How to Calculate Mining Profitability?

Are you serious about mining cryptocurrency? If so, you need to know how to use your money and equipment as well as possible. In this guide, we will show you how to mine your digital assets in the most profitable way.

Obviously, big money goes into expensive ASIC bitcoin. If you are in that position, you probably know how it works and want to mine bitcoin. However, those of you who have a more moderate budget might want to build a GPU miner for encryption currency, or buy a small ASIC machine for bitcoin or other SHA-256 currencies. In this case, you have come to the right place.

How do I start?
Choose your currency
Digital puzzles The process of mining digital currencies involves solving complex cryptographic puzzles. By doing this, the miners provide 'proof of work' that is valued in digital currency. In general, there are two working hashing algorithms used today: SHA-256 and scrypt. Note that there are a number of alternatives that are less frequently used, which we will not see in this guide (for example, Primecoin).

SHA-256
The SHA-256 algorithm supports raw processing power. In the early days of bitcoin, one can mine effectively with the CPU and GPU (graphics processing unit) that you find on a normal home PC. However, that time has passed, and the bitcoin difficulty level is so high that a special processor known as 'Integrated Application Specific Chips' (ASIC) is needed to mine it. The use of such powerful processors, together with the increasing exponential difficulty of bitcoin, has created a technological arms race, which means that even newly designed chips can quickly become obsolete.
Scrypt
The Scrypt algorithm supports a greater amount of RAM and parallel processing capabilities, which is why GPU-based rigs are still a way to do it. In addition, ASIC for Scrypt has not taken off, so the level of difficulty of the currency has not been driven dramatically as is the case with Bitcoin.
The right rig

shutterstock_88988593 Depending on your budget and the type of currency you want to have, there are two ways to set up your mining system:

DIY mining rig
This can be built from your own PC, with as many graphics cards (ie: GPU) that you can fit or be able to. While some people might use a standard PC case, many use unusual casings, such as beer crates, which allow increased airflow around the components. The DIY bonus system is that you can mine the CPU and GPU simultaneously (see our guide to mining altcoin).
ASIC
ASICs are self-contained units (power adapters that cannot stand), which come with USB ports and / or Ethernet, and are usually ready to be made by the manufacturer. ASIC miners are usually more expensive than DIY rigs and are mostly produced in the US, which means we in other parts of the world have to spend a little extra to import them.

Turn on
Mining rigs require electricity - lots of electricity. If you are building a DIY rig, you will get an ATX power supply unit (PSU), so it's worth investing in the most efficient supply you can get.

Consider the following two cases, for example: A PSU that is guaranteed to supply 860W and 93% efficiently will really attract 925W (860W / 0.93). Conversely, a 750W power supply that is only 80% efficient will actually produce 937.5 W (750 / 0.8) - so it uses more power, but supplies less.

When creating a mining rig, you must take into account the power requirements of all the components you use - especially all of these graphics cards. Plus it's a good idea to provide some excess capacity to handle unexpected events and provide the potential to overclock your system.

ASIC, on the other hand, can do more calculations with far less power because they are very special devices. And because they are shipped with the appropriate power adapter, you don't have to worry about doing all the math to find the one that's right for the task.

Mining efficiency of various systems can be compared by taking the ratio of the amount of hash he can do in a second, divided by the power consumed:

Hashing speed / power consumption = mining efficiency

Check your bill
After your rig's initial expenditure, the important thing you need to know to calculate your sustainable profitability is your electricity costs. Check with your provider, or see your last bill. If the power costs increase more than you get, it's definitely not a good business model.

Combine your efforts
Instead of doing it yourself, it usually makes more sense to join a group, where you combine resources with other miners. By joining a group, you get a part of the coin mined by all group members and have a greater chance of breaking blocks.

Miners get a share of the prize if the difficulty level of the block they complete is greater than the level specified by the combined operator. That level is always between 1 and the difficulty level of the currency.

Problems that must be considered
Spend to produce
shutterstock_96423176 Inevitably, the difficulty level of all currencies increases over time - a fact that will reduce the chances of your equipment producing coins or mining stocks. As a result, it is important to start with the best equipment that you can afford, to mine profitably over a long period of time.

The volatility of the currency mined also affects your long-term profitability. If the price suddenly drops, you will be faced with a choice to sell at a low price or hang on your coin until the value goes up. In the previous case, you had to maintain longer mining to replace equipment and electricity expenses.

Keep calm
Mining wherever you mine, this is a computationally intensive operation that produces a lot of overheating. Mining efficiency decreases when temperatures increase, so make sure your rig has adequate ventilation and cooling. As noted above, this is why some mining rig builders use beer rather than PC cases - to maximize airflow around their components. Even a stand-alone desktop fan can help keep your kit cool.

Power problem
When building a DIY mining rig, it makes no sense to save money by buying a cheap PSU. Instability in the power supply can reduce performance, or even cause system crashes that will cause downtime, so invest in high-quality units.

Avoid downtime
If your hardware is not mined, you lose money. Here are some ways to minimize downtime:

Get the best power supply you can afford.
Consider using an uninterruptible power supply (UPS), so that, if you have a short supply of electricity, it won't affect your miners.
Configure your mining computer to automatically start mining at start-up, so that if the system crashes and reboots, it will automatically start mining again. (This applies to DIY rigs and computers that accommodate ASICs.)
Hidden costs
Losing money. There are costs involved with mining, of course, such as rigs and sustainable electricity costs for beginners. However, some additions are less clear:

Shipping and customs
We import Jalapeno ASIC miners from Butterfly Labs to England. A shipping fee of £ 53 ($ 88), and British customs are charged at £ 46.09 (around $ 76). These costs are significant, and if you import an item, try to determine in advance what costs might be incurred.
Accessories
Do you need cables, adapters, etc. for what you plan to use and / or make?
Cooling costs
This is not just the cost of using your miner's power. What about electricity running an additional cooling system, such as a fan or air conditioner?

Do addition
Profitability calculator
shutterstock_135890222 For help with some calculations that need to be made by miners, there are several websites that provide profitability calculators. You can enter parameters such as equipment costs, hash levels, power consumption, and current bitcoin prices, to see how long it will take to repay your investment.

As a test, we entered the two mining system specifications into the calculator below. For our Scrypt GPU mining rig, we use the system described, and for ASAS SHAS-256 miners, we use the Butterfly Labs miner's specifications.

With UK electricity prices set at £ 0.20 per KWh (which is equivalent to $ 0.33), these are recommendations and benefits the following sites offer:

(Note that these numbers are correct on January 21, 2014, and they are all subject to currency volatility and changes in the level of difficulty.)

Multicurrency Calculator:

Dustcoin:
SHA-256: Freicoin $ 1.43 per day
Scrypt: Dogecoin at a price of $ 31.05 per day

CoinWarz:
SHA-256: Bitcoin at $ 1.14 per day
Scrypt: Dogecoin for $ 39.13 per day

Bitcoin special calculator:

Tradeblock key:
Bitcoin costs $ 1.20 per day

Bitcoinx:
Bitcoin costs $ 1.42 per day

Hopefully, this gives you an idea of ​​the spread of results across these services, remembering the same data at the same time.

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