5 Things You Absolutely Need to Know Before You Start Crypto Mining
Cryptocurrency mining has been around for 10 years now. It has evolved from CPU to GPU and now ASIC (application-specific integrated circuit) mining. Below are the 10 things you should absolutely know before you power on your crypto mining rig.
Mining Strategy: What to Mine
First, you need to identify your target return on investment (ROI). Research various mine-able coins on mining ROI calculators (e.g. https://crypt0.zone/calculator, https://whattomine.com). You should input your equipment like NVIDIA GTX1070, AMD RX580 into the mining calculator to determine which coins give you the best profitability.
Thereafter, you could decide to start small or with a huge upfront capital and invest in 6 x top-end NVIDIA GTX1080. Given the current (as of writing) market condition, most of the coins are not making a profit. Therefore, it is advisable to hold and wait for a more favorable market price before selling your coins.
Personal recommendation — strong projects with community support: Ether (ETH), Zcash (ZEC), Monero (XMR). Crypto mining is not different from any investments. Keep in mind that the higher your ROI expectation, the more risks you will have to take. Although it is tempting to mine coins that could potentially return 20 times, they could also be potentially worthless in future.
There are different types of hash like the SHA-256 (Bitcoin), ethash (Ethereum), Equihash (Zcash) and etc. Your mining rig might be more suitable for certain type of hash than others.
Hashrate: Speed of Mining
In simple terms, a hash rate can be defined as the speed at which a mining rig operates. Crypto mining involves finding blocks through complex computations. The mining rig has to make thousands or even millions of guesses per second to find the right answers to solve a block.
Hash rate is not something you can calculate by a formula. It is determined empirically, usually from other miners whom have the same set-up. It is, however, an excellent reference point for you.
Mining Pool: Must Join for Small Miners
Once you have decided on the coin to mine and the type of mining rig that can provide your expected ROI, it is time to look for a mining pool. Without a mining pool, you would only receive a mining payout if you found a block on your own. This is called solo mining. It could take years before you manage to find a block.
You should definitely join a mining pool to share your hash rate with the pool. Once the pool finds a block, you get a payout based on the percent of hash rate contributed to the pool.
Cryptocurrency Wallet and Exchange
You need to prepare a crypto wallet address to receive your mining payouts from your mining pool. Furthermore, you would have to eventually set up an account on cryptocurrency exchange so that you can exchange your coins to a stablecoin like Tether (USDT) to achieve your ROI. You can read my guide on how to register and trade altcoins on crypto exchanges for more information.
Location for Crypto Mining Rig: Where to Place
While no one can guarantee you profitability on crypto mining now, I can guarantee you it is going to be hot and noisy when you run a whole load of GPUs 24/7. Preferably, you would need a space that is well ventilated and a reliable internet connection. The location will also determine the cost of electricity and it has to be relatively low to maximize your profits.
Sample Crypto Mining (GPU) Rig Set-up
To build a versatile GPU mining rig that can mine a wider variety of coins, you will need the following items:
- GPU — Your budget, hashrate and power consumption of the GPUs will likely determine which one you will be getting. Some of the popular GPU includes the NVIDIA GTX1070, GTX1080 and AMD RX570, RX580.
- Mining Rig — you need something light made out of aluminium or wooden would be excellent. Usually comes with the fans for additional cooling effect.
- Power Supply — 1200W~1600W PSU should be sufficient for 6 to 8 x GPUs mining rig. It all depends on the power consumption of individual GPU (e.g. GTX 1070 requires around ~125W each) and add some buffer for your motherboard + CPU
- Motherboard + CPU + RAM + SSD — you need a crypto mining motherboard that can fit in many GPUs and the other necessary components in any computers like processor (CPU), RAM and SSD for storage.
- Mining Software — depends on the coin you are mining. You can try ethminer if you are going to mine Ethers.
- Other accessories — power cables, connectors, cable ties, screws to assemble your mining rig.
Conclusion: Crypto Mining… yay or nay
The cryptocurrency market is still 80% down from its all time high (ATH), with some analysts predicting weakness for 2019. Prices of mining rigs and GPUs are starting to come down now and I think it makes an excellent opportunity for entry. With speculative mining, it is still highly possible to turn a profit in 2019.
If there are any other useful tips you would like to share with me, feel free to leave a comment! Also, do share this article if you think a friend would find it handy!
Originally published at cryptohero8.com on January 8, 2019.
