What factors affect the profitability of mining?
We can divide factors on which profitability affects mining into two groups:
- The factors we can't influence by ourselves — situation on the crypto market. A single miner can't affect the number of miners globally, the complexity of mining coins, and cryptocurrency rates.
- The factors you can influence are — computer's performance and settings. For example, you can add a second video card to double your profitability!
More and more people have become aware of mining — mining cryptocurrencies is getting more complex. In the perfect world, coin rates grow in proportion to the increase in complexity to keep the profits at the same level. But we are in a harsh reality 😧
How does the market affect profitability?
Competition with other miners ⛏
Miners get rewards when they find the correct hash for a block of transactions in the blockchain. New mining blocks can be found at fixed intervals — for example, 30 seconds for Ethereum. The reward for a found block is also fixed at 3 ETH.
If you were the only miner in the entire Ethereum network in the world, you would get three coins every 30 seconds. But as soon as another miner joins you, each of you will get 1.5 coins.
So the more miners are mining crypto, the less income each has, but their total income is the same.
The complexity of calculations ➗
We have already mentioned that we are mining blocks in fixed intervals. But how is it achieved? After all, the more miners connected to the mining pool, the faster each new block is found? That's right. The network automatically increases the computation complexity when there are too many miners. It helps keep a constant rate of the emission of new coins.
The higher the computational complexity, the less efficient your hardware is, and therefore the lower your profitability.
For example, the computation complexity of the Bitcoin network is so high that even the most powerful video cards can't generate any substantial income. Therefore, it would be best to use the unique ASIC miners for mining Bitcoin.
Cryptocurrency rates 📈
So far, we have talked about the technical principles of cryptocurrency and mining. These principles determine how many coins you will get while mining.
Thus you still can't buy a coffee or sandwich with Bitcoins or Ethereum. Instead, you have to exchange cryptocurrency into fiat money: euros, dollars, and so on. The exchange rate of crypto into fiat depends on the market capitalization of the cryptocurrency you get. One can determine capitalization by the bid-ask spread of the cryptocurrency, point of interest of investors, confidence for the coin, and some other factors.
Therefore, the profit in dollars also depends on the rate of the mined cryptocurrency.
For example, some coin is worth 1$. So you have 2X of such coins. Therefore, you can sell them for 2$ — it's obvious. If the exchange rate doubles tomorrow, you will still have two coins, but you can sell them for 4$.
Crypto coin rates are unpredictable and constantly changing: a coin may lose its cost dramatically or suddenly grow up and become the most expensive cryptocurrency on the market. When you keep your savings in cryptocurrencies, their cost in dollars fluctuates all the time, depending on the exchange rate.
How does a computer's hardware affect your profit?
Profitability in Kryptex directly depends on the computer's computing power. The video cards (GPUs) perform the most profitable calculations, so the more powerful and newer your GPU is — the more profits it will make.
Computers with hardware and components older than 2016 most likely not earn in Kryptex. Old processors and video cards can't support the mathematical instructions that generate income from mining.
Central Processor (CPU)
Kryptex uses CPU for mining coins on the CryptoNight algorithm, which requires 2MB of L3 cache per compute thread. So the more L3 cache CPU has, the more threads you can use, the higher the gain.
For example, an AMD FX 8320 CPU has eight cores and 8MB of L3 cache to use only four cores (threads) for mining. Therefore, if the CPU lacks an L3 cache, more threads will not generate more earnings.
CPU frequency has almost no effect on performance. We do not recommend overclocking processors - it increases the heat, but the hashrate will increase insignificantly.
AMD processors usually mine more efficiently than Intel processors.
The video card (GPU)
The main mining advantage of video cards — is fast video memory. Therefore, the quicker the video memory (VRAM), the more profit the video card will gain.
The total amount of video memory will not affect the hash rate. But! Some algorithms have minimum requirements for the amount of video memory. For example, you will not be able to mine Ethereum on video cards with less than 4GB of VRAM.
Overclocking the video memory's frequency, you are increasing the hashrate and profitability. How to overclock your GPU and don't burn it down check our article "How to overclock your video card for mining."
The amount of the video cards
The performance of several video cards is summarized. For example, if one video card earns 2$ per day, then two similar video cards will earn 4$ per day, and so on.
A typical home computer can accommodate 2-3 video cards, depending on the type of motherboard. However, if you want to install more, you must use particular tools: raisers and unique frames to install video cards.
One video card GeForce GTX 1070 8Gb on the DaggerHashimoto algorithm mines about 30Mh/s. Five such GPUs could produce about 150Mh/s.
You will get the best mining experience mining on the same or similar video cards. However, mixing AMD and NVIDIA cards in the same system sometimes could lead to unstable computer work.
The stability of internet connection
Remember your school times? It was frustrating when your teacher gave you an "F" for not doing your homework. You did it but just forgot your notebook at home!
Similar happens to mining — you need to complete the task and timely send it. It's not about the speed of the internet. It's about the latency (ping). ⏳
- Less than 90ms — perfect!
- 90-125ms — your decisions will be late 2-5% of the time.
- 125-180ms — there is a risk of losing up to 10% of returns.
There is no way to calculate profits with pings. If you use Wi-Fi or 3G/4G modem, try switching to a wired connection if the actual profitability is not the same as the calculated.
You can check the ping by running in the command line: ping eth.kryptex.network
Try connecting your mining farms to the internet by wire and avoid Wi-Fi and 3G/4G connections whenever possible.
Kryptex uses your computer's calculating ability at 100% in full mode. Unfortunately, the Full mode can lead to system weaknesses unnoticed earlier. In such a way, the actual profitability will be less than Kryptex predicts.
If you observe symptoms like this...
- Your computer freezes or restarts;
- CPU or GPU overheating;
- The load GPU is not stable;
- Profitability is floating and remains unstable.
...then check if your computer is ready for mining:
- Reduce or disable overclocking. If the mining has stabilized after setting the GPU to the factory settings, you need to reduce the overclocking and lower the frequencies.
- Check the power supply. The computer may work unstable if it lacks power. Calculate your peak power consumption using a power calculator. Note that if you have an old power supply, it may have degraded over time.
- Keep an eye on the temperature. If your computer overheats, it will thermal throttle, reduce your GPU and CPU power, or even shut down, keeping itself from burning up at work 😳 Use programs like MSI Afterburner or OpenHardwareMonitor to monitor system sensors.
Stability of calculations
If you overclock your video cards too much, it will lead to computational errors. For example, the GPU will decide that
2+2=5. The mining pool checks all solutions. The pool will not accept solutions with errors, and you will not get money for them.
Kryptex can't consider the wrong solutions. For example, if you extremely overclock your GPU, Kryptex will show higher profitability, but the actual profitability will be times lower.
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