You lined up your racks, you aligned those miners, powered the risers and everything is buzzing nicely, hashing around and, most importantly, drawing power each and every second. Power that costs a lot of money. Power that must be converted to revenue, otherwise all your gear is just scrap iron (and some plastic). So, how do you make sure all this hash power goes to the right place? How do you get the most of your mining equipment?
There are many strategies that can be used, and if you ask 10 crypto gurus about them, you will probably get 10 different answers. We still live in a very dynamic world, and you can get to the same point – profit – by following many different routes.
Keeping that in mind, and without pretending we know the ultimate answer to the best mining strategy, here are 5 tips to help you maximize your mining ROI.
1. Keep an Eye on Bitcoin premium clones.
By “premium clone” I understand the Bitcoin forks backed by significant players in the pool / mining equipment area, like Bitcoin Cash or Bitcoin Gold. These clones are using an almost identical code base and they are accepted at every significant pool out there (not to mention MinerGate offered support to them from the early days). While it is true that nobody knows where those clones will end up, the liquidity they provide is a god send for many professional miners. So, especially when there are technical milestones announced (a new hard fork, an upgrade of the platform, etc.) it could be wise to allocate a certain part of your mining power to these tokens.
2. Ethereum mining is coming close to the End.
As you already know, Ethereum will soon move to a Proof of Stake protocol, named Casper. What does this mean, in layman terms, is that mining won’t be available anymore. But since Ethereum is still the second crypto currency by market cap, and since it is already the hosts of so many other coins, it would be a shame not to profit for it. So, until Ethereum mining comes to the actual end, every ETH could be considered as a future investment in a PoS participation. Just to be clear, the end of ETH mining doesn’t mean you can’t produce ETH by securing the network, it means you will use a different method. Namely, ore ETH.
3. Emerging Coins.
A part from the incontestable start, Bitcoin, there are a lot of emerging tokens that can still be mined with good results. But how can you differentiate them from the hundreds of ‘shitcoins’ out there? Well, there are a few criteria. First of all, do a research about how well supported they are in mining pools. For instance, Bytecoin has a pretty good support on MinerGate. Second, have a look at their actual market cap. The bigger, the better. And third, try to see evaluate the team behind it, both from technical and marketing perspectives. The times when you could have a nice coin with just a bunch of clever geeks are over. Competition is rough, so you also need strong marketing skills in your team.
4. Privacy Tokens.
Whether you mine for fun or as a business, I think privacy should be an important concern for you. As such, a part of your mining power could be directed to privacy oriented tokens, like ZCash and Monero (both offered on MinerGate). Not only it’s good for you to have a part of your value in untraceable assets, but the value of untraceable assets itself is growing, based on the same line of thinking. So, if the main bet is still Bitcoin, I think that from the sea of alts, those who are taking privacy seriously are the ones that will survive on the long run. Also, if you really want to go deeper, you can keep an eye on forks for these tokens, but this presents a much higher risk. Better stay with what works.
5. Signal Tokens.
If you are in the crypto universe for more than 4-5 years, then you know how things are going on. Many technical and strategical improvements that we are seeing now in Bitcoin (and their premium clones) are first tested in much smaller ecosystems. Traditionally, one of these ecosystems has been Litecoin. If you followed Litecoin evolution, then you know that it grew even more than Bitcoin. From a strategical point of view, keeping in your mining power portfolio a signal token will give you a lot of insights into what to expect from their “older brothers” when they will implement a specific feature, both in terms of technical challenges and ROI.
So, to make a short recap:
Bitcoin and Bitcoin Premium Clones – for the increased liquidity.
Ethereum – as a preparation for their upcoming PoS algorithm.
Emerging coins – Bytecoin and all other “supporting” coins that you see are being supported in significantly big mining pools.
Privacy tokens – not only for protecting your own investment, but because their intrinsic value is to grow.
Signal tokens – to get a real heads up when some changes are going to be implemented and prepare accordingly.
Apart from that, you should obviously take into account the specifics of each mining algorithm. Some coins are requiring dedicated mining equipment, like Bitcoin, while others can be mined with less intensive computing gear (emerging tokens). As always, a thorough assessment of what each pool offers from this point of view, like what is their “token offer”, is always useful. And an evaluation of cost versus performance of your gear, before you start mining, is obviously going to help.
Even if all these things look like time consuming and boring, they can prove incredibly profitable in the long run. Better fail at the “spreadsheet” level a hundred times, before you actually buy equipment and start spending money on power then after you did it.
And of course, what you see above is just a scaffold, a canvas on which you can design your own mining strategy.