Overview

Ever since Bitcoin mining became popular in the last few years, more people have wondered about methods to mine other cryptocurrencies. Though Bitcoin is the most appealing, it’s common knowledge amongst mining communities that at-home miners are unlikely to turn a profit even just mining a fraction of the coin. 

The main reasons for this are the algorithm, hashing difficulty, the number of miners in the network, expensive equipment, and the power consumption of such devices. Fortunately, several other coins make better sense economically that one can mine in their own capacity. 

Regardless of the coin in question, there are mainly three factors to consider in assessing profitability:

  • Power consumption (along with cost per KWh): Since mining is a power-consuming activity, electricity costs are one of the ongoing expenses for miners worldwide. The most profitable miners have been fortunate enough to live in countries with cheap or reduced electricity costs per KWh (kilowatt-hour)
  • Hash power/rate: The hash rates refer to the speed the computer hardware processes hashes. The higher the hash rate, the quicker your computer can solve the mathematical equations in the blockchain. However, the increase in hash rate comes with it the rise in equipment cost. 
  • Pool fee (if applicable): The pool fee is typically minimal for a large majority of mining pools, meaning this is the lowest cost for a miner.

Other factors to consider

  • Equipment required: The algorithms of certain coins were set only to accept specific types of equipment. ASIC machines, most associated with Bitcoin, are quite expensive compared to GPUs and are not compatible with some coins. However, where they are acceptable, they offer a competitive edge than GPUs due to their astronomically higher hash rate.
  • Block time and coin supply: The time it takes for a block to form in the blockchain is crucial. Ideally, one desires a coin that produces more blocks quickly. For example, the average time for Bitcoin’s block creation is roughly ten minutes. There are countless coins where blocks form significantly faster, which is excellent since it allows for a wider distribution of mining rewards. If a coin has a much bigger supply, this is an added advantage. Some coins have halving encoded in them, meaning that mining rewards get split in half after some years. A coin with an infinite supply is better in this scenario.
  • Mining difficulty: Sadly, this aspect consistently changes even with the niche coins. The algorithms of the blockchain never stay the same, and the difficulty is adjusted accordingly. On some days, when the network is busier, mining difficulty increases – and vice versa. There are plenty of resources for each coin that provide daily updates about mining difficulty.

Another aspect related to mining difficulty would be the public interest of the coin. For example, Bitcoin and Ethereum are two of the biggest brands, though they are less profitable to mine and more pricey in value. A good investment may be looking towards a less-traded, not-too-expensive, and well-known crypto with foreseeable, unreliazed potential.

  • Liquidity: Some cryptos are a lot easier to convert to other cryptos or fiat currencies. More established coins can seamlessly convert to many other currencies, while less established coins are harder. Despite that this may be a minor consideration, it can still be an affecting decision down the line.
  • Future outlook and price: It’s good to have an understanding of the coin you’d be mining by assessing what its future prospects could be. Though there are hundreds of lesser-known altcoins in the markets, a smarter decision may be looking at more recognized coins. Ideally, they should already exist on the largest crypto exchanges for liquidity purposes and display unique selling points.

Top 3 cryptocurrencies to mine in 2020

Due to the numerous technical issues involved, calculating mining profitability is highly subjective and varies drastically from one miner to another. We’d recommend the website, coinwarz.com, for a mining profitability calculator, while simultaneously keeping the above-mentioned factors in mind.

1. Monero

Monero

Presently sitting with about 0.5% of the market share, Monero ticks many of the boxes:

  • Despite a meagre market cap, it’s already recognized by many worldwide exchanges as a tradeable instrument that’s relatively inexpensive. This aspect makes it a liquid currency and one likely to grow in popularity over time.
  • Fast block creation time (the time to mine one block is two minutes where the reward is 2.15 XMR)
  • Unlike other coins, there is no maximum supply for Monero.
  • GPUs and ASICs can both mine this coin. For the most expensive GPU with the fastest hate rate, Bitmain’s Antminer S19 Pro would set you back approximately $2400. On the other hand, the recommended GPU with the highest hash rate is the AMD Radeon R9 295X2, which costs between $500-600 on Amazon.

2. Horizen

Horizen

Currently owning about 0.02% of market share, Horizen also exhibits many other similar attributes to Monero:

  • Low market share with the potential for future growth. The coin is recognized as a tradeable currency by many worldwide exchanges and even cheaper than Monero.
  • Fast block creation (the time to mine one block is two and a half minutes where the reward is 7.50 ZEN)
  • Like Bitcoin, Horizen will have a maximum supply of 21 million coins. Furthermore, the creators of the coin encoded halving in its blockchain, which may affect future rewards for miners. Although subject to change, the 30th of November, 2020 is meant to be the halving date.
  • GPUs and ASICs can both mine this coin. For the most expensive GPU with the fastest hate rate, Bitmain’s Antminer S19 Pro would set you back approximately $2400. On the other hand, the recommended GPU with the highest hash rate is the AMD Radeon R9 295X2, which costs between $500-600 on Amazon.

3. Zcash

Zcash

Zcash’s market share currently sits at about 0.16%. Like its counterparts, the coin resembles a few likenesses:

  • Low market share with the potential for future growth. The coin is recognized as a tradeable currency by many worldwide exchanges and is relatively cheap.
  • Fast block creation (the time to mine one block is approximately minute and a half where the reward is 5 ZEC).
  • Like Bitcoin, Zcash will have a maximum supply of 21 million coins. Furthermore, the creators of the coin encoded halving in its blockchain, which may affect future rewards for miners. Although subject to change, the 18th of November, 2020 is meant to be the halving date.
  • GPUs and ASICs can both mine this coin. For the most expensive GPU with the fastest hate rate, Bitmain’s Antminer S19 Pro would set you back approximately $2400. On the other hand, the recommended GPU with the highest hash rate is the AMD Radeon R9 295X2, which costs between $500-600 on Amazon.

Conclusion

Mining is a large playing field with countless options. The top 3 coins provided here thoroughly take into account all the crucial influences that make mining a worthwhile and profitable experience.