“Is it worth it?”
That’s the constantly-repeated question in the mining community when a coin is starting to become profitable. Ethereum this year, for example, saw a big jump in price, which has led lots of people who would have otherwise not thought twice about cryptocurrency to become suddenly interested. Especialy in the months of May and June of this year, there was an insane influx of new miners as the currency saw its first large price bubble.
When this happens, though, most of the biggest profits (at least for that bubble) have already been made. People had been mining the coin for months or years prior, and they certainly saw some decent gains, especially if they had a decently-sized holding. For many, their entire wallet of Ether jumped 10x or 20x or 30x its value.
So back to the question: Is it worth it to start mining? If you’re just now hearing about Ethereum and interested in maybe jumping on board, that can be a hard question, and it depends on a lot of different factors.
Ethereum difficulty update for July 2017
Difficulty has continued slowly but steadily rising since our last update at the beginning of June, and with the recent dip in price, has finally begun to level off. But a leveling difficulty doesn’t mean that right now is the best time to get into Ethereum mining. In fact, it might mean the opposite. Here’s the current chart from Coinwarz:
For those unfamiliar with how mining works, this is basically the rate at which you will see rewards for the amount of energy your GPU puts into mining the coin. The same amount of energy (or time the GPU is running, in this case) put in a couple months ago would have given the miner far more return than today.
As we go into the middle of July 2017, Ethereum’s difficulty has reached all-new highs, passing 1200T. This is a significant bump since June, more than double the difficulty of 500T at the beginning of that month. That also compares to an average of around 350T for the month of May, although that number steadily rose throughout the month to the numbers we’re seeing today.
Profits for miners, as many including myself expected would happen, have plummeted with the recent price drop. As of this writing, a 150 Mh/s 6 GPU mining rig consuming roughly 1,000W of electricity at a rate of $0.1 per KW/h is turning almost .5 ETH per week, which is almost exactly half of what the same rig would have made just last month.
Want to learn how to build a 6 GPU rig for Ethereum? Click here.
Is it worth it to start mining Ethereum in June 2017?
So is it worth it to start mining Ethereum in July 2017? Probably not, especially if you haven’t even purchased your hardware. With 6 8GB RX 480 GPUs, for example, you’ll get about 150-180 Mh/s, and that’s the best case scenario. At current rates that’s about .5 ETH per week, and at current prices that’s only about $76 profit. That’s a pretty miserable return, and considering the uncertainty of Bitcoin in the next month and the difficulty bomb (which is only going to get worse), a $2,000 rig, assuming current rates, would probably not reach return-on-investment by what it mines alone. Of course it may see ROI in the long-run with much higher prices in ETH, but if that’s your hope you might as well buy ETH directly.
The time-tested wisdom in mining is that it’s probably best to not assume that ETH will stay at any given price in the short term. Theoretically, it could crash at any moment. And it’s also worth considering the ever-rising difficulty that may flatline (as we’re seeing) but probably won’t ever go back down. If ETH halved or more in price (down to $100), people would be dumping their GPUs all over eBay and Craigslist — meaning much lower resale value for your hardware. It’s also wise to consider that if the difficulty continues increasing and the price doesn’t see any major bumps in the coming weeks, revenues will only be thinned even more.
At the time last month’s writing, I said that the network was bottlenecked by the number of GPUs that AMD and Nvidia could manufacture. I mentioned that as AMD and Nvidia slowly got more units into the market over the coming months, it would be likely to see a rapidly increasing difficulty without much increase in price (or even a decrease). Such a scenario would put those who were just then (in June) getting into Ethereum mining in a tough spot as they watch their profit drop. That’s exactly what happened, and now those miners are going to have a tough time seeing ROI.
Finally, it’s always worth remembering that Ethereum’s switch over to proof of stake is coming, although we’re not sure when or what that will look like. Some believe that Ethereum will switch entirely to proof of stake overnight and that it will come in the next month, while others think it will go hybrid (proof of work mining would stick around, in part) and that it might not come until 2018. No one knows for sure, but when it comes, it will mean no more GPU mining at all.
Don’t just do it for the money
If you’re interested in mining because you want to make a long term investment or because you want to make a quick buck, you’re going to be disappointed. If that’s you, then I would say to stick with just buying some Ethereum or Bitcoin on Coinbase and holding onto it for several years. My mantra with mining is this: Don’t just do it for the money. If you want to start mining, it’s probably a good idea for you to care about it as a hobby as well. It might not ever make you big gains, or you could see huge gains, and wish you just bought into cryptocurrency trading instead.
If you do know for sure that you want to spend the time finding GPUs, building a rig, maintaining a rig, repairing a rig, dealing with the noise and heat from the rig, keeping an eye on your rig while out of town, don’t mind the increase in your electric bill, want to play with software and tweak your cards, and generally just see this as a fun hobby, then go for it. For those people, long term, it’s probably better than just spending tons of money on ETH and hoping to make it big. As of July 2017, however, it’s probably a good idea to wait until this bubble pops even more. If price drops further and difficulty continues increasing, some of the biggest miners will get out of the game. That would mean lots of excess hardware on the market and rapidly dropping prices.
Want to learn how to build a 6 GPU rig for Ethereum? Click here.
Do you appreciate this? Tips welcome!
Have feedback or thoughts? Leave a comment.