Let's Talk About Mining - Cryptocurrency Revisited

Manufacturer: PC Perspective


Astute readers of the site might remember the original story we did on Bitcoin mining in 2011, the good ole' days where the concept of the blockchain was new and exciting and mining Bitcoin on a GPU was still plenty viable.

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However, that didn't last long, as the race for cash lead people to developing Application Specific Integrated Circuits (ASICs) dedicated solely to Bitcoin mining quickly while sipping power. Use of the expensive ASICs drove the difficulty of mining Bitcoin to the roof and killed any sort of chance of profitability from mere mortals mining cryptocurrency.

Cryptomining saw a resurgence in late 2013 with the popular adoption of alternate cryptocurrencies, specifically Litecoin which was based on the Scrypt algorithm instead of AES-256 like Bitcoin. This meant that the ASIC developed for mining Bitcoin were useless. This is also the period of time that many of you may remember as the "Dogecoin" era, my personal favorite cryptocurrency of all time. 

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Defenders of these new "altcoins" claimed that Scrypt was different enough that ASICs would never be developed for it, and GPU mining would remain viable for a larger portion of users. As it turns out, the promise of money always wins out, and we soon saw Scrypt ASICs. Once again, the market for GPU mining crashed.

That brings us to today, and what I am calling "Third-wave Cryptomining." 

While the mass populous stopped caring about cryptocurrency as a whole, the dedicated group that was left continued to develop altcoins. These different currencies are based on various algorithms and other proofs of works (see technologies like Storj, which use the blockchain for a decentralized Dropbox-like service!).

As you may have predicted, for various reasons that might be difficult to historically quantify, there is another very popular cryptocurrency from this wave of development, Ethereum.

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Ethereum is based on the Dagger-Hashimoto algorithm and has a whole host of different quirks that makes it different from other cryptocurrencies. We aren't here to get deep in the woods on the methods behind different blockchain implementations, but if you have some time check out the Ethereum White Paper. It's all very fascinating.

Continue reading our look at this third wave of cryptocurrency!

Ethereum's popularity combined with the recent extreme surge in the price of Bitcoin to $2500+ USD has made GPU mining more profitable than ever.

So why do we, and our readers, care about Ethereum? Well, the answer lies in unfortunate circumstances that will seem very familiar to anyone who has been following computer hardware in the past few years — GPU shortages.

Yes, just as we saw back in 2013 with the Hawaii-based R9 290 GPUs, it's once again practically impossible to buy certain AMD GPUs.

This time, due to AMD's current product stack, miners have gravitated towards Polaris-based GPUs such as the RX 580 and 570. These cards are impossible to find at retail outlets and are going for $350-$400 used on eBay — about double MSRP.

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This sucks for gamers. The RX 580 is a great product at the price point for gaming and should be a viable option for gamers looking to build a new system. However, that's not quite how supply and demands works. AMD's aggressive pricing strategy combined with their OpenCL compute performance make Polaris a great GPU for mining cryptocurrencies. 

On a side note, if you have a Polaris GPU there's never been a better time to list it on eBay and purchase a better GPU for no additional investment. Although much to AMD's chagrin that would likely be an NVIDIA GPU these days, as we await Vega.

Hey, I've got a GPU sitting here idle most of the time. How do I get in on this?

The choice of what cryptocurrency to mine is overwhelming at this point. New altcoins pop up daily, and the market swings dramatically in short periods of time. Regardless of what you do, you should spend some time looking at crypto mining and the fascinating uses of technology that is has spurred.

Ethereum seems like it would be the smart choice, and for the moment it might be. However, Ethereum is proposing a plan to switch to Proof of Stake, which would eliminate mining (from the best of my understanding.) 

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In doing some research on current mining techniques, I came across a service called NiceHash. What NiceHash does is connect buyers and sellers of compute power. Buyers pay (in Bitcoin) for a mining power dedicated towards the currency they want to whatever mining pool they would like.

Sellers download the NiceHash miner application and the NiceHash servers dole out the workload accordingly. For their compute power, Sellers are paid in Bitcoin on a specific schedule. Sellers must have a Bitcoin wallet to receive payments — I've used a service called Coinbase for this purpose for years and have been happy with it. 

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The NiceHash application will benchmark your GPUs to see what settings are optimal for each miner, and automatically switch from currency to currency, depending on the demand they are getting from buyers.

