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DIY Mining Rig – Is GPU Mining Still Profitable in 2017?

After being in the crypto space for the last 6 months (it feels like years!), we decided that we wanted to round out our portfolio by adding a mining rig. While we currently have an Antminer D3 on order (that is basically worthless), we wanted to supplement that mining with a 6 card GPU mining rig. We are relatively new to mining, but we will be providing you with everything you need to know in order to build your first rig.

You’ll also want to get yourself a hardware wallet to store the cryptocurrency you will be mining. Different coins only be used on certain hardware wallets, but Bitcoin can be stored on all of them. You can read about the Best Bitcoin Wallets currently available here and here.

Is GPU Mining Still Profitable?

Short answer, yes. You won’t get rich overnight by building one mining rig, but you can certainly make money if you do it right. There are a few different ways to approach GPU mining, and I choose to define them in terms of exchange rate risk.

Strategy

Exchange Rate Risk

Mine and HODL Altcoins

HIGH

Sell Hash Power for Bitcoin and HODL

MEDIUM

Convert to USD

LOW

Strategy #1 - Mine and HODL Altcoins

This is the first strategy and arguably the riskiest of the three. If you choose to mine something like VertCoin (VRT) or ZenCash (ZEN)and decide to hold it, you’re accepting the risk that that coin may go to zero. I call this high exchange rate risk. The newer the altcoin, the lower the probability of its success. That’s not to say a new altcoin won’t become the next Bitcoin or Ethereum, but it is highly unlikely to happen in the near term.

The opposite could also happen. Suppose you started mining ZenCash a few months ago and you held it, you would be up an additional 200% return due to the price increase of ZenCash. Mining at a loss for an “appreciation play” is a risky scenario that could wind up being hugely profitable. There are many altcoins that have been pumped 5x or 10x seemingly out of nowhere. If you mine the right coin, you could find yourself sitting on a pot of gold.


Strategy #2 - Sell Hash Power for Bitcoin and HODL

Your second option has less exchange rate risk than mining altcoins because Bitcoin is considered the base currency for the cryptocurrency market. We are making the assumption that Bitcoin, or BTC, would be LESS volatile than an altcoin like ZenCash or Monero. While the 30% and 50% price reductions that seem to happen fairly often for Bitcoin, it still is looked to as the safe haven cryptocurrency.

Once you get your GPU mining rig up and running, you can sell your hashing power to Nice Hash, the largest crypto-mining marketplace. Nice Hash will pay you in Bitcoin for selling the has power your GPU mining rig is currently generating. Simply choose your hashing algorithm, and Nice Hash will deposit the equivalent amount of “mined” BTC to your wallet address. We would recommend using a hardware wallet for this.

Strategy #3 - Convert Crypto into USD 

If you want to start a mining business, this would be the most logical way to operate. Locking in earnings by converting Bitcoin or another altcoin directly to USD will be the best way to protect yourself from fluctuations in the crypto market. For tax purposes, you may also want to convert your earnings into USD in order to pay for expenses, like the brand new gpu mining rig you just built!

While this is the safest option from a business management standpoint, it is also the most limiting in terms of profit potential. By converting your earnings into USD, you will not be able to realize the appreciation of your mined token. Depending upon your risk tolerance, you may want to keep a certain amount of earnings in the mined token, and convert the rest into fiat currency to lock in those earnings.


How Profitable is a GPU Mining Rig?

The nice part about GPU mining is that you have a few difference choices in terms of what you want to mine. With that being said, you will also need to decide what algorithm you want to start mining.  I like to start by checking out www.whattomine.com (WTM) and seeing what the most profitable coins to mine are. Please note that these are just estimates in terms of profitability. Using WTM is very simple.

  • Select GPU  you plan on using
  • Determine how many cards you want in your rig
  • Enter your electricity rate (I used $0.11 $/kwh)
  • Hit Calculate
mining rig

Photo Credit: WhatToMine.Com

Selecting a GPU is fairly straight forward. The most profitable card (as determined by WhatToMine) is usually the latest card on the list, going from left to right, and top to bottom. Your budget will ultimately determine how many cards you can purchase, but for our example, we will go with 6 cards as that is what we are interested in building. You can find you’re $/kwh on your electricity bill. If you can’t obtain that information, you can always Google your local area rates.

