Cryptocurrency mining is a fundamental element for many popular coins.
For most cryptocurrencies, miners provide a distributed way to validate transactions, secure the network and infuse the market with newly minted coins as a reward. For other cryptocurrencies mining as we know it is slowly becoming a thing of the past or was never even included in the initial design.
“Can you still turn a profit?”
Some cryptocurrencies like Ethereum are beginning the shift away from proof-of-work (traditional mining) to proof-of-stake (staking). This doesn’t mean that mining will completely disappear, but there will be less dependency on huge warehouses of power hungry mining hardware owned by just a handful of individuals. Newer cryptocurrencies, like Algorand, were built from the beginning as pure proof-of-work designs and eschew mining altogether.
In Ethereum, moving to this new way of achieving consensus means that new “validators” would need to provide a significant financial stake in order to serve the network. The idea behind this is that people are less likely to perform malicious actions (like validating a phony transaction) if they risk losing a significant portion of their stake.
Ethereum will soon implement EIP-1559 and fundamentally change the way the blockchain operates. You can read more about proof-of-stake on Coindesk in the article published here.
So if some cryptocurrencies are moving away from proof-of-work, can you still become a miner today and turn a profit? Yes, you can. It’s just not nearly as easy or as simple as it once was. In the early days of mining you could pickup a few GPUs, or order an ASIC miner (which would actually arrive) and start mining with relative ease. Difficulty was lower and although the price of most cryptocurrencies was lower, as we’ve seen recently they were set to skyrocket a short while later.
In this article, we’ll look at some of the most popular cryptocurrencies you can still mine today and just how difficult it is to get started with each one. We’ll also look at some of the barriers to entry occurring right now and a few basic examples of potential profit and achievable hashrates on common hardware.
The Great Hardware Shortage
Before we dive into each cryptocurrency, we’ll need to cover a significant issue taking place right now in the mining community.
There is a massive hardware shortage.
Take a look on Newegg, Amazon or other popular retailers and you’ll find that almost every mid to high-end graphics card is superbly sold out. Retailers are overextended due to the incredible demand and the extreme lack of hardware due to chip shortages, COVID-19 delays and cryptocurrency popularity spikes.
There’s a Computer Chip Shortage, by Ella Alderson, explains in detail just how we got ourselves into such a tight spot with global chip manufacturing and how its a contributing factor to the current situation. The other major element of this shortage is the recent meteoric rise of Bitcoin and other cryptocurrency prices. The skyrocketing value has caused a wave of fresh miners flocking to the digital gold rush and buying up more hardware than ever before.
This lack of hardware is not limited to GPUs either. The shortages extend into a wide array of electronic components. Processors and other microcontrollers for automobiles and household electronics have all been impacted. So purchasing something like an ASIC miner doesn’t mean you’re completely out of the woods.
The bottom line is that this shortage will impact your search for hardware. Significantly. You’ll have to spend a lot more time on wait lists, watching for stock updates or sifting through the absolutely outrageous second-hand market. You may even find yourself paying premium prices for graphics cards that came out over 3 years ago.
My advice is to keep checking retailers, put your name on notify lists and if you can try to visit a few smaller local shops. There are also several Discord groups and live YouTube streams dedicated to providing real-time GPU stock updates across various retailers.
Now that you’re caught up on the madness, let’s look at some popular coins where your mining efforts can be directed.
Please keep in mind that prices and hardware availability are extremely volatile, so be sure to do your own research before making any purchasing or investment decisions. The cost for hardware items has deliberately been left off due to market volatility.
But I thought you said Ethereum was switching to proof-of-stake!? Well, it is, but not for a little while. As of April 2021, Ethereum is still heavily supported by a large network of mining machines that validate transactions, execute Smart Contracts, etc.
The big shift to proof-of-stake likely won’t take place until 2022, so if you want to get started mining Ethereum you absolutely can. Just be aware that significant changes are coming in the long term. You should be prepared to re-purpose any hardware investment to mine another coin or sell on the open market when Ethereum mining begins to taper off. Also remember to stay on top of news and announcements from the Ethereum team for any planned network changes.
You can mine Ethereum primarily on GPUs, but there are a few ASIC miners that have come out recently which are highly competitive (remember to consider power and cooling for these). Below are sample ETH hashrates for popular GPUs and the latest and greatest ASIC miners:
NVIDIA GeForce RTX 3080 (~85 MH/s)
NVIDIA GeForce 1080 Ti (~45 MH/s)
AMD Radeon RX 6800 XT (~59 MH/s)
Innosilicon A10 Pro (~500 MH/s)
Innosilicon A11 Pro (~2000 MH/s)
Ethereum Classic (ETC)
This is the same as Ethereum if they hadn’t rolled back the DAO hack in the summer of 2016. Ethereum Classic is a forked version of Ethereum at the point where the DAO hack occurred. Instead of changing the rules, Ethereum Classic continued on without altering history like Ethereum did. This version aims to keep the blockchain brutally fair and honest and focused on sticking to the original principles of decentralized currency.
Ethereum Classic can be mined with GPUs and some ASICs just like Ethereum, but with one key difference. ETC is never switching to proof-of-stake. That’s right. You’ll be able to mine good old fashioned proof-of-work on Ethereum Classic forever.
Read more: Data Driven Investor