Mining profitability comparison sites

So here’s the first type of information source, which provides a shortcut around the whole “Is it mineable?” question. Refer to the mining-comparison sites. A number of these sites gather a plethora of data about mineable cryptocurrencies. Here are a few, and more will probably appear over time, so if any of these links break, do a search engine query:

• 2CryptoCalc: https://2cryptocalc.com/
• CoinWarz: www.coinwarz.com
• Crypto-CoinZ: www.crypto-coinz.net
• NiceHash: www.nicehash.com/profitability-calculator
• WhatToMine: www.whattomine.com

The first thing these sites do for you is to provide a list of mineable cryptocurrencies; if it’s not on this list, it’s probably not mineable, or not practical to mine. Some of these sites will have more cryptocurrencies listed than others, but in combination, they will give you a great idea of what’s practical to mine right now. (What about the brand new coin that’s coming out tomorrow? Sure, it won’t be on those lists, but for a beginning miner, that probably doesn’t matter, and in any case, consider the Lindy Effect, explained later in this chapter, in the section, “Longevity of a cryptocurrency.”)

Take a look at Figure 8-1, a screenshot of WhatToMine.com. You can see that it’s listing a variety of cryptocurrencies and comparing them to mining ether on the Ethereum blockchain. There’s Metaverse, Callisto, Expanse, DubaiCoin, and so on. At the time of this writing, WhatToMine lists 62 cryptocurrencies that can be mined with graphics processing units (GPUs) and 59 that require application-specific integrated circuits (ASICs) to economically mine. (Look for the GPU and ASIC tabs near the top of the page.) In combination, these sites list around 150 different mineable cryptocurrencies.

In Figure 8-2, you can see CoinWarz.com, another very popular site; CoinWarz compares the various cryptocurrencies to mining Bitcoin, rather than Ethereum. CoinWarz has a much clearer table, allowing you to easily see a few important metrics:

• Basic information related to the cryptocurrency, including the name, icon, ticker symbol (LTC, BTC, and so on), the overall network hash rate (the number of tera hashes per second; for more about hash rates, see Chapter 5), the block reward (though strictly speaking, what CoinWarz is showing is the block subsidy; the block reward is the subsidy plus the transaction fees), the number of blocks, and the time it takes on average to add a new block to the blockchain.
• A chart showing the block difficulty and how it’s changed over time.
• An estimate of how many coins you could mine each day based on your mining rig’s hash rate and the current block difficulty, and your hash rate and the average difficulty over the past 24 hours.
• The exchange rate between each cryptocurrency and Bitcoin, and how it’s changed over the last two weeks (the numbers are based on the best exchange for that cryptocurrency, which it names, so you can get the best rate when you sell your mined cryptocurrency).
• The exchange volume over the last 24 hours — that is, how much of the coin has been traded.
• The daily gross revenue, in U.S. dollars, that you would likely make (again, based on your hash rate), the cost for electricity, and the profit (or loss!) you would make each day.
• Your daily estimated earnings, denominated in Bitcoin.

Okay, so about your hash rate. As noted, some of these calculations are based on your computer equipment’s hash rate — that is, the number of PoW hashes it can carry out in a second (see Chapter 5). That’s the basic information these sites need to know to calculate how often you’re likely to win the game and add a block to the blockchain. Your hash rate is, essentially, the computational power of your computer.

These sites use default power settings, and the advantage of this approach is that you can at least get an idea of the relative profitability of the different cryptocurrencies, even if you don’t know the power of your equipment.

Now, if you do know how powerful your equipment is, you can enter that information. In CoinWarz, this information is entered into the top of the page, as shown in Figure 8-3. What are all these boxes? For each mining algorithm (SHA-256, Scrypt, X11, and so on), you see three text boxes. You enter your processor’s hash rate in the top box, in (depending on the algorithm) H/s (hashes per second), MH/s (mega hashes per second), or GH/s (giga hashes per second).

The second box is watts, the amount of electrical power your processor is going to use; and the last box is the cost of that electricity, in $/kWh, dollars per kilowatt-hour. Well, that’s a complicated subject, one that we get into in Chapter 10. Actually, some of these comparison sites provide data for common processors for you. For example, in Figure 8-4, you can see the calculator at Crypto-Coinz.net.

