There are many companies that sell AISCs for mining cryptocurrencies. Bitmain and BitFury are some of these companies. Buying an ASIC means you are going to have to spend a few thousand dollars. Cost of these ASICs changes with the changes in the price of Bitcoin. But, a decent ASIC will almost always cost you in the thousands.
If you can’t afford an ASIC, you can always buy a mining rig or build your own rig. This is less expensive compared to an ASIC. But, buying a mining rig that has multiple graphics cards will always cost you more than if you had built your own rig. If you decide to build your own rig, I can guarantee that you are going to save a few hundred dollars.
Buying Hash Power
If you want to mine cryptocurrency but don’t have the expertise or money to build a mining rig, you are left with few options. The options are cloud mining or buying hash power. Although cloud mining is cheap compared to other methods of mining, buying hash power is the cheapest of them all. You can even buy hash power with a few cents. That is how cheap, buying hash power is.
Selling Hash Power
On the other hand, if you already own an ASIC or a mining rig, you can rent it on a hash power marketplace like MiningRigRentals or Nicehash and earn some money. Although, at this point, you have to decide whether to rent your mining rig or to mine cryptocurrency for yourself.
In this article, our focus is on buying/selling hash power for profit. So, if you are a buyer or seller of hash power, you can use this article as a guide to profit from this opportunity.
How to Lease Hash Power Profitably as a Seller
If you own a mining rig, you can lease it on a marketplace like Nicehash or MiningRigRentals. When you lease your rig on such marketplaces, you do not have to worry about downtime. Buyers are not affected if your rig stops working and you do not have to grant time extensions or issue refunds.
All you need to do is provide the computing power of your rig, workstation, server, ASIC or farm and you will be rewarded. As long as you provide computing power, you will continue to earn. When you stop providing computing power, you will stop earning. Simple as that.
Hash power marketplaces work similarly to pools. Owners of rigs point their rigs to a stratum server owned by the service. This server verifies, aggregates hash power of connected rigs and assign them to pools, the buyer sets when they order. You can connect as many rigs as you like and there is no limit to the amount of hash power you can provide.
There are 2 main ways to profit from a mining rig. You can either mine cryptocurrency for yourself or lease this rig on a marketplace like mentioned above. Whichever you do, you must know how to do it profitably. For this, you must use a mining calculator.
You can use CoinWarz calculator for this. Go to CoinWars and select the cryptocurrency you want to mine. I will use DASH cryptocurrency as an example.
With my Antminer S17 Pro, I can hash at a rate of 53Th/s. For Power Cost, I entered 13 cents. This is the average rate per kilowatt hour (kWh), I pay for electricity.
Antminer S17 Pro has a power consumption of 2094W. The difficulty, block reward, and BTC/USD value are filled for me automatically.
Pool fees are left blank because, in this example, I’m going to sell hash power; not mine Bitcoin.
There is no pool fee for selling hash power. Buyer is the one who pays that fee. But, hash power exchanges like MiningRigRentals and Nicehash do have fees for payouts. So, you need to incorporate that fee instead of pool fees.
Antminer S17 Pro cost me $2200. So, I entered that amount in the hardware cost field. This is what I got when I hit calculate:
As of now, I’m estimated to break-even in 281 days. That is how long it is going to take for me to cover the cost of $2200 for my Antminer S17 Pro. So, now I have to incorporate the fee of the hash power exchange. For this example, I will use Nicehash fees. Nicehash processes payouts daily. The fee is 2% of the total withdrawal amount.
I’m estimated to earn 0.00198849 daily if I mine Bitcoin with my Antminer S17 Pro. If I deduct the 2% fee from daily earnings, I’m left with 0.0019491702 BTC.
So, when I sell Antminer S17 Pro’s hash power on Nicehash, I’m going to charge a daily rate of 0.0019491702 BTC or more for the computing power. If I have to set the rate on an hourly basis, the fee will be 0.000081215425 BTC or more.
It is important to understand that this is only an estimate. The actual earnings can be lower or higher than this. So, to be safe, I will charge an hourly fee, much higher than 0.000081215425 BTC for renting my rig.
The majority of sellers that rent hash power is doing it because they can earn a lot more than just mining. When selling hash power, your earnings are constant and guaranteed as long as the mining rigs operate; as opposed to fluctuating earnings with mining. Although there are many reasons why someone wants to sell hash power, the main reason is more profit.
However, if you decide to mine instead, you can estimate earnings using the CoinWarz calculator. But, this time, you must enter the pool fees. You will get a breakdown of your daily earnings and break-even point.
