Crypto
Bitcoin Mining 2021

Bitcoin Mining 2021

Bitcoin mining, or better yet Ethereum/altcoin mining has been extremely popular in 2021. I got a little lucky on my timeline when I started crypto mining because I got in before scarcity started hitting the GPU market but this is an amature “guide” to basically give you my experience/opinion about mining crypto. But as always to start this off…

Disclaimer: I am not a financial advisor. The information on this site is for informational purposes and isn’t financial advice. I cannot guarantee that you will have the same results as I have nor can I guarantee that the information shared here is appropriate for you. My opinions are my own despite any referral links that may be within the blog. I am not also not a tax consultant or a CPA. As they say in the crypto world, DYOR.

Bitcoin mining can be as simple as downloading a program and clicking run within a couple minutes. Just to jump straight into some easy programs. I have used both BetterHash and NiceHash. Both of these platforms will mine crypto for you and pay you in Bitcoin. Out of the two, I like BetterHash more personally. I have had better results with BetterHash. NiceHash for me, has yielded less income and it has been less steady, crashing quite frequently. It is worth noting that if you are making your own rig and you don’t want to buy Windows 10, then you can download operating systems for both of these platforms that will have the bare bones features to just only mine. I have used both of these operating systems too, among some others, but personally I prefer to use windows 10 because I had trouble with maintaining GPU temps in those softwares. If you feel like you want to have a little more control on mining, you should look into phoenix mining and or epic cash. I have also tested out mining with Banano which is okay if you want to mine for BAN tokens (a banana meme token forked off of nano). You mine to help medical research and they give you BANANO as a reward. I definitely do not consider myself an expert on crypto mining. When I bought my graphics cards, crypto was still in a lull and I decided it was a good investment while I waited for some price action to happen in the market. Since then, I have had some crazy headaches with setting up my rigs but I’ll explain that some other time.

So the easiest way in my opinion to get started, I would jump on BetterHash and try that. It is as simple as downloading the program and clicking run. Your computer will not like the program and tell you it is a virus so you will have to allow it to run. Also I find that chrome really doesn’t like it so I have to download it on firefox. 

If you wish to use my referral code then I’ll earn a few extra bucks out of the fees BetterHash charges you when you withdraw money. For me, I wait to withdrawal .01 BTC which is once every few weeks and betterhash charges a small fee like .0002.

https://www.betterhash.net/?ref=37383

The other main thing that I like to do is download the graphics card BIOS system. I use a radeon 580 graphics card so I use AMD Radeon Software. 

https://www.amd.com/en/support

I this is not optimized but basically I use my fans quite extensively. On two computer setups I run it basically like this image above. For my other computer, I use evga and same thing, I dont mess with the over clocking systems that much but simply mess with the fan speeds. With Evga Precision.

https://www.evga.com/precisionx1/

Obviously, if you are using a different brand of graphics card then you will have to go download a different software or install a special mining bios on your graphics card.

What is crypto mining Background: What exactly caused GPU mining to go up?

It is important to note that Ethereum (ETH) is like the top dog when it comes to crypto mining so I’ll explain this from an Ethereum perspective. ETH is the #2 crypto by market cap and has the most developers within the platform. It is also extremely easy to make a token within the Ethereum network. By doing so, you spend GAS and someone has to validate that transaction as well as every other transaction/transfer on the network. GAS fees range by complexity (a simple transfer between wallets vs making a smart contract) and by popularity. Gas fees are basically transaction fees and miners receive money from these transactions but also from the network itself. You may have heard about “bitcoin halving” or “block rewards”. Basically, the crypto networks also reward newly minted coins to the miners as an extra benefit for helping validate the transactions. So miners collect two fees, transaction costs and also block rewards.

Reward fluctuating

As the network becomes congested, the price of GAS goes up and there is a bidding war to frontload transactions. For example, let’s say it normally costs $2 to transfer ETH from one wallet to another and that might take 30 seconds. If there is a lot of transactions occurring, then the fees start to go up to $4 and it might take a minute. But then, some user might pay $5 so they can get their transaction frontloaded and it might clear in 20 seconds. This type of bidding war/transaction cost has been extremely crazy at times. Without going into too much depth, the platform Uniswap became extremely popular in the summer of 2020. And then yield farming became a thing and at times I have paid upwards of $100 per transaction in GAS fees and have seen transactions take as long as 24 hours to clear. What’s the result? People getting very high returns on crypto mining using their graphics cards. Generally speaking, it can take anywhere from 2-6 months to pay off a graphics card by mining right now. I have seen as high as $150/graphics card per month. Now obviously if you are mining and the value of the crypto themselves go up then you would have made more money if you still have the crypto. For example, the bitcoin I mined last summer has gone up x4 in value.