We've been running this application a bit around the office, and I'm impressed at how well it works. NiceHash does take about a 3% cut in the middle, and you aren't going to make the absolute maximum profit possible with your hardware but I think it's pretty close overall. For the convenience of just turning on the application (you can even set it to activate after detecting your PC idle for a certain amount of time), it seems to be worth it for me.

For some quick numbers, at current difficulties and the exchange rate of Bitcoin, we saw a profit of about $3.25/day for an RX 580, $5/day for an AMD R9 Fury X, and about $10/day for a GTX 1080 Ti. (Check out this convenient NiceHash Calculator for your own estimates.)

Power consumption and the cost of electricity was a big concern when we first took a look at Bitcoin mining. However, keep in mind that Bitcoin was only worth $14 when we did our initial analysis. Now that Bitcoin is worth so much more, power consumption for us in Kentucky was only totaling about 10% of our gross profit from mining. For some more information about power costs versus system power, you can check out our previous article.

For those of you naturally thinking about how many GPUs you can cram into a system, stay tuned for some future content from PCPer.

Please note: These rates are very subject to change. If you're thinking of buying a ton of extra hardware to mine, with the hope of paying it off and making a profit in a couple of months please be aware that the price of Bitcoin fluctuates and these numbers may not be sustainable.

Also keep in mind that, operating a GPU at 100% load constantly could shorten the lifespan of your hardware.

However, if you've been hearing about this mining stuff and want to give it a try I think that NiceHash is a nice way to learn about the process and get your feet wet before you move onto bigger and better things.

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June 9, 2017 | 03:33 PM - Posted by CrackerAttack13

Been mining with my 8350 and r9 390 and getting about 5.50 per day. Too bad my friends 770 that I have sitting around can't mine enough to make it worth it.

June 9, 2017 | 06:01 PM - Posted by mouf

So that fancy 1080Ti could actually be of use while I am at work all day... I might need to jump on this train.

June 9, 2017 | 06:17 PM - Posted by Tim Verry

Hehe my hardware is too old for Nicehash, if only it was possible to find a RX 480 that I've been wanting for awhile now.

If you have the hardware sitting around, it might be worth doing if it is profitable after power costs. I am not sure I can recommend people go out and buy GPUs to start mining with, if you can stomach the risk emotionally and financially go for it but realize that there is risk to this investment.

You might be better off, if you want to invest in BTC, to just buy BTC and sit on it rather than trying to mine. I wish I had held onto more of my bitcoins from my mining days, I would have been hella rich! hehe OTOH, I needed the money at the time and it could have gone the other way and they could have become worthless. Hindsight is 20/20 and all that.

With that said, Nicehash does worth really well and is simple to set up and use :-).

June 9, 2017 | 09:53 PM - Posted by StephanS

So why is the RX 580 so popular when the 1070 is around $370 new (cheaper then a used RX 480) and deliver more coin for less power ?!

I'm very, very puzzled.

June 10, 2017 | 06:25 AM - Posted by veer01_42

You realize a rx580 is around 200 usd and a gtx1070 is around 400 usd?

Yuour pricing, even used, is way off, also AMD graphics cards have always been better than nvidia at coinmining.

June 11, 2017 | 07:15 PM - Posted by StephanS

No rx 480 have been trending at $380 on ebay. I saw it often over $400.. I know been following it very closely.
Almost sold my RX 480, but with the ebay tax, shipping ,etc.. even at $400 it was not worth it for me.
And the GTX 1070 as $379 on newegg, and at some point even lower on amazon.
Again I know because this is the trade I was going to do.

And no, the GTX 1070 deliver better rate AND use less energy then the RX 580.

June 15, 2017 | 11:04 AM - Posted by Nizar El Zarif

Upon release last year the RX 480 was 200$ for 4gb model and 240 for the 8 gb model, the rx 570 is around 170 $, however recently, miners have been purchasing all the RX series stocks, raising the prices for gamers.

June 28, 2017 | 03:37 PM - Posted by BeeksElectric (not verified)

From what I've seen, a lot of the custom miner software that the hardcore miners (the ones who will buy up every card they can get their hands and run them all in parallel) use is primarily designed for AMD cards because those are the standard. So even though they may get a little less hashing power with an RX x80 than a 1070, they'd rather go that route to keep using their current mining workflow.

