To mine or not to mine crypto? So, what’s the best crypto to mine in 2020? And according to motivational speakers and online financial “analysts”, there are a million ways of making money and staying profitable. Crypto and Bitcoin mining may well be the best option.
Crypto shapes the future of finance
There are tons of coins listed by coin aggregators that claim to be an improvement of Bitcoin’s infrastructure. They are SECURE, faster, and better. Besides, they claim to use less energy and are perfectly decentralized. They argue that these coins will shape the future of finance but are yet to be picked up by mainstream miners.
Earn money legally to be profitable in the long run
However, for a miner, the goal is to dive in from the deep end and earn money legally and remain profitable whilst filtering out noise in the long term. Though there are popular coins like Litecoin or Bitcoin, not all are worth the efforts even when using the latest and best gear. They may be promising yet illiquid, fast yet its price is near worthless.
Understand profitability parameters
So, before a miner digs in and invests their hard-earned funds in hardware or mining software, it is best to first evaluate whether it is worth the hustle and thoroughly understand some of the many parameters that influence mining profitability.
These are fluid and keep changing. Therefore, the list could be a tad bit longer depending on one’s location. Remember, to mine in the United States may not be the same as to mine Bitcoin or Ethereum in China, or say in the Middle East.
There are laws that govern equipment import, electricity, environmental conditions, and yes, the legality of using the coin. That’s not forgetting on-chain factors that while ingrained in code, can be changed or left to execute drastically slashing or pumping profitability. Ethereum, for example, has a different monetary policy and terms of mining may not be the same as those of Bitcoin.
What will shape profitability in crypto mining
Before deciding, considering these will determine whether one will be profitable in the long term:
1. Electricity Costs
Thing is, electricity is a resource that the government spends a lot of money on to improve its grid as it powers manufacturing—a sector classified an economic activity in all countries. Therefore, electricity is not free and is sold by distributors depending on consumption.
Rates vary between retailers and manufacturers, directly depending on the abundance of the generating component. In countries like China where coal is plenty and dams are in their thousands, electricity costs is relatively low.
The same trend can be observed in the Middle East in countries like Iran where there is oil and the government has ratified cryptocurrency mining, earning revenue from miners.
A blend of supportive policy and an abundance of power generating sources can also positively influence the price of electricity. And you will need to figure out where you want to set up your farm if you want to beat miners in say China whose electricity rates are sub $0.05 KWh.
Anywhere above $0.12 per KWh (mining gear—especially ASICS, spend a lot of power) places you at a disadvantage.
As economics dictate, revenue must be greater than costs—a big part of which will be from the electricity needed to best mine crypto.
2. Mining Rigs Deployment Period
The costs of electricity may be right (or you may be completely off-grid and drawing power from renewable sources), but it won’t make sense if you can’t deploy your gear to the network (preferably via a mining pool) and mine faster.
Presently, the time taken from purchase to delivery, to installation and testing is roughly 30 days or approximately three difficulty cycles (each of 14 days) in Bitcoin terms.
3. Mining Rigs Maintenance
Ideally, the purchased gear should be simple to maintain with highly reliability. This is also not forgetting that reliability is proportionate to the availability of professional technicians.
Though this may not reflect on mining revenue, it is imperative that technicians are properly trained to troubleshoot and restore operations in the shortest time possible.
The higher the uptime, the more the revenue, and thus profits.
4. Price of the Coin
Price is shaped by market forces of supply and demand. But it’s a little bit different in the crypto scene where there are claims of market manipulation. Still, a miner’s pockets will be well-padded if he/she can mine valuable coins.
The higher the price, the better the coins’ liquidity, and this means not only can they easily dispose of their coins when needed but they can consistently earn profits from rising demand which more often than not drive prices higher.
5. On-Chain Factors
Here, a Proof-of-Work miner will have to keep up with on-chain parameters like hash rate, difficulty, and “halving events.” Hash rate influences mining difficulty but halving is hard-coded and meant to reduce daily emission over time.
