you likely fall into one or more of these three categories:
1. Someone who is aware of what cryptocurrencies are but have not explored how they are created
2. Someone who holds one or more cryptocurrencies in one of the popular crypto wallets like Coinbase
3. Someone who has previously attempted to mine crypto assets but found that your efforts were a waste of time and/or money.
Regardless of which category you fall into, when you hear “cryptocurrency”, your first thought is probably some variation of an optimistic or skeptical view on the topic that almost definitely references the most well-known cryptocurrency, Bitcoin.
And why wouldn’t it? As I currently write, Bitcoin’s price sits at $7,407.10 per coin and leads all crypto assets in market capitalization at $127.10 billion. To put that into perspective, Bitcoin Cash, a variation of the Bitcoin protocol, occupies 2nd place in terms of price per coin with a price of $783.37 per coin while Ethereum, a protocol built for decentralized applications to run on, has the 2nd biggest market capitalization at $45.96 billion. As lucrative as holding Bitcoin may be, the process of mining the coin is cumbersome for the average person. This is not to say that anyone who is not willing to invest thousands of dollars and hundreds of hours of research into mining cryptocurrencies should just forget about it. No, in fact, this article is meant to encourage the average crypto enthusiast with any interest in mining cryptocurrencies to not waste your time on Bitcoin.
What is Mining
For those of you who are already familiar with the process of mining and completely understand why Bitcoin is the least optimal coin to mine for the average person, I’d like to say congratulations! You get to skip this section of the article and head straight to the next. Your prior knowledge is the closest you’ll get to a real life “Advance to Go” Monopoly card.
For the rest of you still here, I’m going to give a short description of crypto-mining, the 3 commonly used tools to mine cryptocurrencies, and why mining Bitcoin is financially sub-optimal for a large majority of the public.
In the world of cryptocurrencies, mining is the act of validating blockchain transactions. This necessity of validation warrants an incentive for the miners, usually in the form of coins. This process of validation involves computer’s racing against each other to solve complex mathematical puzzles in hopes of being the first to validate those transactions. As I said earlier, mining can be a lucrative business when done properly. However, the cost of time and money to use the most efficient, suitable hardware for mining large-network cryptocurrencies like Bitcoin is just not worth it for many people. To further explain why this is the case, let’s delve into the 3 tools commonly used to mine cryptocurrencies: CPU, GPU, and ASIC miners.
First, we’ll start with CPU mining. A CPU, which stands for Central Processing Unit, is within the hardware of every computer and is known as the brain of the computer. Mining for cryptocurrencies using just your CPU will always produce worse results than GPUs or ASICs. This occurs because CPUs are designed to optimize for efficiently switching between different tasks giving them the most flexibility when compared to GPUs and ASICs. While this is great for normal computer use, when it comes to mining this also means that CPUs have fewer arithmetic logic units than GPUs and ASICs. Think of arithmetic logic units as tools processing units use to solve those complex mathematical problems previously discussed. Ultimately, this means that their speed to mining coins is also slower than that of GPUs or ASICs. Luckily for you and me, every computer in the world contains both a CPU and GPU.
Next, we’ll explore mining with your computer’s GPU. Your GPU, the graphic processing unit, is a chip that does repetitive calculations for processing graphics. The most powerful versions of these processing units are traditionally found in gaming computers. GPUs are designed to be more flexible than ASICs, yet not as flexible as CPUs when it comes to switching between tasks. Although less flexible, GPUs contain more arithmetic logic units than a CPU, allowing it to mine coins at a more efficient rate than a CPU. When used independently, a CPU is over-matched when mining just about every cryptocurrency out there as a GPU can run tasks up to 20 times faster than a CPU. When the CPU is utilized in tandem with the GPU, the results of mining can become more efficient while still being an affordable process for the average person. Unfortunately, even a combination of the best CPU and GPU is no match for the miner that is helping to make it essentially pointless for the general public to attempt mining Bitcoin and other massive cryptocurrencies.
That ominous statement brings us to the ASIC miner. An ASIC, which is an application specific integrated circuit, is a microchip designed to solve a specific crypto algorithm as quickly as possible. ASICs are the least flexible of the group of computer chips due to their single-purpose functionality, but they are by far the most powerful and efficient of the group. To show just how powerful these chips are, an ASIC miner specifically designed for mining Bitcoin can calculate its complex algorithm at a rate that is 100,000 times faster than the best CPU. As a result, ASICs produce an enormous amount of heat and electricity, making them easily the most expensive of the three computing chips to maintain. The most popular producer of ASIC miners, a China based company named Bitmain, charges over $600 for their Bitcoin miners. And if you think that’s a steep price, just imagine the impact a device that powerful has on your electricity bill.