June 10, 2017 | 01:24 PM - Posted by ncook06

Thanks, Ken! This is an awesome writeup. I set up Coinbase and NiceHash with your links. Now my 1080 SLI rig is now earning $13 per day when it would otherwise be doing nothing.

June 10, 2017 | 03:38 PM - Posted by btdog

Thanks, Ken. I was wondering what you were talking about during a recent podcast and this clarifies.

Still hesitant to try it out. First, I don't have any "good" GPUs (the best I have would be an r9 290 and my 1070). Second, bitcoins (all coins) are so erratic and can fluctuate so quickly. You could be sitting on a pile of gold one minute, and then staring at a pile of crap the next.

Last, and sorry to ruin anyone's day with this, you have to report your mining on your tax return so that Uncle Sam and your honest politicians can get their share of the mining business. That $10/day is now only $7...or $6...or $5 if you get the luxury of paying taxes in CA. Happy Mining!

June 10, 2017 | 05:29 PM - Posted by CNote

LOL I'm up in Humboldt... nobody pays taxes for "bud-mining" and I doubt many people would pay them for bit coin either.

July 2, 2017 | 10:51 PM - Posted by Anonymouse (not verified)

People in Humboldt know BudCoin is a better use of Electricity than RiptoCoin; despite getting even more ripped.

June 10, 2017 | 08:54 PM - Posted by Wingfan70

So i have a 290X lightning sitting on the shelf, wondering if i should give this a go?

June 12, 2017 | 09:40 AM - Posted by slyons89

If power is relatively cheap where you live, absolutely. My 390X does awesome at this type of mining. Hint, to save a lot of power and heat, try undervolting the card and clocking it down a little, you can reduce the power usage a lot without reducing performance as much (like 20% reduction in power and heat but only 5-10% less performance).

June 13, 2017 | 07:35 AM - Posted by boothman

So I have an R9 Fury in one PC, and an R9 390 in another. I tried mining Ethereum using the ethminer and a Chrome-based wallet called MetaMask. I let the fury rig run for a week and got nothing.

Does anyone think if that if mine using NiceHash, that I'll net some return?

Thx in advance.

June 13, 2017 | 01:58 PM - Posted by Tim Verry

Yeah, you should get some BTC from Nicehash. Were you using a pool when you tried mining ether before?

June 15, 2017 | 01:37 AM - Posted by nagus

After mining for a few days... looks like Canadians have no way to withdraw funds from coinbase.

June 15, 2017 | 04:28 AM - Posted by ET3D

Thanks to this article. I might try to mine with an underclocked RX 460, see how it turns out. I occasionally mined over the years, lost some coins to embezzlement, and generally became disenchanted and just stopped.

Still, given the high current value and the apparent ease of NiceHash, I might give it a try again, just to see how it works in practice. It will be pocket change, but still interesting.

June 16, 2017 | 08:06 PM - Posted by stalinvlad

The King prints the same money he then raises tax from.
Back in the cold war days Russia (USSR) would charge one GBP to one rouble
(See thats what Kings can do)
When you pull a kings head off and declare the king is dead...well no the king is not dead he just appeared somewhere else, the king is dead, long live the king as we say in england
What you can do is drop the kings crown in a bucket of water and shoutout a number
Drop enougth Crowns in enuff buckets frequently enuff shouting numbers all the time and most people will regard you as important, declare worth to receive worth.
What is worth?
Worth is a story.
Like the King's word it sounds more or less like anyone else.
A wise King uses money to help rule
An unwise king is rule by money.

In case you still have not got it money is a story

June 17, 2017 | 02:18 AM - Posted by ET3D

I just found out that the bitcoin transaction fee is now in dollars. That puts a damper on things. I used to buy game bundles with bitcoin, that kind of stuff, but paying a $5 tax for a $5 bundle, or even a $15 bundle, is a very high fee.

June 18, 2017 | 11:39 PM - Posted by Tim Verry

Indeed, so much for BTC being a cheaper way to send money to people!

July 13, 2017 | 10:54 AM - Posted by Geoff Peterson (not verified)


Don't sign up to Coinbase as recommended by Ken in this article. You won't be able to sell your Bitcoin for Canadian dollars via your bank account or VISA as they DO NOT SUPPORT Canadian users!

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