After I explain my mining rig to people, they are immediately wanting to jump into the mining realm. The cost of the rig, alone usually turns people away from the idea. However, for those that still aren’t, there are many other hidden costs. Electric bills, pool fee’s, and transaction fee’s will hurt, and even possibly turn your income into an expense. It’s not some kinda of magic money machine. Here’s what it really costs to mine.
This will be the number one, damaging factor to your mining profits. If your rig is hashing, it’s pulling power, and a lot of it.
Where I live, the cost of power is .10/kw. Which, isn’t bad. It’s obviously better, and worse than some other areas.
If you don’t pay for electricity, and your family doesn’t care about you running up the bill. Lucky you, 100% profit.
The best way to measure the amount of power your rig is pulling from the wall, is with a “Kill-O-Watt” meter. You can always estimate how much power your rig is pulling, but if you want to be as accurate as possible, getting one of these is your best bet.
In my case, the rig is pulling only 533 watts(could be better but, not bad considering it’s 2 extremely old cards).
Calculating The Cost
1000 Watts = 1 Kilowatts, which means the rig is pulling .533 Kilowatts.
.533(rig power consumption) x 24(hours running) = 1.2792 Kw/h(Kilowatt used per hour)
1.2792(Kilowatt used per hour) x $0.10(Cost of 1 kilowatt in my area) = $0.13(Cost of running the rig for one hour)
$0.13(Cost of running the rig for one hour) x 24(Full day cost) = $3.12
$3.12(Full day cost) x 30(One month) = $93.60
Yikes, it costs me $93.60 a month, to mine.
Mining Software Fee’s
These damn middlemen are all over the place!
If you use “Claymore’s miner“, which you probably do… You’re losing 2% of your profits, which will go to the creator(this guy is rich).
Based on my pool’s payout history, I’d say I make 2 UBQ(Ubiq, the coin I’m mining) per day before fee’s.
2.2 UBQ(Mined) x 2% = 0.44 UBQ(Total Mining Software Fee)
2.2 UBQ(Mined) – 0.44 UBQ(Total Mining Software Fee) = 2.156(What’s left after mining software fee’s)
Looks like we are technically losing $0.09 a day to the software fees(with the current price of UBQ).
As you know, the pool you mine from takes a tiny sliver for themselves. Bastards. My current pool takes 0.02%, which is pretty good compared to the others.
2.156 UBQ(Total after software fee’s) x 0.02%(Fee) = 0.043 UBQ(Total pool fee).
2.156 UBQ(Total after software fee’s) – 0.0043 UBQ(Total pool fee) = 2.152 UBQ(What’s left)
That’s like, 1 cent. We can live with that.
Are We Even Making Money?
At this point I’ve mined 2.2 UBQ, after the fee’s for the pool and software, I’m left with 2.152 UBQ.
2.152 UBQ x 2.13(Price of UBQ, at the time of writing this) = $4.58(Total left to USD).
But wait, we forgot to subtract the electricity cost, which we calculated before!
$4.58 (What’s left after one day of mining) – $3.12(Cost of running the rig for the day) = $1.46.
After 24 hours, of your machine working it’s poor little arse off, you’ve made $1.46 in Ubiq(or whatever currency you’re mining).
$1.46(Daily profit) x 30(One month) = $43.80
This is the end of the road. The currency will now sit in your digital wallet, until you do something else with it.
Doesn’t sound so awesome, and insanely profitable now, does it?
You can always convert it to cash from here, but I wouldn’t recommend it. It’s better to just let it sit in your wallet(and hopefully let it grow in value as the coin price rises).
But, You Want Cash Right?
Converting your crypto to USD, is a whole other painful process. Here we go.
First, you need to convert whatever crypto you mined, into Bitcoin. Since, apparently people don’t want to buy whatever you mined, with USD.
You would do this, by finding an online crypto exchange. I’m using “Bittrex“, but you can use whichever one supports your crypto.
All exchanges take fee’s, let’s get started with the math… Again.
Exchanging Our Profits Into Bitcoin
2.152 UBQ(What we’ve got after mining, and it’s fee’s) x 0.25%(Bittrex exchange fee) = 0.00538 UBQ(Lost during BTC conversion)
2.152 UBQ(What we’ve got after mining, and it’s fee’s) – 0.00538 UBQ(Bittrex exchange fee) = 2.14662 UBQ(This is returned in btc)
Now, we’ve got 0.0010515614 BTC(feels a lot smaller this way, huh?).
Exchanging Our Bitcoin Into USD
Since there are many ways to go about this, I’m not going to do the math for any specific one.
“Coinbase”(which is pretty much the industry standard) has many options for converting your BTC to USD. Below is a table from their support site, with some options, and fee’s.
|U.S. Bank Account||1.49%, with a $0.15 minimum|
|Coinbase USD Wallet||1.49%|
How Do People Still Make Big Profits?
The best way to profit from mining, is to mine a coin before it get’s popular, and rises in price. Obtaining, and holding as much coins as possible, then selling when they are worth a lot(and the difficulty is bombing) is the best way to go. This is often a guessing game, as you need to discover for yourself which coins will rise in price, and are worth mining. Don’t go with the mainstream coin, that everyone else is mining. You want to pick something, you genuinely believe in. When I first started mining Ubiq, the cost of one coin was $1.10. A few weeks back, it had peaked at $3.00, and it continues to show signs of growth. I don’t think it’s smart to cash out, until your coin reaches what you believe, is the highest it could sell for.
There are lot’s of hidden fee’s when it comes to mining. The better you know of them, the better decisions you can make, as to what services you use.
At the end of the day, mining is all about the long term hold. It doesn’t matter how much you’re earning “right now”. It matters how much what you have now, will be worth in six months, or two years.
A rig is not just a money machine, it’s an investment tool.