Technically, halving tend to increase the demand of a coin over time but negatively affect hash rate as it becomes more difficult to stay in green—requiring twice the amount of resources to earn the same pre-halving coins.
With a lower hash rate, the network automatically reduces the mining difficulty to keep block generation times constant. These shifting factors can positively or negatively impact cryptocurrency mining.
6. Gear Efficiency
Crypto mining is a rat race. And for them to stay in the green, they must use the latest efficient gear to mine.
Therefore, a miner will from time to time forced to upgrade gear not only to slash on associated costs like energy but to stand a chance against the increasing industrialization of the cryptocurrency scene.
Every now and then, given the potential of some coins, mega-farms are been launched fixed with the latest gear for ASIC or GPU mining. This will naturally force a miner to either upgrade or close shop as competition for scarce coins become stiff.
7. Block Generation Time
Cryptos are only mined in Proof-of-Work networks where for funneling resources to a specific network (often through a mining pool), coins are released as rewards at regular intervals.
In the Bitcoin network, it is after every 10 minutes (but can also vary). In other networks, say in Ethereum, block generation times can be relatively lower. Often, block generation time is shaped by the demand of the underlying network.
Technically, it will be more profitable to mine from networks with fast block generation times emitting highly valuable coins.
Determining factors for coins to mine
When all these have been figured out, it is best to go a step further and determine the coin to mine. What is the best crypto to mine?
Filtering which coins to mine especially in 2020 when cryptocurrency mining is being commercialized at scales never seen before will shape the choice of your preferred network (filtered by mining algorithm) and the suitable gear for that operations.
In crypto-mining, there are three types of hardware to use first depending on what the network creators desired and their guiding principles.
Application-Specific Integrated Circuits (ASICs) are tuned specifically for networks whose preference is security over scalability while a Graphics Processing Unit (GPU) card and a Central Processing Unit (CPU) card are designed for networks whose priority is decentralization over security/scalability.
A network can’t be perfect and be decentralized, secure, and scalability as dictated by the Blockchain trilemma.
While ideal, CPU miners are obsolete given the stiff competition and the intensity of the crypto mining scene.
The algorithm and network will affect gear and therefore choosing which best coin to mine in 2020, depends on the following:
1. Coin Liquidity
This is the ease of converting one coin to cash, or simply, cashing out. In cryptocurrency, it means the ability of quickly transferring mined coins to an exchange and liquidating them for cash (stablecoins).
Cash will be needed for settling operational expenses like catering for electricity or paying for rent. Since governments are yet to classify Bitcoin—or any other crypto as legal tender, the ease of converting to fiat should be top priority when selecting which coin to mine.
2. Cryptocurrency Exchange Support
Often miners prefer Over-the-Counter (OTC) exchanges since they can negotiate selling price without moving the market.
Therefore, if a farm is big enough and regularly generate enough coins for arranged liquidation at OTC exchanges for fiat, the better.
On the other hand, a cryptocurrency exchange that supports fiat or stablecoin trading is suitable for traders who regularly withdraw coins via mining pools.
This is vital when selecting the type of coin to mine.
3. Legality of Mining and the Mined Cryptocurrency
If mining is illegal, it won’t make sense tussling with authorities. Either move to a country/region/state where crypto mining is legal or do your due diligence and cloud mine.
Better still, you can buy cryptocurrency from peer-to-peer, decentralized, or centralized digital asset exchanges. If mining is legal–but certain coins are not allowed, then don’t mine that coin regardless of its profitability.
The United States Secret Service has warned against privacy coins like Monero XMR asserting that criminals use Monero XMR for money laundering and for terrorist financing. Always ensure to abide by the law to prevent unnecessary and usually costly encounters when selecting the coin to mine.
4. Gear Utility
The Bitcoin network is powered by SHA-256 tuned ASIC miners which releases maximum computing power and nothing else. It is delivered as plug-and-play meaning it will function with a single objective of mining Bitcoin.
