What should I be mining? Figuring out what to mine and how to mine it
Cryptocurrency mining is not an easy hobby or a get-rich-quick scheme. Like any other form of investment, it requires you to do your research if you want to have any chance of success. If you put in the right amount of time and effort, you should find yourself mining profitably. If you just start mining without a real plan, you’ll end up losing most of your investment.
So what’s the best approach to profitable cryptocurrency mining? If you follow these steps, you’ll put yourself on track for a scalable operation with excellent long-term potential.
Step 1: Choose your mining equipment
Whether you start by choosing your equipment or choosing your currency is a bit of a chicken or egg conundrum. Some would argue you need to pick your currency first because that’s the real investment. However, your mining equipment is also an investment and dictates your capabilities. Your equipment gives you a baseline for the amount of power you’re going to consume and how profitable you can be. It also helps to narrow the coins you can mine.
So how do you go about deciding which miners to buy? First, you need to decide if you’re going to be using GPU or ASIC miners. Once you’ve made that decision, you’ll need to do some extensive research before settling on your equipment. ASIC Miner Value is a great online tool that shows you potential daily profitability. It’s important to keep in mind that profitability can change frequently and dramatically based on price fluctuations and increased difficulty due to competition. An upcoming release often has astronomical profitability. Once those units start to enter the market, the profitability can go down sharply and quickly. Still, this is a great reference for real-time profitability to help you make a tough decision regarding your equipment.
Step 2: Choose your cryptocurrency
When choosing which cryptocurrency you want to mine, you have to look at the big picture. That means you can’t make your decision based solely on how much the coin is worth. If that’s all that mattered, everyone would mine Bitcoin and nothing else. However, Bitcoin mining is often less profitable than altcoin mining because of the other factors.
There are really three things that matter when choosing your currency:
- The coin’s current price
- The cost of mining
- The growth potential
Obviously the current price matters. You probably aren’t going to use your $15,000 ASIC miner to mine something that’s sitting at 10 cents. You need to find something that’s worth enough to make it worth your while.
You also have to consider the cost of mining, which is dictated by competition, hash rate, difficulty, and power required. Bitcoin is by far the most expensive coin to mine right now. The incredibly competitive market coupled with the complexity of Bitcoin verification requires a lot of power. That’s why many experts recommend investing in ZCash or Ethereum mining right now. The current value is a lot less than Bitcoin, but so is the cost of competition. To figure out your daily costs, use an online calculator such as What to Mine or ASIC Miner. This will give you a great picture of how much it will cost and what you might earn.
Finally, you have to think about growth potential. If a cryptocurrency isn’t poised for growth, then you probably don’t want to mine it regardless of the cost of power. While there is no certainty that any coin is going to increase in value, many experts have big projections for Litecoin, Ethereum, and others. No matter what you choose to mine, it’s important to remember that this is a volatile space, not a get-rich-quick scheme. You have to invest properly and be patient.
Step 3: Choose your mining location
Now that you know what equipment you’re going to use and what coin you’re going to mine, you need a plan for where you are going to mine it. Unless you’re a hobby miner with a very small operation (just a handful of GPUs or maybe one or two ASIC miners), you’re going to need to find a place outside of your home. Due to high competition and power costs, it’s simply not profitable to mine from your home. Mining equipment requires a lot of power, takes up a lot of space, and makes a lot of noise, none of which is conducive to a comfortable home life.
That means you have to find another place to run your mining equipment. That’s where mining colocation comes into play. Mining colocation is a simple concept: you pay a monthly fee for power, storage, internet, security, cooling, and everything else required to keep your equipment running at optimal capacity. Since mining colocation facilities are often strategically designed and located in areas with lower power costs, your equipment can run efficiently and cost-effectively, allowing you to mine more cryptocurrency and see a faster return on your investment.
Choosing a colocation facility can be tricky because there are so many fly-by-night players who’ve recently entered the market. Every general data center seems to have a crypto mining package now, and many warehouse spaces are being transformed into colocation facilities by companies who don’t know the first thing about cryptocurrency. When selecting your colocation service provider, it’s essential to go with someone who really understands mining and the cryptocurrency industry as a whole. If a facility isn’t designed by serious miners, then you aren’t going to have much success.
Mining with Compute North
Our colocation facilities are built by miners for miners who are serious about their investment. With strategic locations based on low power costs, renewable energy, and many other factors, we help you mine more for less. Contact us today to find out how you can take your operations to the next level with our mining colocation services.