WhatToMine will then provide you with a running list of various cryptocurrencies and their respective profitability. The Revenue and Profit column will provide you with daily profitability estimates. The BOLD number is the profitability, which nets out your estimated expenses from total revenue. This is the figure you should use if you want to estimate you expected taxes assuming you convert to USD or another fiat currency.

The line beneath the coin name is the name of the token’s respective algorithm. This is the algorithm that your GPU processes in order to “mine” and earn cryptocurrency. You’ll notice that there are a few different algorithms, but not an extremely large amount. That is one of the nice things about GPU mining, they are much more versatile than ASICs because ASICs can only mine one algorithm.

mining rig

Photo Credit: WhatToMine.Com


GPU mining became extremely popular because the algorithm that Ethereum uses is minable on a GPU. As Ethereum’s price increased, miners were making nearly $100 per day per GPU before the difficulty and hash power increased. Mining ETH is still profitable, but would require a significant investment in a GPU mining rig. At this point, it would be more profitable to simply sell your hash power for BTC and then use that BTC to buy ETH.

GPU mining is also popular because they can process algorithms that are ASIC resistant, such as the Equihash algorithm that Zcash and ZenCash use. GPU mining is considered less centralized than ASIC mining since there are only a few different ASIC mining companies that sell (but mostly keep for themselves) high powered cryptocurrency miners. This means that the average person can purchase, for a reasonable price, GPUs and build their own mining rig to support a network of their choice.

How Many GPUs do I need?

This question can only be answered by your own personal budget. Trio mining rigs have become extremely popular on the BitcoinTalk forums because of their stability and entry level price point. As of November 2017, Trio mining rigs typically consist of two (2x) 1080 Ti GPUs and one (1x) 1070 mini. I would assume as newer cards come to the market, that the 1080 Tis and 1070s will be replaced with their predecessor.

You should also decide how long you expect to be mining for. If you are planning on making this hobby more of a business, it might be worth spending a little bit more up front for more cards and a better assembly. While not everyone can afford spending $3k or more for a GPU mining rig, once you pay off the hardware outside of the GPUs themselves, you typically won’t need to replace it (frame, risers, power supply, etc.)


What Mining Rig Fram Should I Use?

Depending upon what kind of setup you are going for, you may want to purchase or build your own frame for your mining rig. I would highly recommend going with a Trio mining rig (as shown above in the VoskCoin video) or going with a 6-card mining rig setup. VoskCoin showed us a great all-in-one frame and hardware solution from Parallel Miner that we really like. While it may be expensive relative to a DIY frame, it is extremely easy to use for beginners just getting into mining.

Remember, you can think about the frame and the included hardware as a sunk cost. Once you pay it off, you shouldn’t need to replace many of those items on a consistent basis. Coupling these sunk costs with 6 GPUs will also allow you to decrease the time it will take to pay off your rig. Spreading the upfront costs across 6 cards is much more profitable than trying to pay off your sunk costs with 3 cards or less.

This video from VoskCoin shows you how easy to use the Parallel Miner frame is. The nice thing about purchasing this frame is that once you pay off the sunk costs and the GPUs, you can always sell the GPUs and upgrade to new ones down the road. We believe that GPUs will be upgradeable on a quarterly basis. The timing of the GPUs depreciation and resale value should help determine when you choose to upgrade.

Parts List for GPU Mining Rig

6 Card GPU Mining Rig

Rig with Risers and Power Supply

1080 Ti GPU (6x)

GIGABYTE Motherboard

Intel CPU

PCIe Adaptor Power Cable

Power Extension Cable

Power Cable

Power Switch

8GB RAM

Alternative Video Cards (Less expensive)

ZOTAC 1080 mini (6x)

ZOTAC 1070 mini (6x)

ZOTAC 1060 mini (6x)


GPU Mining Rig – Will it always be Profitable?

This is the million-dollar question. We believe GPU mining will be profitable for the foreseeable future for a few reasons.

Why GPU Mining is Here to Stay

New coins will use ASIC resistant algorithms

There will always be new coin and ICOs

Long term outlook of cryptocurrency market is positive

Every new coin (besides Bitcoin Cash, assuming you consider it a NEW coin) utilizes an alogithm that is ASIC resistant and GPU minable. There are a number of different algorithms that are GPU minable.

GPU Mining Rig – Will it always be Profitable?

