From down in the pit, things are looking up. Despite the downturn, cryptocurrency mining continues to thrive— if you know what you’re doing.
Here’s a roundup of some new and current mining lore and the more recent opportunities and strategies springing up in GPU cryptocurrency mining (If you’re more interested in ASICs, take a look at our recent report here.)
The most successful GPU miners are not mining Bitcoin and Ethereum.
Typically, people just mine whatever the most profitable coin is at the time, such as Ether, and leave the machine running. But “that’s not the most intelligent way,” Joshua Riddett, managing director at Easy Crypto Hunter told Decrypt . The startup provides mining, consulting, training and accounting services to the UK’s cryptocurrency industry and, according to Ridett, wily miners target the smaller coins that can be mined. That “really is where the profit is.”
For developed areas, such as the UK, he added that GPUs are more energy efficient, they’re also more versatile, and can mine hundreds of different coins. That makes it possible to turn a tidy profit.
Wily miners pay attention to the “red flags.”
To spot a winner, miners eliminate those with so-called “red flags,” including coins that have been pre-mined; those with an ico; a value of less than £20 million; a core-development team and with code that isn’t open sourced, which limits development potential. A coin with any of these flags is given a wide berth.
Coins also need “realistically liquid” volume so that you can move your money in and out daily, and convert it to other cryptocurrencies or fiat,” said Riddett.
Experts Decrypt canvassed highlighted Ravencoin as an example of a coin that has the right attributes and, because: it uses Bitcoin’s code; it benefits from an existing ecosystem, including Bitcoin developers, and it favors GPU miners over ASICs.
Easy Crypto Hunter is boasting a 91 percent return for its business clients (those with the tax and other advantages that accrue to a limited company in the UK,) based on a year mining Ravencoin. Retail clients are seeing profits of 59 percent.
Illicit cryptocurrency mining, known as “cryptojacking,” is now the most popular form of cybercrime targeting enterprises. Hacker-miners stealthily introduce crypto mining on a target victim’s computer, stealing processor cycles and electricity from their victim, while generating cryptocurrency for themselves.
New coins present new challenges.
Mining newly launched coins is an obvious strategy, but don’t jump in until you know what you’re doing. “The risk is always much greater with a new coin because of new, untrusted people running pools, but also because the coin’s software is new and that can cause unforeseen problems,” councils Pete Hill from GPU software specialist, Cudo Miner.
The best way to find new coins is by sifting through crypto group forums and websites (try the Bitcointalk announcements thread.)
Know when to HODL them—and when to FODL them.
HODL is short for Hold On for Dear Life. It’s an entreaty (made by token developers and other HODLers) for miners and investors to accumulate their cryptocurrency, in the hope that the price will rise over time.
But that’s not necessarily the right play. Crypto miner and writer Zach Hildreth advocates mining the most profitable coin for your machines, selling to the exchanges weekly, and then buying coins that you believe are good investments.
But you need to decide which cryptocurrencies you think will have the most long-term value. Several websites will help you calculate profitability. Check Coinwarz and WhattoMine for insight into which crytptos have the best long-term value.
Consider joining a mining pool, where participants share and share alike. While it’s true that the bigger the mining pool, the more people you have to share the take with, experts say that you still might do significantly better than going it alone. That’s because big pools have big computing power (and may also have newer, better equipment.) A big team, with lots of mining power, can mint more coins, but they’re shared across a greater number of people.
The pool you join will depend on the coins you’re planning to mine, and whether you want more consistent payouts of a smaller amount, or to take on more risk with, potentially, larger rewards. (For more on this, see our guide, here.)
Mining rigs are good for more than just mining.
Miners are increasingly using their GPUs for lucrative alternate tasks to supplement their mining income. GPUs make excellent number-crunchers, and employing them to complete commercial deep-learning tasks, to help smarten up AIs, is becoming a lucrative business.
In fact, Riddett believes that putting GPUs to work on commercial deep-learning tasks will become 3-5 times more profitable than cryptocurrency mining.
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Meanwhile, startups like Golem already allow their customers to rent out their GPUs for work-intensive tasks. As we move into an era of distributed computational power, it’s a trend that’s taking off—Israeli company Run.ai, recently raised $13 million for its distributed machine-learning platform.
North Korea may have earned up to $200 million in 2017 mining crypto.
The golden age of GPU mining is upon us.
The GPU mining community is keenly anticipating Ethereum’s ProgPoW update, Riddett believes it will herald a new era in GPU mining.
And it may bring bounty in excess of better mining for GPUs: “I think we’ll see a very positive price reaction when they [introduce it.] It will kind of hit the reset button for Ethereum and make it a community-driven project.”
Mining is forever.
If not forever, at least a very long time. Many coins will be mineable for years to come. Bitcoin, for instance, began with a total of 21 million. Around 80 percent of Bitcoins have now been mined, but the cryptocurrency is programmed to become more difficult to mine over time. The treasure chest won’t run dry until 2140.
If all else fails, consider the “pickaxe strategy.”
Anonymous YouTube vlogger and mining expert, BrandonCoin, has compiled a handy chart for Decrypt , with examples of how much it costs to amortize your rig and make money on your equipment.
If the returns seem less than impressive, you could go the “Pickaxe” route. This is based on the strategy employed by wiley miners during the 1849 California gold rush. The smart investment was not to pan for gold, but rather to make the pickaxes used for mining. Or, to put it in modern terms, invest in the companies that manufacture those pickaxes: AMD and Nvidia are the biggest manufacturer of GPUs, but consider companies, such as Cudo Miner, that focus on mining software.