Besides a few trades, I started myself in crypto with a small mining rig and the idea of passive income. Most people love the idea of revenue without work – myself included – and yes, if you compare crypto mining returns with conventional investments like stock dividends or real estate rentals, you are getting your money back extremely fast here! So it works, right? Then why did I end up selling my rig?
First of all, despite whatever your favourite guru told you, no passive income is 100% passive. When you rent an apartment you still have to collect the rent and fix broken stuff. Same here, the rig will become your small pet – you must monitor it, dust it off, update and optimize. If you are more serious about mining, you should also be constantly seeking more profitable coins, not just settle with mining Ethereum till your final days. Then do not forget that graphic cards are quite sensitive hardware and they like to crash – meaning you have to keep an eye on it 24/7 and restart the rig if that happens. But back to the main point. I did sell my mining equipment, because I find this path too expensive, slow, risky and not scalable. Let me explain.
Expensive, because you have to buy overpriced hardware, plus you have to burn a lot of electricity to get your coins – both of these costs are upfront and for most people, rig is simply a sizeable investment. Also once you buy that “piece of junk” 😉 your money is trapped in it, and you can not use it for other things, for example for trading or staking/parking.
Slow, because it takes usually 9-12 months to break even. That is you mine just enough to pay for your hardware and electricity. So one year has passed and you are back to square one, with no real profits in your pocket, just paid for all the costs and outdated machinery. One year may sound good from traditional point of view, but in crypto world, it feels like forever.
Risky, because the action in crypto arena is very fast and unpredictable, that it is hard to foresee what is going to happen next month, let alone in one year. You can argue that “so far so good” – that all miners you know are well off. Yes, I see your point, but that was before the crypto mania and as of now the landscape is very different. It is quite unlikely that ETH will go 10x up again to $10,000 USD and you find yourself in a position of your friends who came in early and their rig paid for itself in matter of weeks. More likely, you will not wait 1 year, but 2 because of possible corrections ahead.
Not scalable – as it is a completely different business to run 2 rigs and 20 rigs. In a regular household, you can not possibly connect 10 or 20 rigs, so even if you master things with 1-2 rigs, you are out of luck, because unless you are ready to rent an industrial space, and hire someone to watch over your precious rig farm, who will keep monitoring and optimizing everything, you are stuck. So yes, the bigger operation is quite distinct from plugging in one rig in your basement. Also do not forget replacing broken cards, because the probability that one of your cards goes to silicon heaven increases with the amount of cards that work for you. I am not saying that it is impossible to pull this off, some people love the amazing view on their farm field 🙂 just consider if this is something for you.
To wrap it up, if you have access to cheap graphic cards, free electricity or you have excellent skills in overclocking – then mining can be the right choice for you. However, if you are just a normal guy with no unfair advantage, I can only recommend crypto mining as a good experience and part of your learning curve, but definitely not as a long-term business. Especially if you are tight on cash, or you do not want to risk your capital – consider some alternative way, like crypto currencies trading.