On the flip side, Ethereum is powered by an Ethash algorithm enabling GPU mining. GPUs are useful in graphics and therefore when not mining (say it is obsolete), its computing power can be used in research and other useful purposes.
Since ASICs are tuned for one purpose, once it’s obsolete, not only will its value sharply fall, but a miner will be stuck with electronic junk.
ASICs are usually more expensive but with advances in semiconductor technology, improvised gear is released regularly. On the other hand, the demand for GPUs for crypto mining has pushed demand (and therefore price) but as new GPUs are released due to demanding gamers, a miner can dispose of his/her gear at a profit.
Top Cryptocurrencies to mine in 2020
In 2020, these are the best cryptocurrencies to mine considering the above factors. Their prices may be all over the places but they are liquid, supported by most leading cryptocurrency exchanges, and a single gear can be switched between networks because they are powered by the same mining algorithm.
These are the top six coins to mine profitably when the prevailing market and on-chain conditions have been factored. The average electricity cost has been fixed at $0.05 KWh and profitability tracked over the last week.
1. Ethereum (ETH)
Ethereum is a Proof-of-Work (POW) network whose consensus is guaranteed by the Ethash algorithm. Its native currency, Ether (ETH), is the second most valuable coin in the world trading at $231. As the coin transits to a Proof-of-Stake network, mining Ethereum is still lucrative and measures have been taken to make its mining software and algorithm ASIC resistant.
Analysts predict that depending on their transition success and launch of the Beacon Chain, the ETH price may rally to over $500 by the end of the year.
Since Ethereum mining will continue even if Phase 0 is successful, miners can continue using their gear and earn big profits from their GPUs even after rewards were reduced to two from three during the Constantinople upgrade.
Ethereum (ETH) market cap stands at over $24.7 billion with three 480 GPU cards earning roughly $5 per week.
Common Ethereum (ETH) mining pools are: SparkPool (the most dominant), Ethermine, or F2Pool.
2. Ethereum Classic (ETC)
This is the original chain of Ethereum following the DAO hack. Ethereum Classic developers have stated that it will be for the best interest of the network if it does not transit away from the secure Proof-of-Work consensus.
Launching a single NVIDIA 2080 Ti graphic card (the latest and the best card) delivering 49.5 MH/s of hash earns an Ethereum Classic miner $0.95 from a $1.18 in revenue every day. This is when the cost of power is fixed at $0.05 KWh. Block reward is fixed at 3.88 ETC with a block generation time of 13 seconds.
However, profitability will depend on spot market rates and is not long term. Ethereum Classic is trading at $5.95 at the time of writing with a market cap of $657 million. This is not forgetting the hard-coded block reduction as directed by the network’s monetary policy scheduled every after five million blocks. The last halving took place in March 2020 and block rewards were slashed from 4 to 3.2 ETC.
Ethereum Classic mining pools are interoperable with Ethereum’s. The dominant ones are Ethermine, MiningPoolHub, and NanoPool.
3. Bitcoin Gold (BTG)
If a single NVIDIA RTX 2080 Ti GPU card is deployed to the Bitcoin Gold network, a miner earns $1.29 in profits from a revenue of $1.56 if the cost of power is set to $0.05 KWh. That’s $9.04 a week at the current difficulty of 64,903.
The 2080 Ti consumes 190 watts of power delivering 86 h/s to the Bitcoin Gold network via the Equihash_144 hashing algorithm. BTG is ASIC-Resistant and is meant to be decentralized.
Presently, every after 564.706 seconds or 10 minutes, 12.5 BTG coins are released as a block reward. Since it is a Bitcoin fork, its block generation time is set at 10 minutes but can fluctuate depending on several on-chain factors like hash rate and the network’s mining difficulty.
BTG has a market cap of $140 million with daily trading volumes of slightly over$32 million.
