Before engaging financially into the world of crypto and blockchain, it is vitally important to calculate the profitability of the new prospective business entity. It does not matter how profound a person is on the technical side of the question; every possible effort may and should be applied to ensure the highest profitability of your affiliation.
Ideally, you would need to take into aсcount all the available options in the market and go through thorough comparisons among them. A wise and well-thought decision should be made, because depending on various conditions and market conjuncture, prices on hardware and other variables may vary significantly.
Tip #1 – Compare your hardware
For instance, here it is evident that the price range of the highest and the lowest bid for the most popular ASIC Miner Antminer S9 is extremely wide. A cheapest used device could be bought for just 550 $, whereas the highest price climbs up to almost 3000$. But bear in mind that the cheapest option is not always the best. Used ASIC miners may lack the power capacity a new one would be able to provide.
When you made all the comparisons and decided on the best suitable option, you may start calculating the profitability of your startup. However, the costs for such entity not only depend on the hardware price but such factors as power consumption, price per kw/h and pool fee.
Tip #2 – Search for the best mining pool
Nowadays it is pointless to try mining bitcoins alone. Therefore, it is essential to connect your machine to the pool. In a nutshell, Mining pool is a server that distributes the task of solving the block among all connected participants. These participants are each awarded according to the amount of work they contributed to the probability of finding a block.
In order for this system to be in existence, a fee must be paid. As a whole, you have to pay this fee to be sure that in a certain amount of time your calculations will be awarded and you will get the guaranteed benefit. Without the pools, even the most powerful machines may spend years looking for the right block.
Fortunately, it is possible to monitor and compare different fees that these mining pools charge. Below you can see the pie chart that represents market shares of the most popular mining pools.
Here you can view the fees and features that each pool offers.
Cloud mining companies are another different types of mining pools. Such companies usually own data centers in countries favorable to the industry. They get the best electricity deals possible in the region and possess vast potentials of hashing power. It enables them to cloud mine ethereum, litecoin and bitcoin lucratively, while also being able to share their hardware capacities with users around the globe. They come handy when you don’t want to engage in much details about cryptocurrency and blockchain to start earning money in this industry.
Tip #3 – Find out your power consumption
Each device has its own power consumption that will play a considerable role when calculating the profitability of the venture. This list will allow seeing the comparison of all the ASIC miners in existence even those that became obsolete to this moment. This list will definitely be an excellent helping tool when planning your mining venture.
Tip #4 – make sure you exploit the best electricity rates
Electricity is what you consume to produce. Therefore, this is your most important raw material from which through the work process done by the machines this raw material is converted to virtual gold. Make sure that you have total control of uninterrupted electricity supply, and make sure that you exploit the lowest possible rates of your region.
Tip#5 – Get this numbers and insert them into mining calculator.
When you get all the information needed, that is
- Hashing power
- Power consumption
- Cost per kWh
- Pool fee
Insert all of the numbers into the mining calculator and the service will automatically calculate whether your mining venture is lucrative or not. Don’t forget to subtract the hardware cost to find out your total profit.
ABOUT THE AUTHOR
Alexander Petersons, product director of cloud mining service Hashtoro.com. IT specialist, serial entrepreneur. Started his professional career in small IT companies in Europe, then moved to America for several years. Worked on the development of mobile processors in Telecommunications equipment company Qualcomm (USA).
Since 2012, with a team of like-minded people been working towards creating their own cryptocurrency. Crypto-enthusiast, author of articles on IT and blockchain. Education:
Riga Technical University and Cass business school (The UK), MSc in Corporate Finance.