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Discussion Starter · #1 ·
Well,

The idea of crypto currencies has interested me for a bit..... so much so that earlier this year I bought some BTC (ETF). I learned that its a volatile ride... you have to be able to lose 35% in 2x days and remake it over 3 months, then lose it again over the weekend, only to see it rise up over a few days. Yes, volatile.

The value of crypto is definitely debatable but until it is eliminated, its here as an asset.

To further participate, I figured why not put my toes in. Commercial miners are using special rigs for mining, and lots of home miners also use special setups. Is there value in my home PC ? It sits in my office and 80+% of the time it just sits here doing nothing. For that 80+% of the time can I get it mining? Descent question ?

My home PC is a AMD 3700x and a MSI 1080 (8g) GPU. There is more to the computer but those are the parts that matter for this exercise. I found an automated mining software package (PM me for details), that is designed for running on a home PC, not a mining rig. I went and easily d/l'd it and installed it, the setup took an hr and presto, my CPU is mining and my GPU is mining. I have it set to run 100% of the time and still leave some resources for me the user for day to day use (so its not like working on a 386sx!). The forcasts from the software are that I will make $95/month and my calculations show about $9 in fees (electricity).

This means that while I sleep, run excel or a www browser, I make $86 on my computer (monthly). This is $1,032 / Year. Not bad for nothing.

I will let you know how this turns out.

The office has a large window and over the winter it can get a bit cold, we run a space heater sometimes. Well, in the winter if my computer generates some heat from the mining, it can also just heat the room, its just a bonus. I was gonna spend the money running the space heater anyway. The argument can be made that in the summer I will have extra heat to deal with, Yes your right, but that is 9+ months away.
 

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I'm not into mining but colleagues are and there are websites that can calculate it

Your $95 looks about right for the most profitable coins. Looks like ETH is one of the most profitable however ETH 2 will get rid of all ETH mining soon. That means you would have to learn a new setup when they do or switch to ETC (eth classic is basically just for miners to mine and dump imo) You could setup to mine ETH and then stake those ETH for 5% yield + capital gain/loss if you don't mind switching to another coin later

I would recommend you look into Ergo. It is relatively unknown, has a lot of upside potential imo and it's only available on 3 smaller exchanges so far. The developers are well known and they have a lot of major projects coming. It uses the same programming language as Cardano and uses the same wallet (Yoroi) It won't generate yield yet like ETH at least until they launch ErgoDEX. This is more of a longer term play (months..) if you don't need to sell asap

You can check youtube to get some background on ERG and mining tutorials. If I had a bunch of used GPUs I would mine ERG, but I'd rather buy crypto to stake than GPU cards
 

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Yes, the world of crypto currencies is truly a Wild West. Mining is indeed easy to set up and profitable , a few comments:
  • As m3s mentioned the most profitable crypto currency is ETH. When ETH validation switches to “proof of stake” mining will eventually become deprecated . That said the transition could take years
  • Even if you are no longer able to mine ETH you can always switch to others such as Ravencoin, or more exotic no name cryptos which have higher profitability but can be incredibly volatile
  • Note that crypto mining is not tax efficient, you will pay your marginal rate on 100% of mining revenue , AFAIK power costs cannot be deducted. If you have a spouse you can potentially “income share” but this gets into uncharted waters with the CRA
  • I am not a fan of CPU mining. Profitability is low, impact to your machine is more noticeable due to RAM usage , cpu usage , cache usage , etc.
  • As always be careful of what you run on your machine. Consider compiling from source or only using applications from “trusted” (if that even exists in the crypto world lol) sites
  • Finally , have fun! There is something quite satisfying about being paid and requiring no labour :)
 

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Discussion Starter · #5 ·
I think the Ether change to PoS will be done quickly, there is a lot of effort going into it...

I am not investing into more GPUs as I think that prices will be coming down in the next months.... first, product (gpu) is becoming available at regular prices and mining rules are changing (i: PoS)...... I think you will be able to get into a mining rig in the new year for considerably cheaper than today....

Having said that... I think that having some infrastructure in place is a good idea.... I am out $150 to get a mining frame and a MB that will work with some surplus hardware that I have. Just need GPUs... I'll watch for deals on used ones that I like.... If I can commit < 1k and get a little rig running I'm game.....

Yes mining income is basically the same as interest income or earned income.... theoretically you could income split it.... & if your income is measly, the CRA prob wouldn't care (about a 50/50 split)....