You can see that the GPU tab has been selected, so this area is showing commonly used GPUs in the cryptocurrency mining arena. These are powerful processors, set up to manage the heat that comes from constant processing. The top box lists a bunch of NVIDIA GPU model numbers; the bottom model numbers are AMD products. Find the models you have and enter the quantity you’ll be using into the text boxes, and the site automatically enters the appropriate processing power into the boxes below.

All these sites work differently. We strongly recommend that you try a few, pick one or two that you really like, and then spend an hour or two digging around and figuring out how they function. They provide a huge amount of information, in many different formats, so play a while and really get a handle on them.

Algorithms and cryptocurrencies

When you first start working with these sites, they may seem to be speaking a foreign language. (That’s why we suggest you spend a lot of time digging around in these sites, familiarizing yourself with the lingo, and fully understanding what’s going on.) It takes time to get used to an arena in which every other word is new to you.

Refer to Figure 8-3, for example, and you see SHA-256, Scrypt, X11, and so on. What are these? They are the particular PoW mining algorithms. For each algorithm, one or more (generally more) individual cryptocurrencies exist that use the algorithm. The following sections provide a partial list of mineable cryptocurrencies and the algorithms they use.

The lists in the following section aren’t everything; more algorithms, and more mineable cryptocurrencies, exist, but you can assume that if they’re not on at least one of the comparison sites, they’re not worth your attention. For example, at the time of this writing, a number of algorithms (X25, Keccak, SkunkHash, BLAKE2s, BLAKE256, X17, CNHeavy, and EnergiHash) are not being used by cryptocurrencies deemed worthy of these sites.

Notice another thing about the preceding list, something you may want to consider when picking a cryptocurrency that uses an algorithm that requires an ASIC. We have five ASIC algorithms listed, and below each algorithm, we have 7, 13, 8, 7, and 4 cryptocurrencies using each algorithm respectively. That is, the same ASIC — the same hardware — can be used to mine any of the cryptocurrencies using the algorithm for which the ASIC was designed.

So you could choose to mine, say, CannabisCoin, in which case you would need an X11 ASIC. If CannabisCoin went up in smoke (excuse the pun), you could switch to DASH, IDApay, or Startcoin. But if you bought an ASIC for the Scrypt algorithm, began mining one of the Scrypt cryptocurrencies, and then wanted to switch, you would have not 3 but 12 alternative choices.

The cryptocurrency’s details page

Another great place to find information about a particular cryptocurrency is on the currency’s details page at the comparison sites. The comparison sites we looked at earlier in this chapter generally link to that page. In fact, refer to the image in Figure 8-1; if you click on a cryptocurrency name, you’re taken to a details page that contains additional information about that cryptocurrency. For example, click Callisto (CLO), and you see the page shown in Figure 8-5.

This page contains stacks of information about the cryptocurrency, including statistics such as the block time (how often a block is added), the block reward, the difficulty level, and so on. It also lists mining pools that work with this particular currency (see Chapter 7).

Mining-profit calculators

If you want to know what the profit potential is for a particular cryptocurrency, you need to work with a mining-profit calculator. The mining comparison sites generally contain these calculators, though other sites also provide individual calculators without an overall comparison tool. (www.cryptocompare.com/mining/calculator/, for example, provides calculators for Bitcoin, Ethereum, Monero, Zcash, DASH, and Litecoin.)

For example, refer to Figure 8-5. At the top of the page, you can enter your hardware’s hash rate, power consumption, and cost, along with the cost of your electricity, and the calculator will figure out how much you can make (or lose) over an hour, a day, a week, a month, or a year.

Figure 8-6 shows a simpler calculator, from www.cryptocompare.com/mining/calculator/btc, that displays potential revenue and profit from mining Bitcoin. This calculator even allows you to enter a pool fee, to include the costs of mining through a pool (see Chapter 7). This example, even though it shows you making a profit, is actually a losing proposition. (See the nearby sidebar, “Hash power envy? You’d better pool mine.”)