The proliferation of ASIC miners, while being a large part, is just part of the reason that Bitcoin mining is economically unjustifiable for most prospective cryptocurrency miners. The astronomical price run from Bitcoin attracted more and more people to join the mining network of the cryptocurrency, making it harder and harder for one to successfully mine Bitcoin blocks. A network hashrate essentially describes the amount of computing power by computers across the world that is collectively being thrown towards mining a specific cryptocurrency. Bitcoin’s network hashrate is over 37 million terahashes per second. Now think about this, Bitmain’s most expensive ASIC miner maxes out at 14 terahashes per second. Fourteen.
As astonishing those numbers are, my guess would be that at this point, you’re probably thinking, “What in the hell is a hash?” Well if you’re one of the people reading this that is unaware of what I mean when I say “hash”, that’s completely understandable. Without going too much into technical jargon, I’ll just say that you can equate one hash performed by a computing unit to one attempt by that computing unit to mine a block in a specific cryptocurrency’s network.
In any case, the point that is trying to be made here is that, generally, you will have far better luck in not only successfully mining other cryptocurrencies, but mining those at much more reasonable electricity cost. Which brings us to our main subject of crypto mining alternatives, Monero. Monero is a privacy based cryptocurrency that is not only optimal for CPU and GPU mining, but its underlying algorithm is resistant to ASIC miners. On top of that, Monero provides a greater chance at successful mining with a network hashrate that, when compared to Bitcoin, sits at a “mere” 422.7 megahashes per second. Before continuing this article, if you’d like to learn more about Monero basic features and why it has the potential to reach and even surpass the social utility of Bitcoin, I highly recommend checking out this article written by my friend and co-worker Sean Pahls. For now, let’s move onto the electricity costs associated with mining Monero.
Energy Use in America
In order to fully understand the economic merits of mining Monero, we first need to explore the energy costs associated with the normal use of a computer. At the risk of perhaps offending any of those reading this who don’t live in the United States, we’ll be using energy cost statistics of the United States of America. For the next few paragraphs we’ll be straying away from the qualitative observations and going into basic raw statistics of energy use in America.
When looking at the costs of mining cryptocurrencies in America, the real costs are incurred through the U.S.A.’s average utility rate. Here, the average utility rate is around $0.12 per kilowatts per hour with the average energy use of desktop and laptops falling in the ranges of 70–300 watts per hour and 50–100 watts per hour, respectively.
Based on those assumptions, we’ll now look at the annual and monthly electricity cost of using desktops and laptops. Additionally, if we assume that, conservatively, the average amount of time that a computer is on and/or being used daily is about 8 hours, we find that for desktops, the annual electricity cost ranges from $24.53 (at 70W/hr) to $105.12 (at 300W/hr). For laptops, that annual cost ranges from $17.52 (50W/hr) to $35.04 (100W/hr). Looking at the monthly costs, we can see that for desktops the range is between $2.03 and $8.76 and laptops fall between $1.46 and $2.92.
As you can see, the relative energy costs of using desktops and laptops in the United States would not be described as exorbitant. It is when you introduce additional energy consumption of mining cryptocurrencies that these numbers can get skewed, and where the economic merits of mining Monero greatly outshine those of Bitcoin for the average energy consumer.
For us to really demonstrate the merits of mining an alternative cryptocurrency like Monero, we have to also understand that every CPU and GPU will perform differently and consume varying amounts of energy. So for simplicity, we will be displaying the electricity costs associated with Monero mining efforts on a NVIDIA GeForce GTX 960 GPU and an AMD Ryzen 7–1700 CPU on a desktop running Windows 10. This pairing represents a variation of a possible standard setup of a desktop computer or gaming laptop.
The prices used in this article correspond to the moment that Monero’s price was at $144. Using these assumptions and the ones previously stated above, here are the following results of mining Monero at 8 hours a day for 365 days a year:
Daily Monero Mining Pay Out = $0.31
Monthly Monero Mining Pay Out = $9.36
Yearly Monero Mining Pay Out = $112.32
Daily electricity cost = $0.18
Monthly electricity cost = $5.46
Yearly electricity cost = $66.57
What Does This All Mean?
To those of you still wondering what this all means, I pose this question, what if you weren’t mining Monero purely to transfer into fiat? Instead of transferring Monero into fiat, or even using Monero to as an alternative to fiat, what if you were able to mine XMR working towards a retailer’s rewards points, a video game’s in-app purchases, or a desktop applications’ subscription price? The team at Mineful believes that $5 profit could be the key to boosting user acquisition. We’ve created a B2B framework that will making mining a simple, cost effective process for all. Imagine an application like Setapp, in which the overwhelming majority of their user base operates the free version of their service. Incorporating Monero mining offers non-paying users an alternative to fiat payments, and, even more importantly, does it a low cost without forcing anyone to become a crypto wizard. For an application that incorporates mining Monero as a form of payment, that profit for a prospective user could mean the difference between having that user for one month and having them for one year. It’s in these cases, where that seemingly modest profit is seen in a new light, and it’s the future that Mineful envisions will bring cryptocurrency mining to the masses.