A miner can join the following BTG mining pools: 2Miners, Mining PoolHub, or, Suprnova.
Grin is a privacy-focused protocol and powered by the MimbleWimble protocol mining algorithm. For each successfully mined block, a miner is rewarded with 60 GRIN. At spot rates, each GRIN is trading at $0.4.
Although there is no fixed cap for GRIN coins, the network has adopted the Cuckoo Cycle concept where coins rewards for miners are regularly slashed. Its algorithm is the Cuckarood29 but the coin can be mined through these two other algorithms: CuckAToo-31 and Cuckaroom-29.
A miner should note that deploying his/her GPU through the CuckAToo-31 will result in losses at spot rates. The Grin network will hard fork on July 16, 2020.
If a single Nvidia RTX 2080 Ti GPU card is connected to the network, it will generate 9.20 h/s, consuming 220 watts earning a revenue of $1.29 and a net profit of $1.03 every day. In one week, that translates to $7.82.
GRIN can be traded for other liquid assets like Bitcoin (BTC), Ethereum (ETH), and USDT at KuCoin, Gate, Poloniex, Bittrex, or Hotbit.
A miner can join the following GRIN mining pools: F2Pool, or SparkPool.
5. Bitcoin (BTC)
Bitcoin is the most popular cryptocurrency with a market dominance of 66 percent and a market cap of $167 billion.
Given its liquidity depth, BTC is used as a base in most cryptocurrency exchanges with a decent amount of leading exchanges supporting fiat pairs. The Bitcoin network is powered by a Proof-of-Work consensus algorithm and all transactions are a hashed by the SHA-256 function.
Deploying the Bitmain Antminer S17 Pro with 53 TH/s ASIC, a miner—after factoring in electricity costs set at $0.05 KWh, earns a daily profit of $1.43 at spot rates of around $9,100, from a revenue of $3.95—( 0.00043741 BTC earned as rewards). This translates to $6.07 per week. Each ASIC miner consumes 2,100 watts explaining the high electricity costs.
For each successfully mined block, a miner receives 6.5 BTC as a reward. Before May 11, 2020, when the Bitcoin network halved its miner rewards from 12.5 BTC, profits—using the same gear, could be double.
However, since Bitcoin mining is highly competitive, it is recommended that a miner joins a mining pool. If these are projected daily rewards, factoring in mining pool fees and spot rate fluctuations lower daily profitability.
Common Bitcoin mining pools include F2Pool, Poolin, AntPool, or Huobi Pool. There are tons, these are just but a few.
6. DigiByte (DGB)
DigiByte is as decentralized as Bitcoin and as flexible as Ethereum. To secure the network, transactions can be hashed by five hashing functions.
In 2019, the DigiByte introduced a layer-2 scaling solution enabling asset tokenization and smart contracting capability without sacrificing decentralization.
Following its listing at Binance where DGB is now paired with BNB, BTC, and BUSD, its price shot and now trades at $0.017. Since mining profitability is directly proportional to price—assuming other factors are constant, DGB mining is now profitable.
If a single ASIC– Bitmain Antminer S17 Pro with 53 TH/s, is launched on the DGB network (SHA-256), a miner will earn $4 a week. After every 14 seconds, a new block is released. Block rewards are set at 594 DGB at the current difficulty of 2,554,968,700.
DGB market cap stands at $246 million with a 24-hour trading volume of $14.4 million.
To increase odds of being profitable, a miner can join any DGB mining pools (classified according to the algorithm). Choice of Mining Dutch (the most dominant with 45.90 PH/s at the time of writing), Prohashing, or Antpool.
Depending on your location and local laws, cryptocurrency mining of coins like Ethereum, Bitcoin, or GRIN can be lucrative. The onus is on the miner to research on the best coin to mine, using the latest gear so as to remain profitable in the long term.
If done properly, mining can be profitable and a source of passive crypto income now. Crypto is increasingly becoming mainstream as policymakers draft fitting laws.
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