The cryptocurrency’s home page

Another great place to find information about a cryptocurrency in which you have some interest is, not surprisingly, the cryptocurrency’s home page (though, of course, the information you’ll find here will be biased toward optimism for the future of the currency). That’s easy enough to find. The comparison site’s cryptocurrency details pages (refer to Figure 8-5) generally have this information. You can also find this information at other sites, such as coinmarketcap.com.

Many of these cryptocurrency systems are distributed with the aim of decentralization. This means that for most of these systems, no single party controls them, so many sites may claim to be the home page for that particular peer-to-peer cryptocurrency, with some having more validity to that claim than others. Always do plenty of research and tread lightly.

GitHub

Most cryptocurrencies you’re likely to be mining have a GitHub page. GitHub is a software development platform and software repository, used by many open-source software projects. Although cryptocurrencies are not open source by definition, most of them are (in fact, any cryptocurrency you’re likely to mine is generally open source). You can see an example — the Bitcoin GitHub page — in Figure 8-7.

How do you find the GitHub page? Again, the details page at one of the cryptocurrency sites may hold a link to the currency’s GitHub page, or it may not. You may be able to find a link to it in the currency’s home page, or you can also search for it within GitHub.com.

At GitHub, you can review the actual source code of the cryptocurrency to see how it functions, if you have the skills to do so, but you can also get an idea of how active the community is, how many people are involved, how often changes are made to the code, and so on. For a deeper dive into the specific mechanisms and intricacies involved with GitHub, refer to GitHub For Dummies (John Wiley & Sons, Inc.) by Sarah Guthals and Phil Haack.

The cryptocurrency’s Wikipedia page

Many, perhaps most, cryptocurrencies, have Wikipedia pages. These can be useful places to find general background information about a cryptocurrency, often more quickly than using other sources. These pages often provide a little history about the currency, information about the founders and the technology, controversies related to it, and so on. You won’t find them for many of the smaller, more obscure cryptocurrencies, though, and the level of detail for the ones that are there ranges from sparse to exhaustive.

You can see an example in Figure 8-8, which shows Dogecoin’s Wikipedia page. Notice the info-block on the right side, which provides a quick rundown of important information.

Mining forums

Finally, don’t forget the cryptocurrency mining forums, of which perhaps the most significant are the Bitcoin (BitcoinTalk.org) forums. You can find forums on numerous subjects here, related to many different Bitcoin and cryptocurrency issues. There’s a Bitcoin Mining section, as well as an Alternative Cryptocurrencies section, and within that, a Mining subsection. The Altcoin mining section has more than 800,000 posts in more than 3,000 topic areas, and so a wealth of mining information is there to be digested.

Longevity of a cryptocurrency

To choose a cryptocurrency that is right for you, it is important to have confidence that it will be around and functioning during the period you choose to mine it, as well as the period in which you plan for the cryptocurrency to store your mining rewards.

Cryptocurrency systems that have withstood the test of time are more likely to continue to do so. There’s a theory called the Lindy Effect that states that the life expectancy of certain things, such as technology, increases as they age. (The opposite is true for living things, of course; once they reach a certain age, life expectancy declines.)

The theory, by the way, is named after a deli in New York where comedians gather each night to discuss their work. Anyway, this theory suggests that the life expectancy of ideas or technologies (nonbiological systems) is related to their current age, and that each extra duration of existence makes it more likely that the idea or technology will continue to survive. Open-source systems such as Bitcoin or other similar cryptocurrencies are constantly being upgraded and improved ever so slightly by programmers and software enthusiasts. Each code bug, or error in the system, that is found and quickly patched (a software term for fixed) will leave the system tougher and less prone to error going forward. Software systems such as Bitcoin or similar open-source cryptocurrencies can be considered antifragile, with each flaw that is discovered and subsequently fixed leading to a stronger and less fragile technology.

It is important to choose a cryptocurrency to mine with enough perceived longevity, durability, and endurance to suit your specific risk profile.

Let us summarize with a question: Which cryptocurrency is likely to survive longer? Bitcoin, dating back to January 2009, or JustAnotherCoin, a (hypothetical) new cryptocurrency released to the world yesterday afternoon? Bitcoin be a better bet, if you’ll excuse the alliteration. There are a couple of thousand cryptocurrencies; most are garbage, and can’t possibly survive. A new one is likely just one more JunkCoin on the garbage heap.