Risk

The first risk of crypto mining is if you spend more money on electricity vs the amount of money you make from it. This isn’t very applicable right now because of the high rewards and crypto has been going up in value. But this hasn’t always been the case. Back in 2017 people made like $5/day per graphics card but then when crypto hit the bear market most people disconnected their less efficient mining cards. I use Radeon 580 GPUs which when I first started mining were making .5 per day per card but for the average person they will spend .35 per day in electricity. Obviously the higher the electricity cost vs the reward will make a big factor when deciding to mine or not. For those who have lower electricity rates, commercial rates or better yet, free electricity then obviously mining becomes extremely attractive. 

Ethereum being the “top dog”, is going to become harder and harder to mine. There are currently two main threats to mining ETH. EIP 1559 and ETH 2.0. EIP 1559 is a new proposal that should take effect this year. Basically, the ETH network would average out the gas fees for transactions and so you wouldn’t have floating transaction costs dependent on congestion. Additionally, ~35% of the transaction fees would be burnt. What does this mean? Ethereum mining will probably become less attractive and the gains wont be as high in times of high volatility. What that looks like exactly? It is hard to say. Volatility has been less lately so I’ve been making about $50+/month per graphics card but I don’t know if that becomes the new standard or if it is more or less. But what will that look like for Ethereum’s network as a whole? Burning tokens and adding scarcity into the mix will add value to the coin and ETH should go up. Again, I still don’t know what that means for ETH mining. 

Secondly, ETH 2.0 is moving into a proof of stake. Basically the process of validating transactions is going to become more streamlined and faster. People who hold the coin will be able to stake (place the crypto into like a financial CD) and generate interest rates on it. The outcome to this is that the Ethereum network will be faster and cheaper to use and bring a lot more utility to the platform but mining (proof of work) will not be a thing on Ethereum anymore. This is projected to happen in 2022 roughly but with all major projects, this can potentially take some time to implement.

 

So what’s the big deal with Ethereum for crypto mining anyways? Is bitcoin changing?

Many simple and easier platforms, like betterhash and nicehash, will mine Ethereum (or other cryptos) and automatically sell those tokens and give you BTC. This adds a lot of negative selling pressure for ETH (and buying pressure) for BTC. The reason platforms do this is that you make more BTC by mining ETH and trading it for BTC than just mining BTC straight out. But, what if you took out a major platform out of the mix? Then with less projects to mine and all the sudden there will be more people looking for alternatives. I would think the rewards should go down overall as far as GPU mining is concerned. Will there be other projects to mine? Absolutely. I often mine raven and my CPU is picking up a few dollars from Monero and some other smaller projects. But, if you are looking for mining these projects, so are other people. Will the be new projects that require miners? Probably. But the future is everchanging in the crypto world so I would definitely consider that before plunging a significant amount of money.

You should also worry about wearing down your GPUs. I run my fans a little hard but I am okay with that because I figure that I can always replace them (and the thermal paste). It isn’t terribly expensive to replace a GPU fan but if you overheat your GPU constantly and don’t manage its temperatures then you might be ruining the shelf life of your GPU. Lately I have read some articles that this may not be as bad as people think it is but it is still a consideration and risk factor that I think you should consider. For me personally, I try to keep my GPUs below 70 and 75C is the max. Look up on google what people recommend for your specific GPU and decide if it is worth it to you.

The last thing that I would worry about is taxes. Crypto mining in the USA is considered revenue so Uncle Sam will want his cut. I don’t mind paying my taxes on crypto mining personally but it is something to consider. Especially as profits sink, I would be worried about how to write off some of your electricity bill. I would probably recommend consulting with a CPA.

So in my personal opinion, if you are looking to buy a GPU and mine with it right now and get it to pay itself off and potentially make some extra money, then there is plenty of time before those crazy changes happen. But time is definitely of the essence. I bought a bunch of GPUs and had one issue or another so I left like half of my GPUs not mining because work became too busy and I didn’t have time to troubleshoot it. What was the result? Losing literally thousands of dollars of potential revenue. This is another topic for another day. If you are on the fence, I would definitely jump in sooner than later or maybe just buy crypto straight itself. That’s a decision you’ll have to make on your own. For me personally? I have 7 Radeon 580s that I am running that cost me like $150 each. I also have 2 evga graphics cards running and generally speaking I make anywhere from $500-$1000 a month so I am quite pleased with that. Will I buy more GPUs? Probably not. I am really itching to buy another graphics card or two but personally I would rather just buy crypto and not pay a premium on the graphics cards. Will a GPU be a better investment than just straight crypto? Time will tell.  I hope this was helpful.

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