Monero Mining: An Introduction to Entering the Privacy Coin Mining World
Monero (XMR) continues to gain attention amongst the cryptocurrency community as a solution for transaction privacy. Founded in 2014, the project has quickly ascended as the leader of privacy coins. If you’re interested in mining Monero, here are the details you need to know.
Reasons for Mining Monero
- Cooler temperatures: Mining Ethereum of other Ethash-based cryptocurrencies, for example, is much warmer at around 12-15 degrees Celsius higher. BTC’s Equihash algorithm also requires more energy to run a mining rig. Since Monero requires less power and less heat is generated, your mining rig should have a longer lifetime compared to trying to mine some other cryptocurrencies. Overall, this should also mean that Monero/Cryptonight algorithm mining operations are lower than mining specific for most other popular cryptocurrencies using different algorithms.
- Price Value: The price per XMR has skyrocketed in a short time. In May 2016, prices were less than $1 per XMR. In late April/early May 2018, prices are closer to $250 per XMR. While this could, of course, go up or down drastically, prices have generally remained above $100 since November 2017.
- Committed to Decentralization: Currently, it is much easier for hobbyist miners to start mining XMR due to a recent algorithm change that focuses on a clear mission of ASIC resistance. In an era where ASIC has led to increased entry-level mining costs, Monero is making XMR easier for more people to mine. We’ll examine the recent ASIC resistance battle more in a dedicated section below.
- Exchange Availability: Because XMR is considered to be one of the top cryptocurrency projects and is ranked consistently within the top 15 of the market cap rankings, it is a currency that people trade often. In turn, this liquidity will give miners the opportunity to sell XMR rather easily on almost any cryptocurrency exchange.
- Less Hardware Required: Since Monero requires less hardware than mining for other cryptocurrencies, this makes the entire process of making your own XMR mining operation cheaper and easier to accomplish.
Reasons Against Mining Monero
- No ASIC option: Yes, this is also the same as the third reason for why you should mine Monero. Essentially, Monero’s ASIC-stance can be a good thing or a bad thing depending on your perspective. For most people who don’t have the resources to fund large ASIC mining operations, not having an ASIC option is a good thing. For those people that want to run an ASIC-based enterprise-level Monero farm, this is a bad thing. As of April 2018, ASIC mining with Monero is practically impossible to do.
- Other Privacy Coin Options: If you are a miner who likes to HODL, Monero could very well go up in value in the future. However, other mineable privacy coins might be better options as they could have more value growth than XMR over time. There are a lot of other up-and-coming privacy coins which are looking to surpass Monero’s technology and market cap.
Cost of Building Monero Mining Rigs
The cost of building a Monero (XMR) GPU mining rig, for example, varies depending on which components are used. Some people estimate that you can make one for under $600 and other people say around $800 per rig is a better estimate. 1 GPU rigs should be able to mine around 430 h/s, and 12 GPU rigs (cost of around $4000+) should be able to reach around 5160 h/s (calculated in September 2017).
The ASIC Controversy
Bitmain and other mining rig manufacturers announced the release of new ASIC mining rigs that could mine Monero. Initial costs for the Bitmain Antminer X3 ASIC were around $12,000 per rig. Essentially, the availability of these rigs would give miners with lots of money to invest in mining rigs (including large-scale enterprises) the ability to mine a significant amount of XMR. Other mining rigs (i.e. GPU and CPU) would have essentially become obsolete.
The Monero community decided that it would not accept the prevalence of ASIC miners that would have flooded the market with the release of the new. During March 2018, The Monero community knew that the mass production of such rigs could lead to much greater centralization of the XMR token supply, something which has concerned many other projects teams. If you’re looking to start mining XMR now, it’s best to not look at the highly-discounted ASIC rigs. Since the Cryptonight algorithm change, it’s clear that ASIC rigs are no longer effective for mining XMR.
Hash Rates, Difficulty, and Profitability
Monero’s new ASIC-resistant algorithm seems to have worked. How effective has this change been thus far? XMR dropped from an all-time high of over 1.3 GH/s on April 6 to an all-time low of around 448 MH/s on April 11. Since April 11, XMR hash rates have remained steady at around 500 MH/s.
The profitability of mining Monero increased from .551 USD/Day for 1 KHash/s on April 6 to 1.795 on April 27.
Difficulty decreased significantly from 120+ G on April 4 to around 60 G during the rest of April.
The Future of Monero Mining
For now, it appears that Monero is committed to sticking with Proof-of-Work (PoW), meaning that XMR will likely remain a mineable cryptocurrency for awhile. The good news for miners who don’t have the money for expensive ASIC rigs is that Monero seems to be one of the projects most committed to proactively enhancing its algorithm to create more effective ASIC resistance.
While there is a possibility that some ASIC mining rig manufacturers could circumvent the algorithm changes introduced in April 2018, Monero’s latest move is a clear sign that such attempts could lead to net losses for manufacturers and the miners who invest in their rigs. It’s also important to note that Monero typically updates its algorithm twice per year, so any potential future advances made by ASIC mining rig manufacturers could very well be thwarted once again. For those interested in ASIC mining, other projects like BTC might be the way to go. Meanwhile, those interested in CPU and GPU mining will at least have the foundations for success in place due to Monero’s clear stance on ASIC resistance.
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