Hashing Algorithm

Cryptocurrency

Equihash

Zcash, ZenCash

ETHash

Ethereum, Ethereum Classic

Lyra2REv2

Vertcoin, Monacoin

NeoScrypt

FeatherCoin

Skunkhash

FeatherCoin

Power Extension Cable

ALTCOM

LBRY

LBRY

CryptoNight

Monero, Electroneum

Equihash has remained the most profitable algorithm to mine / process for the past few months, ever since mining difficulty and total Ethereum hash power has increased. Equihash is the algorithm of choice for security coins such as Zcash and ZenCash. The Lyra2REv2 algorithm is utilized by VertCoin, which has seen significant growth in the past few months. The rise of altcoins such as Zcash and Monero in 2017 has driven the rebirth of GPU mining.

CryptoNight algorithm is utilized by Monero, another privacy coin. Monero and its underlying XMR token have absolutely explosed in 2017. Their GUI desktop wallet is fairly straightforward, and they are expected to release a hardware wallet within the next few months. It is worth mentioning that Monero mining is more profitable utilizing AMD GPUs. We will note that the optimization of AMD cards can be a difficult task to overcome, but there are plenty of tutorials on setting up a Monero mining rig on the bitcointalk forums.


There Will Always Be New Coins

Cryptocurrencies are here to stay, period. 2017 has proved to be the year of the ICO, but ICO activity will most likely increase in 2018 and 2019 as the Ethereum network continues to scale. Additionally, more and more use cases for cryptocurrency are coming to the surface which leads to more ICOs. While we are not certain that each new use case deserves its own token, this will most likely be the trend until the market says otherwise.

These new tokens will almost certainly use an algorithm that is GPU minable. It is important to keep your ear to the ground for new coins or tokens that are gaining traction in the cryptocurrency space. Monero and other privacy coins such as Zcash and its ZenCash fork are currently some of the most profitable GPU minable coins. ZenCash just made its debut, and is currently making a lot of miners a decent income.

Hard forks are also another reason why we believe GPU mining is here to stay and will continue to be profitable. Bitcoin Gold was created to help decentralize Bitcoin, the already decentralized king of crypto. The reason BTG chose to fork was to enable the average investor to mine and participate in the network without having to spend a lot of money on ASIC mining rigs. This is an attempt to decentralize the current mining pools who dominate the hash power of the network.

Long Term Outlook on Crypto is Positive

Cryptocurrencies are here to stay, period. 2017 has proved to be the year of the ICO, but ICO activity will most likely increase in 2018 and 2019 as the Ethereum network continues to scale. Additionally, more and more use cases for cryptocurrency are coming to the surface which leads to more ICOs. While we are not certain that each new use case deserves its own token, this will most likely be the trend until the market says otherwise.

These new tokens will almost certainly use an algorithm that is GPU minable. It is important to keep your ear to the ground for new coins or tokens that are gaining traction in the cryptocurrency space. Monero and other privacy coins such as Zcash and its ZenCash fork are currently some of the most profitable GPU minable coins. ZenCash just made its debut, and is currently making a lot of miners a decent income.

Hard forks are also another reason why we believe GPU mining will continue to be profitable. Bitcoin Gold was created to help decentralize Bitcoin, the already decentralized king of crypto. The reason BTG chose to fork was to enable the average investor to mine and participate in the network without having to spend a lot of money on ASIC mining rigs. This is an attempt to decentralize the current mining pools who dominate the hash power of the network.

At the time of this writing, Bitcoin futures trading is set to begin within the next few weeks as noted by CME Group. This may be related to Novogratz’s comment that “the heard is coming” and new money will be coming into the cryptocurrency space. Novogratz also reminded everyone that the NASDAQ bubble didn’t burst until the market cap reached nearly $6 trillion dollars. This was during a time when the internet was just making its way into homes and business, and owning a good domain name meant you could IPO with essentially no business model. We are not even close to those times.

As of November 19th, 2017, mining the X11Gost algorithm on Nice Hash is EXTREMELY profitable. This is the first time I have seen over $100 a day profitability for a 6-card rig (6x 1080 Ti). I will leave this picture up on this post for proof that GPU mining is here to stay, and that it behooves you to keep checking which coins are most profitable. This profitability was only available for a few hours on the 19th. After refreshing the page, the X11Gost profitability had dropped back down to normal levels.

mining rig