Is GPU-based crypto mining dead or dying?

Crypto winter? 

Crypto 'bear' market?

If you have listened to various pundits and wannabe pundits lately you would have to come to the conclusion that crypto mining in general and GPU-based mining in particular has seen it's better days.

While, it is true that mining was hot in 2016-2017 and peaked in the winter of 2017 and spring of 2018, that does not mean that this aspect of crypto-currency is no longer valid or profitable for the small to medium scale mining operation.

No one can argue that the large mining operations, as long as their electric costs stay low, are still making money even with a depressed coin market.

The small to medium sized miners cannot mix it up with the large warehouses containing ASIC based mining rigs mining Bitcoin and other ASIC algorithm coins. However there are hundreds of what are referred to as 'alt-coins' that have been deigned by the coin's designers to be ASIC resistant, being mined by CPUs and mainly GPUs. While CPU mining can be profitable on certain coins, it is not an easily scale-able solution as GPU based systems.

Which brings us to our question - is GPU based mining profitable?

The answer is yes if the right coin is mined, electricity cost is reasonable, and up-front equipment cost is managed.

What the current coin market is forcing miners to do is to be smarter, more efficient, and focus on the long-term. Gone are the days where a miner could throw together an ATX motherboard mounted on a wooden frame, add some high(and over) priced GPU cards, add some additional A/C capacity to keep the mining rigs/house cool, kick off almost any mining software and sing all the way to the bank. Electric costs? Oh it was important, but standing in the way of profit - nah!

So what has changed and what do we miners have to adjust in a tightened price market?

Here are the items:

  • Reduce equipment costs

This means that ROI is key for every component of the mining operation - it all adds up. While the GPU cost is the major consideration, the base computer, power supplies, power distribution and management parts have to also be kept under control.

A miner will have to compare expensive, higher performance GPUs with older lower performance, but decidedly cheaper ones. Also the power requirements of newer ones vs older ones may come into play. A spreadsheet of a variety of GPUs with these data points is very helpful.

  •  Power cost
While a mining location mainly determines your base power cost, a close look can be given to alternative power generation such as solar and wind turbines to supplement the line power and, may be cost-effective. Making the case for this is the electric cost vs the ROI of the alternative power source.
As an example:
If your local electricity cost is .13/KWH and your are using 4000KWH, your monthly power cost is aproximately $375. If you can install a wind turbine that produces 500W average, it will produce electricity of $47/mo. If a wind turbine can be installed at a cost of $600 then the ROI is 13 months, which is reasonable. The same goes for solar although it has a duty cycle of around 1/3-1/2 of the day. The key point to remember is any supplemental alternate power goes straight to the bottom line as profit.
 
  • Heat

Ah heat. The ugly by-product of high powered number-crunching. In actual mineral mining the left over slag after the sought after mineral is removed is called a 'tailings pile' (look up this term). Heat is the 'tailings pile' of crypto mining. In earth mining, the 'tailings' were re-distributed to the environment by various means. It is a similar problem for crypto-mining - the heat has to be re-distributed to the environment. Usually, like real tailings, it is has very little value unless you live in a cold climate and use it to heat your home and water. But eventually summer comes and the heat has to be expelled somewhere. Where is the best place? The great outdoors of course. (see here for additional info on thermodynamics as applied to mining).

So, for an efficiency minded miner the heat management is paramount. How much heat are we talking about?

Let's take a typical scenario: You have 2 8-GPU miners that have GPUs using around 20 amps ea. 20 amps x 12 Volts x 8 equals 1920 watts. Two rigs makes it 3840 watts (3.84KW). Add a few percent for PSU losses and it comes to around 4 KW. 4KW is equal to 13,100 BTU/hr or a little over 1 ton of A/C.  From an electrical use this is a double whammy -  4KW for the mining and another 4KW (and KWH) for the cooling. This effectively doubles the electricity cost in your profit calculator (not good). So, we can see that heat management is a critical part of an efficient mining operation. The VORTEX Ultimate Mining Rig is our answer to managing the heat problem. (go here for additional information on heat and GPU mining rigs).

  • Stability

An often overlooked aspect of efficient mining is operational stability and failures. What do we mean? The answer is that we want to buy/build a mining rig, configure it and let er rip! Any hiccups, or things that go bump in the night can cut into mining efficiency by cutting down on duty cycle or compromising full operational performance of the hardware - which can cut into profitability. Many miners use O/S and application workarounds to solve some of these issues. How many times have you had to throttle back a GPU when it ran too hot?

Voltage losses, heat and sloppy wiring can spawn some of these failures. So the goal is to have robust PSUs, correctly sized distribution wiring, and maximum heat exhaust to address these issues. The VORTEX Ultimate Mining Rig we feel is an excellent foundation for a reliable mining rig (see here for the VORTEX design features). 

 

SUMMARY

What can we conclude? While smaller 'citizen miners', and even medium sized shops are currently not becoming rich, it is still possible to cover expenses and pay for a mining installation. Just don't quit your day job at this time. Why would a miner hang in with a depressed market while seeming to just be swapping dollars? Here are a few reasons:

  • Crypto has historically had a roller coaster existence with good times and poor times. It is not prudent to cash out when the market is low. If you are upside down, don't fold - just become more efficient!
  • When the mining scene is psychologically depressed, many miners dump equipment. This means you may pick up some good GPU buys. Swap out the Nvidia 1060's for 1080's.
  • The crypto industry is still in an early level of development. Many new projects are ongoing now - and many will require miners. During times of a slow-down, tighten up your operation, become more efficient and scratch for every advantage you can get so when changes come, you will be ready.

The improvement of efficiency in the mining operation is why the VORTEX UMR product was developed - we would love to be able to toss the costly and profit eating A/C requirement in the dump. In addition a VORTEX rig can provide you with a quality made, stable, and easy-to-manage foundation so you can concentrate on processes and procedures to enhance your mining profits in the future. 


Web Analytics