Tuesday, October 24, 2017

Crypto mining and the elusive ROI

For those who have started mining or those who want to start mining, the usual question is "what is the ROI?". Now, for the uninitiated, ROI stands for "Return On Investment", meaning the amount of time needed to get back the initial capital spent.

Frankly speaking, for me ROI is an elusive term. Cryptos are governed by several things, namely the hashrate, difficulty, and price volatility. Your coin shares received per day are determined as per below:

Hashrate:- the more mining power added to the network, the less shares you get.
Difficulty:- the higher the difficulty level, the less shares you get.

The more people start to mine that particular coin, the lesser coin you get per day. Considering that the electricity bill and the coin value is the same, you would actually lose your profit. However, if you somehow found the "gold mine" before other people, you could actually make much more profit than just holding coins.

Story 1: when I started mining Ethereum back in April 2016, with my RM30,000 rig (around 8,000USD), until December 2016, I got around 233ETH. Using the ROI calculation back in April-May '16, with 1ETH = USD10-15, it would take a year or two for me achieve my ROI. However, during the price jump on May '17, where 1ETH = USD400, I got my ROI and got much more in profit. Nowadays, using the same rig, I can get only around 0.4ETH monthly.

Story 2: in December '16 I started mining ZEC using the same rig. Managed to get around 30ZEC up till April '17. Lo and behold, ZEC price jumped up to USD400 in May '17, earning me much profit for my mining. Nowadays, I can only mine around 1-2ZEC per month compared to 1 ZEC per day due to the difficulty spike.

ZEC difficulty over a 3 month period

Story 3: In July '17, I started noticing a new coin, ZENcash, which is a derivative of ZEC but with better technology implementation. Using my rigs, I switched to ZEN and managed to mine around 750ZEN (got around 16ZEN per day) till early Oct '17. The price then was around 5USD per ZEN. Later this month, ZEN managed to climb up to 25USD per ZEN, earning me around 18,000USD (RM75,000). However I'll continue to hold on to this coin because I think it'll be much worth than 25USD. The difficulty has also risen exponentially due to miners switching from ZEC to ZEN (refer to ZEC difficulty chart above) and also Ethereum miners switching algorithms to ZEN. Nowadays I can only get around 2ZEN per day...

ZEN difficulty spike
So there. Over 1 year I managed to get not only my ROI, but extra profit from mining those coins. The bad thing is much of my coins I had sold to pay my bills, or I would've gained much more. :(

The whole point of this post is that if you want to be a coin miner, don't get stuck in "ROI" or fast cash thinking. Mining is work. Mining is a means to say that you support the whole cryptocurrency ecosystem. If it's profitable, good for you. If it ain't, and you want to purely make profit from cryptocurrencies, it's better that you buy some bitcoins (BTC) and hold them. Mind you, 8,000USD (RM30,000) in bitcoins will earn me around 17BTCs (1BTC = 450USD in April '16), which will actually get me 93,500USD (around RM400,000) in BTC value nowadays. Duduk rumah goyang kaki can get you more than 1000% ROI.

If you are a computer person, like to handle computer parts, fiddling with softwares, supporting the whole crypto ecosystem, then mining is for you. Don't give up. Find the coin that you have confidence in. Mine the shit out of that coin before other people realize them. Support the system. Just remember: MINING IS WORK.

*hint: Bitcoin Gold can be mined using Equihash algorithm (ZEC, ZCL, HUSH, ZEN...), will it be the next goldmine?*

1 comment:

  1. Great article. Find more about crypto trends, investing and mining at CryptoDetail