Today, CPUs and powerful GPUs are worthless for mining bitcoin. If you want to mine Bitcoin you need an ASIC (application specific integrated circuit). ASIC miners are built specifically to execute a hashing algorithm. It can calculate hashes, a lot quicker than a GPU or most powerful CPUs.
Fortunately, Bitcoin is not the only cryptocurrency out there. There are so many cryptocurrencies that are still mineable with a GPU or CPU. Some of these cryptocurrencies are ASIC resistant. Meaning, there is no ASIC machine built to mine that coin, making it only mine-able with a GPU or CPU. Monero (XMR) and Bitcoin Gold (BTG) are a few examples amongst many.
Before you start mining, you need to know your objective. I assume your objective is earning a profit. There are two ways you can profit from mining. You can either mine in the short term to make immediate profit or HODL, hoping that coins you mined will be worth many times in the future.
Most Profitable Coin – Mining for Profit in the Short Term
If you are mining to make a quick buck, you need to understand that there is no one specific coin that is profitable to mine. The difficulty of cryptocurrency changes all the time. So you need to alternate between mining different cryptocurrencies.
The question you should ask is “What is the most profitable cryptocurrency to mine at the moment?”. You must use a profit calculator to determine which cryptocurrency to mine.
Identifying Most Profitable Cryptocurrency to Mine.
Finding the Power Consumption of Your Device
If your device is a laptop, you can look at the charger to determine the power it consumes. Most laptop chargers consume 65W. 65W means, the laptop consumes 65 Watts in an hour. Alternatively, you can plug in an energy usage meter/monitor to determine the power it consumes.
Finding the Hash Rate
It is important to know that mining different cryptocurrencies can produce drastically different hash rates. This is because different hashing algorithms are used to mine cryptocurrency. You can look up your CPU or GPU for the hash rate it can produce for a specific algorithm. WhatToMine is a great tool for this. Alternatively, if you mined a coin, you can look at the average hash rate your machine produced when mining that coin. This is your device’s hash rate.
Finding Cost of Electricity
You can find the cost of electricity easily by looking at your electricity bill or Googling it. You must find the cost of kilowatt-hours (kWh) for your country.
When calculating your mining profitability, you must take pool fees into account. Some pools are free. Usually, pools charge a fee of 1%.
You have all the information needed to calculate the mining outcome and determine which coin is most profitable to mine. Now to calculate profitability, I use Cryptocompare or WhatToMine. You can use any other calculator you prefer. Input your details and hit calculate. WhatToMine will display the most profitable to least profitable in a list. Cryptocompare will display expected daily, weekly, monthly and yearly profit for the coin you choose to mine.
Mining for the Long-Term Potential
You can also mine for the long-term potential of the coin. It may not be the most profitable coin to mine at the moment but eventually, it will be worth many times in the future. Here are my top 3 coins that have the greatest potential:
Bitcoin is the most popular and first decentralized cryptocurrency created by pseudonymous developer Satoshi Nakamoto in 2009. It uses the SHA-256 algorithm. Unfortunately, you will not be able to mine Bitcoin with a CPU or GPU. You need a powerful ASIC miner to mine Bitcoin. ASIC miners are expensive and consume a lot of electricity. Some may even mine Bitcoin at a loss, hoping it will eventually pay off.
Monero is famous for its privacy features. Monero was created in April 2014. Bitcoin transactions are transparent. Anyone can see all the transactions in the blockchain. If someone links your wallet to your real-world identity, they can track all the transactions you have done. Monero hides sending and receiving addresses as well as the amounts. Due to its anonymity, it is widely used in the dark market for illegal transactions. This does not mean Monero doesn’t have good potential. There are so many use case scenarios where anonymity is concerned that aren’t illegal.
The best thing about Monero is, it can be mined with a CPU or GPU. Monero is ASIC resistant. You can easily mine Monero with GUI wallet. Alternatively, you can download a program like MoneroSpelunker and start mining.
Ethereum is another cryptocurrency that has great potential. Some say Ethereum has the potential to surpass Bitcoin. Decentralized applications (DAPS) can be built on the Ethereum network. Ethereum provides all the tools necessary to build decentralized applications (DAPS) on the Ethereum network. Creators have the full control of the content they create on the Ethereum network without having to embrace third parties. Ethereum uses a peer to peer approach. Which means there is no need for third parties.
The technology between Bitcoin and Ethereum is different. Bitcoin is a money transfer system while Ethereum is a whole network. It has its own payment system and coding language. Bitcoin has the capability to replace the banking system while Ethereum can replace the internet’s third parties. Ethereum has plans to go from proof of work model to proof of stake in the future. If this happens, you can no longer mine Ethereum. This can further increase the value of Ethereum.
Before you start mining any of these 3 coins, you need to consider 2 things:
- Should you buy these coins rather than mine?
- Should you mine other cryptocurrency and convert to them?
If I didn’t have powerful ASIC miners and cheap electricity, I would rather own these coins. Whichever you do, happy HODLING!