GCR

Profitability is crucial for any business. And for capital-intensive projects like crypto mining, it’s a much bigger deal. Mining typically consumes a lot of electricity and sometimes requires expensive mining equipment. As a result, the bulk of the concern of miners is how to improve their ROI.  

In this article, we explore seven simple ways to boost your crypto mining ROI. These hacks vary from capitalizing on low hash rate alternatives, strategic timing, migratory mining, and many more. 

Let’s dive in. 

What is Crypto Mining? 

Crypto mining is the process of verifying data blocks and adding transaction records to a public ledger, known as a blockchain. Once a block has been verified, the miner announces to other miners to confirm the verification and then receives a reward in the form of cryptocurrency. 

These rewards vary in value. For instance, the reward of mining a Bitcoin block is currently 6.25 BTC.  Others like Ravencoin, Zcash, Litecoin, though lower in value, are more profitable, largely due to their high ROI when balanced against mining costs. 

Miners use specialized software on a mobile phone, personal computer, or a computing device designated for mining, such as ASIC (application-specific integrated circuit). In the mining space, it’s often said that the more powerful the mining hardware, the more profitable the mining operation. 

But this doesn’t always have to be the case. Below are simple ways to boost your crypto mining ROI. 

Studying the cryptocurrency market helps to guide your decision of whether to jump right in. If that market survives, there’s always time to dive in and mine. Studying the market is crucial as it underpins every other hack we shall be considering later in this article.  

1. Do Your Research Before You Start 

You can almost never go wrong with crypto mining if you do the proper homework. The mining space is generally complicated, so there’s the possibility of making the wrong decisions. For instance, if you’re planning to acquire mining gear, but a study shows it would turn out to be unprofitable, it may be better to simply buy the underlying crypto asset you plan to mine from an exchange. 

2. Try Out Alternative Cryptocurrencies with Low Hash Rates 

If you’ve been mining a currency and your profit calculation shows that you’re running at a loss, you don’t necessarily have to shut down mining operations. You can try out alternative cryptocurrencies with low hash rates. 

As a miner, it’s important that you study your chances of profits if you mine other less popular cryptocurrencies. Even if the crypto market faces a general windfall,  this doesn’t render all crypto mining unprofitable. It’s possible to find smaller cryptocurrencies offering even better ROI than more popular cryptocurrencies.  

In fact, smaller, less popular cryptocurrencies have lower hash rates, meaning you can earn a bigger percentage of the mining rewards if you contribute a bigger percentage of the hash rate. This way, even though the coins are worth less, you have a high chance of mining more. 

However, your ability to mine more will depend on whether you’re mining with ASICs or GPU rigs. With ASICs, you would have to watch out only for those algorithms your ASIC was made to mine. A GPU rig offers a wider range of options, allowing you to mine different cryptocurrencies with different algorithms on cryptocurrencies with low hash rates.  

Most importantly, bear in mind that low hash cryptocurrencies don’t have strong blockchain security infrastructures like bigger cryptocurrencies. More so, frequent price inflations typically pose a challenge for smaller cryptocurrencies. So, mine when the market looks good and keep off when things appear to be otherwise. 

3. Mine a Chain from at its Earliest Days

Launching a new cryptocurrency comes with a kind of euphoria, with the launchers hyping and pumping up interest in their new cryptocurrencies. Despite these efforts, the new currency either doesn’t last or keeps depreciating.

However, these new cryptocurrencies often have significant values in the early days of their launch, sometimes running into months. This is due to the scarce nature of the coins on these new currencies, which traders value at a premium. But this is typically not the case where such a cryptocurrency is pre-mined, in which case a new currency is launched with coins already existing, particularly resulting from initial coin offering, crowd sale, or other distribution methods.

There have been cases of exceptional early mining profits for coins like Grin, Zcash, and many more. For example, in the early hours of launching Zcash, it was valued at over $5000, but after a few days, it was worth only ten percent of the initial value. A quick look at smaller cryptocurrencies on CoinMarketCap in their first week and the first month will reveal a similar pattern. 

The central idea here is to mine cryptocurrencies at the start, either with CPUs, GPUs, or ASICs. But there is often the fear of these currencies losing value against other local fiat currencies over time. One way to escape this hurdle is by directing your hash power on early mining and exchanging your rewards for stronger systems and local fiat currency as soon as you earn them.

4. Smart Trading on Cryptocurrency Markets

You can increase your profits as a cryptocurrency miner by trading on exchanges. You can also exploit the gains from arbitrage trading, where you buy crypto on a different exchange and sell on another. This requires sufficient knowledge of crypto trading dynamics.

It will, for instance, help you trade smartly and multiply your profits, as well as possibly reduce the effect of tax liabilities. Again, once the conversion is made from mined crypto to local fiat currency, the ROI calculations for the mined cryptocurrency are locked in. 

5. Scale Your Mining Operations

Expanding your cryptocurrency networks can lead to an increased burn rate, an evaporated runway, and other unforeseen issues.  You can scale your mining using another method without any need for additional mining equipment. 

One of such ways is by replacing aging mining equipment, leading to hardware sufficiency gains which in turn increases the hash rate significantly while also reducing energy consumption in some cases. Another way to scale your mining operations is cloud mining. Here, you approach companies specializing in managing mining equipment to purchase large amounts of hash rates for any algorithm or cryptocurrency of your choice. 

Though decent choices, some of these options carry third-party risks. As such, it is important to calculate their actual and potential profits and balance them against the risk of the mining equipment aging quickly. This will help you determine when it is time to get new deployments of larger crypto mining equipment. 

6. Use Cheap Electricity for Cryptocurrency Mining

More often than not, electricity is the largest operational expenditure in cryptocurrency mining.  So, if you want to increase your mining ROI, you must be intentional about reducing electricity costs.

It may be profitable to run your mining equipment in a particular place rather than another place due to the difference in their electricity costs. Nomadic crypto miners take advantage of this inexpensive energy by embarking on migratory mining, in which case mining sites are changed periodically. 

Other miners explore alternative energy sources that are not in use but have little to no cost incurred from using them. Such alternatives include solar, geothermal energy, unflared natural gas, wind, and hydroelectric excesses. 

You can also talk to your electrical utility about the possibility of offering you the best rates or discounts on the high load factors of your mining equipment. You can consider switching to hybrid residential-industrial rates offering industrial rates and save about 40% on your energy costs, compared to regular residential rates. This plan, called ToD (Time of the Day), is saving electricity costs for miners. Reach out to your utility for plans or rates suitable for your mining operations and scale. Lastly, identify low-cost electricity periods in the day and run your mining during these periods, but do this carefully.

7. Take Advantage of your Hardware Deals 

Mining hardware takes the largest bulk of your crypto mining capital. But a reduced initial cost and a quick ROI are possible if you take advantage of the savings on original purchases of your mining hardware. 

Search online stores and marketplaces like Amazon, eBay, NewEgg and Craigslist, and others for discounted mining hardware. After identifying the piece of equipment, you would like to buy, run another search to confirm if it’s possible to get it cheaper somewhere else. Understand the price range for each piece of equipment. 

If the goal is to buy the greatest and latest hardware, bear in mind that you may have to pay a premium for the most efficient devices with the highest hash rates. But ensure to run your calculations, and you may find that you’re better off with a less efficient piece of equipment selling at a lower price. And sometimes, it’s best to buy new pieces straight from the manufacturer. This helps you cut out middleman costs. 

In Conclusion

In closing, today, there are uncertainties about the future of crypto mining with their ripple effects on the ROI portfolio of crypto miners. Take a chance on all the hacks discussed in this article, and make the most of your crypto-mining investments.