How to calculate mining’s profitability?

4 min reading

If you’re thinking about crypto-mining, you need to know how to make the best use of your money and equipment. In this guide, we'll show you how to mine digital currencies in the most cost-effective way.

How to start?

Choose the currency you want to mine

The process of mining digital currencies involves solving complex cryptographic puzzles. In doing so, miners provide "Proof of Work", awarded with a certain amount of coins. Generally speaking, there are two hash algorithms: SHA-256 and script.

SHA-256

The SHA-256 algorithm favours raw processing power. In very early times, Bitcoin could be successfully used CPUs and GPUs (graphics processors) that can be found on a normal home computer to mine. However, Bitcoin's mining is so difficult, that specialized processors known as Application Specific Integrated Chips (ASICs) are needed to mine it.

script

The encryption algorithm favours greater amounts of RAM and parallels processing capabilities.

The mining hardware

Depending on the budget and type of currency you intend to mine, there are two ways to set up the mining system:

Construction of equipment on your own

You can build it from your own computer, with as many graphics cards (e.g. GPU) as you can fit, or how much you can afford. While some people can use a standard computer case, many use non-standard cases, such as beer boxes, which allow for greater airflow around the components. The advantage of home-made systems is that you can simultaneously perform CPU and GPU mining.

Increase power

Mining requires electricity - a lot of electricity. If you're building home equipment, you'll still need an ATX (PSU) power supply, so invest in the most efficient power source you can get. You should also consider the problem of electricity bills. After the initial expense per device, the most important thing you need to know to calculate your current profitability is the cost of electricity. Check with your operator or check your last bill. If the energy costs add up to more than you earn, then, of course, this is not a good business model.

Combine your efforts

Instead of going alone, it is usually better to join the Mining Pool, where you combine resources with other miners. The members earn part of the rewards if the level of difficulty of the blocks they have solved is higher than the level set by the operator of the group.

Other problems to consider

Unstable currency exchange rate also affects long-term profitability. If the price drops suddenly, you will have the choice either to sell at a low price or to keep the coins until their value increases. In the first case, you would have to continue mining to recover your expenses for equipment and electricity.

Hidden costs

The costs associated with mining, such as the platform and current costs of electricity are probably the most important ones for the mining beginners.

Cooling costs

This is not only the cost of energy consumption by the mine. And what about the electricity that drives an additional cooling system, such as fans or air conditioning?

Profitability calculators

To get help with some of the calculations that miners have to make, there are several websites that provide profitability calculators. You can enter parameters such as hardware cost, hashing rate, energy consumption and the current bitcoin price to see how much time it will take to pay off your investment.

Waluta Kurs Dokonaj zakupu

Dear customer,

We use cookies to provide our services correctly and safely. Cookies are small text-based data sets that shall be saved on the device you are using in connection with the use of this instnat website. Cookies are created in order to ensure proper functioning of thes instant website. By clicking the button "I accept and go to the website", you implicitly agree to creation of the cookies on your computer and to deploy automatic tracking and data collection and processing on behalf of the Tokeneo TEO OU. Click the above-captioned button is also tantamount to accepting website's privacy policy. Closing the notification by means of "X" is unequivocally connected with your consent. If you do not agree to any of the above, please discontinue using our Website.

“Cookies” shall make an identification of the software used by you and to customization of this instant website to your needs. Cookies contain the name of the domain from which they origin, duration of period of their storage on your computer and an assigned value.

Third party cookies:
We also use third-party cookies for the following purposes:

  • creating statistics - helping to understand the way Users use the Website, which allows to improve its structure and content with use of the analytical tools
  • defining a user profile - in order to display custom-tailored content in advertising networks.

External entities that might be source of any third-party cookies on this instant Website are as follows:

Using a settings of your web browser or by using pre-set configuration tools available in our service you can independently and at any time change the settings concerning your use of the “cookies”, specifying the conditionsof their storage and how your device is creating and downloading them. These settings can be changed to block the automatic handling of cookies in the settings of your web browser or inform about their placement on your device each time.

Detailed information about the options related to use of “cookies” is available in the settings of your software (web browser).

Service privacy policy

This instant document lays out the principles of the Privacy Policy on the tokeneo.com/news/pl website (hereinafter referred to as the "Website" or "Service"). The administrator of the Website is TOKENEO TEO OÜ (an Estonian law limited liability company) with its registered offices in Tallinn (in the province of Harju Maakond), at 19-7K Maakri Street (in the district of Kesklinna Iinnaosa), 10-145 Tallinn, Estonia, registered on 21.12.2018 in the Estonian Business Register under number 14630242, using the EU VAT number: EE102149487.

The full document to read the Tokeneo privacy policy is available in this document.

Advanced settings can be changed in your browser.