I’d never been involved in Crypto (owning or mining) until I came across a web article about CPU mining in early January 2020. At that time, I had about 5 old computers lying around (I’ve been building my own computers since 80286 CPUs were the latest technology). So, I spent a few dollars getting all 5 of them up and running (about US$100 in total for bits and pieces – all my numbers have been converted to USD even though they occurred in AUD) and started mining PASC through a couple of mining pools such as Fastpool and Nanopool. I mined for a month and made about $10 after electricity costs which average $0.16/KW where I come from. Then I started researching GPU mining.
By the end of February, I had purchased 6 x RX5700 GPUs and set up my first GPU mining rig - mining ETH and ETC. I was still mining on several pools, switching when opportunity seemed better elsewhere having come to an understanding of how probability – stated as “Luck” on a pool – influences the rate at which a pool mines ETH/ETC. After power costs I was making about $3 a day.
I did this for a couple of months, learning heaps about bios modding and overclocking/undervolting the GPUs. By the beginning of May, I had the rig running relatively smoothly at a steady 310MH/s for a power consumption (of the 6 x GPUs) of 450W. Consumption measured at the wall including the cooling fans I set up was about 800W. My daily profit was up to about $5 a day now also.
I then decided to set up another rig - which very quickly turned into setting up two rigs. My research clearly showed that nothing from Nvidia could mine anything as profitably as AMD cards could mine ETH/ETC – and that is still true today. So I decided on RX570s as I was able to buy them for about $160 each.
By the end of June, I had finished building the 2 new rigs and was now running my own 18 GPU “farm” in a shed out the back. I had spent a total of $7,500 on hardware. Even though it was winter here, I was learning the importance of a good cooling solution as I was regularly getting crashes from overheating.
I was also learning the benefits of the stability of Linux and was gradually moving away from Windows into a linux based setup. By mid-July, I had pretty much settled on the configuration that I then ran for the rest of the year. All 3 rigs run on HiveOS using Phoenix Miner (it was Claymore’s until it died) and mining to Nicehash. Nicehash then converts my ETH/ETC into BTC and I transfer that to my Coinjar Wallet every couple of days. My stable configuration of 6 x RX5700 and 12 x RX570 was hashing at 675MH/s and using about 2500W counting all my cooling solutions (measured at the wall using power meters).
Throughout this time, I was building my new home and I moved in at the beginning of September. This bought me the benefit of free power during daylight hours as I have a 12KW solar system installed.
Yesterday, 31 December 2020, I completed the sale of my 3 mining rigs, sold down my ETH and BTC and have ceased mining.
Here’s the results.
Total cost of mining equipment: $7,500
Proceeds from sale of Mining Equipment: $5,000
Cost of Electricity during mining period: $1,750
ETH mined and sold (5.9 @ $720): $4,248
BTC mined and sold (0.31902267 @ $29,040): $9,265
Profit before Tax: $9,263
I made more than 75% of this profit in the last 5 months so if I could keep it at this rate for a full 12 months, I could easily make $15-20k in a year, right?
On the surface this looks like a compelling argument for crypto mining! Except that there are several unique circumstances that mean this sort of profit may not happen in the future.
Firstly, most of this profit came from the increase in the value of ETH and BTC. Over the year, BTC went from $7,177.57 to $29,019.20 (404% increase) while ETH went from $130.27 to $742.13 (570% increase). If both these coins had gone up 10% during the period that I held them (about 6 months for most of it) then my profit would have been a bit under $1,500. Nothing to scoff at but hardly worth the thousands of hours of effort and frustration that a year of crypto mining involves.
The second issue is the impending end to ETH mining with the recent launch of ETH2.0 and the switch from Proof of Work to Proof of Stake. Once ETH mining disappears, most coins are far less profitable than what you can currently make mining ETH with AMD GPUs. There might be something else takes its place, but I decided not to gamble on that. The end of profitable ETH mining would also likely see a significant decrease in the value of secondhand AMD GPUs and so I decided to take my money off the table before that happened. I don’t intend to participate in ETH staking as I’ve spent quite some time on the ETH2.0 testnet and know that there are much better ways of making money than locking up $23,000 to make 4%.
This year has been significant for the rise in value of many coins and I just wanted to compare my mining experience with what would have happened if I’d not bought my mining equipment but just bought the coins instead.
If I’d bought $7,500 worth of BTC at the end of May 2020 (which is when I spent most of it on mining equipment) and sold it at the end of December 2020, then I would have made $15,557 in profit. If I’d bought $7,500 worth of ETH at the end of May 2020 and sold it at the end of December 2020, I would have made $14,697 profit. As @MRV says, you’re better off buying the coins than mining them - at least you were in 2020.
The main question is, will 2021 be the same? For BTC to make the same rise it will have to be $117,325.78 by 31 December 2021 and ETH would have to close out the year at $4,230.14. I’ll certainly be putting money back into crypto this year, just doing it a little differently than I did last year.