If you decide to go this path, it is important to understand that Bitcoin may not be the most profitable coin to mine at any given moment. In that case, you can use WhatToMine or CoinWarz calculators to see what is the most profitable coin at the given moment. As for Antminer S17 Pro, I must look for the most profitable SHA-256 coin (hashing algorithm).
How to Rent Hash Power Profitably as a Buyer
One advantage of buying hash power is, you get to mine almost any coin. You can buy hash power of almost any hashing algorithm. The best thing about buying hashing power is, you get to rent a rig for a very little price. It can even be a few cents. If you don’t have the money to buy a mining rig, you can rent one for a few hours or days for very little cost. MiningRigRentals and Nicehash are some of the places to buy/sell hash power.
However, obtaining a rig for little cost doesn’t mean it is going to be profitable. Sellers charge fees based on the estimated mining returns that can be brought by using their rigs. For example, if the rig is estimated to earn $1 every hour, they may lease it for $1.05 every hour. This is bad news for the buyer. It means, as a buyer, you will never make a return on investment.
Although on rare occasions, you may find hash power for very little cost, enabling you to profit, if you utilize it. To find if buying hash power and mining with it is profitable, you can use WhatToMine calculators.
Step 1: Go to WhatToMine and select the coin you want to mine.
Step 2: Enter the hash rate of the rig you will be renting.
Step 3: Enter the fee of the pool you will be mining in (pool fees).
Step 4: Click Calculate.
Step 5: Take note of estimated hourly earnings.
Step 6: Compare with sellers hourly rate.
Step 7: The difference is the profit/loss you will be making.
As an example, I will calculate DASH mining profitability. DASH uses the X11 algorithm to hash. So, I will look for X11 mining rigs, available for rent. You can do this easily on MiningRigsRentals, Sort the rigs from the lowest rate to highest rate to find the best rig to rent.
As of now, if I rent the first rig on the list, I will pay a fee of 0.01046367 BTC every three hours. That is 0.00348789 BTC per hour. This rig is capable of hashing at 12 TH/s.
Now I head over to WhatToMine to estimate mining earnings with this rig. To calculate estimated earnings, I enter the following details: hash rate and pool fees. All other values are set to 0 and everything else is filled for me automatically.
If we compare the seller’s hourly rate with estimated hourly earnings, the different is 0.00106889 BTC. Your estimated earnings are lower than seller’s rate, so you will be making a loss of 0.00106889 BTC every hour.
If you try calculating profitability with different rigs and algorithms, you will likely get similar results. In almost all occasions, the buyer loses. But, hash power exchanges like Nicehash allows you to set your own pay rate for mining rigs. So, you can estimate your mining rewards with WhatToMine and set a rate lower than that. If you do this right, your cost of mining will be lower than earnings, making you a profit.
Unfortunately, if you do this, it is likely that there will not be any mining rigs assigned to your order; because, sellers always get assigned to the highest bidder. Since your rate is low, your order will be paused and may never be executed. But on rare occasions, if you just leave the order as it is, and you become the highest bidder, mining rigs will start mining for you.
To learn all the ways you could profit as a buyer of hash power, check here.
Usually, those who buy hash power is doing it for reasons other than short term profit.
Why Would Anyone Buy Hash Power from a Hash Power Exchange?
If short term profit is not the goal, why would anyone buy hash power? These are the reasons I find plausible:
Long term earnings – The buyer hopes the value of the coin they mine will appreciate in the future and recoup their investment.
Cheap alternative to mining – If the buyer can’t afford expensive mining rigs, buying hash power is the fastest way to mine.
An alternative to buying cryptocurrency – If buying cryptocurrency is not feasible or banned in the buyer’s country, mining could be the only way to obtain it. In some occasions, mining can have lower fees compared to buying.
Increase the hash rate of a mining pool – If a buyer owns a mining pool, he can buy hash power and allocate to it to increase the hash rate of the pool.
Mine a cryptocurrency that is not available in an exchange – If the coin you want to own is not available in exchanges, the only way to own that coin may be to mine it.
Launch a 51% attack or any other activity to do with hash power – If you own the majority of hash power (51%) in a cryptocurrency network, you can launch attacks. As is the case for some of the smaller coins.
Anonymous – Buying hash power to mine coins is an anonymous way to obtain cryptocurrency. If you take all the precautions, it is merely impossible to track.
Money laundering & many other reasons.
Buying/selling hash power has its advantages to both the buyer and seller. For sellers, it is a good way to earn more profit; and for buyers, it is a way of obtaining cheap hash power among many other reasons. If you want to earn as a seller, you must charge fees at a rate above estimated mining rewards of your rig. And if you are a buyer, always try to find good deals and mine a coin that is likely to appreciate in the future.