On the other hand, sometimes apparently stable, long-lasting systems die. Who remembers DEC, WordPerfect, or VisiCalc, for example? (We bet that many readers have no idea what these words even mean!) And sometimes new systems appear in a flash and beat out well-established competitors. (Google, anyone? Facebook?)

But, to continue with the example of technology companies, most newcomers fail; most Internet startups in the 1990s Internet bubble went out of business, for example. Most obscure cryptocurrencies will fail, too. So, in general, a long-lasting cryptocurrency, such as Bitcoin, Litecoin, or ether, is a better bet than today’s new entry into the cryptocurrency market.

How do you figure out how long the cryptocurrency has been around? It shouldn’t be too hard to find. Check the currency’s own website, its Wikipedia entry if there is one, and GitHub’s history of software commits and releases.

Hash rate and cryptocurrency security

Another important factor involved with the choice of which cryptocurrency to mine is the security encompassing the blockchain being selected to mine. You wouldn’t want to put your eggs (mining resources) in a basket (blockchain) with holes in it that cannot support the weight of your precious cargo (value).

This same idea applies to cryptocurrency systems, and security in this sense is relative. A cryptocurrency that has a low level of hash-powered proof of work is less secure than other cryptocurrencies that run on a similar consensus mechanism, as it’s more easily hacked or manipulated. This puts the cryptocurrency’s chance of surviving at risk and also puts your funds in that blockchain at risk.

Where do you find the level of hash power being used by the network? One great place to look for this kind of information is BitInfoCharts.com, which will let you select cryptocurrencies to compare against each other. This site provides a huge range of different cryptocurrency metrics, from pricing charts to market cap to lists of the richest blockchain addresses, for a large range of cryptocurrencies.

As shown in Figure 8-9, one thing you can do is select a bunch of cryptocurrencies and create a chart comparing their hash rates; see https://bitinfocharts.com/comparison/bitcoin-hashrate.html. You can also find individual hash rates from the comparison sites we look at earlier in this chapter (see the section, “Hash rate and cryptocurrency security”).

In fact, hash rate is something you’ll find on various sites. For example, you can find the hash rate for Bitcoin, Ethereum, and Bitcoin Cash at www.blockchain.com/explorer. The pool-mining services provide hash rate statistics for the cryptocurrencies they mine, and statistics sites such as Coin Dance provide some, too (see https://coin.dance/blocks/hashrate).

Community support

Another factor to consider and weigh when selecting which cryptocurrency is right for you is community support. Network effects of cryptocurrency systems are important, and wide adoption and utilization are key metrics to look at when choosing which blockchain to mine. Are many people involved in managing and developing the cryptocurrency? (A cryptocurrency with very few people involved is likely to be unstable.) And are many people using the cryptocurrency — that is, is there much trading going on, or are people using it to make purchases?

There’s a concept known as Metcalfe’s Law that explains network effects. The idea, proposed by Robert Metcalfe, one of the inventors of Ethernet, is that a communication system creates value proportional to the square of the number of users of that particular system. Essentially, the more users on a system, the more useful — and more valuable — the network becomes.

Community support is also important in other ways. It can be measured in the form of open-source developers actively contributing to the cryptocurrency’s code repository. A healthy and robust cryptocurrency will have a diverse set of many individuals and entities reviewing and auditing the code that fortifies it.

Developer support is critical to the longevity and robustness of a cryptocurrency system. Note that many cryptocurrency systems created and issued by companies or consortiums are not open source, not mineable, and do not have a wide range of code auditors outside of the company reviewing and revising their walled-garden systems.

How do you measure community support? The cryptocurrency’s GitHub page is a great start; you’ll be able to see exactly how active the development process is, and how many people are involved. The currency’s web page may give you an idea of activity, too, especially if the site has discussion groups. Another helpful tool to compare support across different networks can be found at www.coindesk.com/data, which shows a variety of rankings comparing top cryptocurrencies such as social, market, and developer benchmarks.