As the price of Bitcoin starts to soar once again, society has a renewed interest in getting involved in the mining of cryptocurrencies. However, starting out as a cryptocurrency miner is certainly not cheap, and you need to make sure you have all the proper information before you dive in.
What Do You Need to Start?
First of all, if you plan to mine cryptocurrency of any sort, you need to be prepared to fork out some cash. There are a few different types of mining, and depending on the type you choose to engage in will determine your up-front cost. GPU mining will cost you a few thousand to get started, as well as a bundle to upkeep. GPU mining is done using a processor, motherboard, cooling fan, and a number of graphics cards. If you have some of these things lying around your house, it is possible to build your own rig. Nevertheless, it can be difficult to know what you are doing and, in the end, your up-front cost could possibly end up being the same if you need to purchase any sort of parts. It might just be more convenient to purchase a ready to go rig.
On the other hand, CPU mining using a simple computer is also a possibility, but this method is extremely slow and you probably won’t generate large returns. This method is also very expensive upkeep wise in terms of electricity and cooling.
There is a third method of mining known as cloud mining, where you would pay another company to mine for you. This method is the easiest to start up, and the month to month cost depends on the company you choose. But just like the other two methods, this will also take some money up front as well as cost money each month to upkeep.
So just how much money are we looking at? Especially for the coming year 2021? Well that all depends on the coin you choose. Bitcoin is perhaps the most famous cryptocurrency and one of the most expensive to mine as the production approaches the specified market cap. Each Bitcoin takes a large amount of electricity and massive amount of computing power to create. Thus, the cost of mining a single Bitcoin depends largely on where you live. In 2018, the cost to mine one Bitcoin in the US was $4,758, meanwhile in Venezuela it was just $531 per coin. If you wanted to cross the pond, you would find it was more expensive at $8,402 per coin in the UK and over $13,000 per coin in Belgium.
But since 2018, Bitcoin has come even closer to its maximum supply, meaning it is now about $5,000-$8,000 to mine one Bitcoin in the US and that number is only expected to increase in the coming years. This means, if you’re looking to mine cryptocurrency in 2021 and don’t have a lot of cash, it would probably be best to focus on a different currency.
Another popular coin to mine is Ethereum. Similar to Bitcoin, the cost to mine Ethereum goes up over time. In 2018, it was estimated to cost $268 per coin on average with the variance depending on the country you were in. In 2021, the costs are likely to be higher, and with the current price of Ethereum sitting around $450, this may not seem like the best uses of your money. In fact, many Ethereum miners have reported turning off their miners because it is no longer profitable as it once was. Unlike Bitcoin, Ethereum does not have a finite amount of coins and will not see the price spike that Bitcoin does as it is mined towards completion. Therefore, the miners are often working just to break even at the end of the day.
Other Cryptocurrencies to Mine
Although it may be a bit disheartening that Bitcoin and Ethereum aren’t easy or cost effective to mine, there are a number of cryptocurrencies that appear to be cost effective to mine in the coming year. Of course, they will require more research (and the hardware needed might vary a bit by coin) but if you’re dead set on mining you should check out some of these coins.
The number one recommended cryptocurrency to mine is Litecoin, as the price often remains stable and it is easy to spend or trade your earnings. Litecoin requires less of an initial investment than Bitcoin or Ethereum and you have the possibility to reap decent profits. Currently in the US, it costs about $60 to mine one Litecoin, and the cost of electricity here probably isn’t going to drop. So, if you are interested in mining Litecoin, to make a profit based on the current price of Litecoin you’ll need to live somewhere with cheap electricity.
Dogecoin is also a favorite among miners as it is easier to mine than a number of the larger cap coins. However, you need to mine it somewhere with cheap electricity (similar to Litecoin) because it will cost about $5 per day to mine the coins in the US, which will put you at a net profit of -$4.79 per day, meaning you would be paying to mine the coins. But if you can get power for less than $0.10 per kwh, it’s definitely possible to make a profit.
Monero is a high-level privacy coin which has proven to be slightly more profitable than mining Dogecoin—but mostly because it maintains a much higher price than the aforementioned coin. Monero uses much less electricity than Dogecoin and at US electricity rates would only cost a couple dollars to run. Even so, based on the current price, if you tried to mine Monero in the US you would still lose money each day.
Will Mining Get Better in 2021?
If you’ve read this far, you can tell becoming a miner in the USA is not a very profitable line of work, and unfortunately, a number of miners are predicting that the cost of mining is going to continue to rise in the coming year. But the prices of cryptocurrencies, such as Bitcoin and Ethereum are predicted to rise as well—meaning mining could become more profitable, especially if a number of the current miners call it quits due to a year of low returns. And you do always have the option of looking at various countries that are best for mining.
Overall, if you’re interested in becoming a cryptocurrency miner, and have the upfront funds (and low electricity costs) to make it possible, now may be the time to enter the market. Be aware that any sort of business involving cryptocurrencies always carries risks and you may lose money in the process.