Trick is... I'm doing nothing and making some cash.....
 

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This means that while I sleep, run excel or a www browser, I make $86 on my computer (monthly). This is $1,032 / Year. Not bad for nothing.
A couple risks to point out.

1. storing the coins is actually quite difficult in practice. Places like Coinbase do this for you, but if you're going to mine and store your own coins, you've got to be awfully careful about how you do this. Many people have lost access to coins, and money just goes "poof". If you use any kind of software that takes care of coin storage for you, then beware that there is a hacking and theft risk.

2. the electricity cost isn't the only cost. A computer that is running at high CPU % use, all the time, gets extra wear and tear. This causes wear across all kinds of components because of the high temperatures you get in the internal components and the CPU. The fans work harder and other components get some thermal wear. It's hard to quantify the damage but you are probably reducing the life of your computer. As an electrical engineer who used to work on CPU thermal design (within Intel), I'd encourage you to try keeping the CPU usage below 50% sustained or maybe 75% at a maximum.

Thermal stress is pretty damaging to computer systems and can harm everything inside that case: the power supply, mother board, CPU, even the hard drive
 

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A couple risks to point out.

1. storing the coins is actually quite difficult in practice. Places like Coinbase do this for you, but if you're going to mine and store your own coins, you've got to be awfully careful about how you do this. Many people have lost access to coins, and money just goes "poof". If you use any kind of software that takes care of coin storage for you, then beware that there is a hacking and theft risk.
Storing coins is trivially easy.
Keep your private keys private.
 

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It's not trivially easy. It's probably the biggest practical problem with the crypto koinz.

Amateurs without knowledge of cryptography think it's easy, and then inevitably screw it up.
Okay, when you create your wallet, you're given the password. (pass phrase actually)
If you have the passphrase, you have full access to the wallet.
If you share it, they have full access to the wallet.

Just don't lose your password and your fine. It's literally that simple.
There is not a single case of someone, who has their password losing their coins.

Similarly there isn't a single case I'm aware of where someone losing coins without sharing their wallet/key/password. (FYI, they're pretty much the same thing)
 

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Discussion Starter · #11 · (Edited)
Well,
in Sept / Oct I bought a few older Vid cards and started mining Ether. It paid OK, and generally takes 12-13 months to break even on your gross earned income/revenue. Thats like a 90+% ROI/yr. I couldn't help but keep at it. Few weeks ago I bough $4500 more worth of gear and now I make ~$22/day(+/-) in mining, thats about $650+/month or $8,000-$8,500/Yr. In 1 year I will be paid up. Its a test to see if this really works. Maybe its totally different than my projections. I will let ya know. I have $750 in my digital wallet so far, I'll pull it to lower my investment costs.

This whole party might change around Canada Day as Ether is changing the way they process data from PoW to PoS (Ether 2.0). This will all but eliminate the Ether need for home miners. The new way is more efficient for electricity/environment. There are still a bunch of other coins to mine using PoW formulas. The thing here is that they are not as profitable as Ether. So, I'll need to decide if I continue once the $ from Mining Ether dries up.

I do like the idea of residual $ just dumping in. Yes, I'll declare it as 'Other Income', not out to undercut the tax man. Once I remove electricity cost (~10% of monthly income) & pay taxes, it might be more a learning experiment for me.

It has been a good learning ride for me though, regardless of continuing on after Either mining dries up.

Ether 2.0 was supposed to arrive in 2020 (I think) and has faced repeated delays. They have successfully tested the network change PoW to PoS and it worked. So, we are closer now than before but who knows if it will get pushed back again. It does currently look like it will happen around Canada Day given the currently avail information.

I am not buying anything more for this project and need to recoup what I have invested so far.

To all the people that criticize the electricity used to maintain the blockchain, do you use AC ? There is a reason that your AC unit sits outside. You generate more heat than you generate cold its a thermal inefficiency and most of the time AC units are hooked up with a 2-pole 30-60 amp breaker at every house !!!!! AC alone uses more electricity and generates more heat than mining.... just think of that this summer when you cool off your house, or walk into a mall.

Are you a hypocrite ?
 

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The problem with mining is the hardware depreciates over time and the yields go down as it becomes more crowded. On the other hand if you can hodl it probably doesn't matter

At the moment I would rather take that $4500 and buy ADA at .75 cents off its high of $3. But since you have the rigs you should really learn about Ergo chain (PoW eUTXO)

With liquid PoS (Cardano, not ethereum) you can stake for 5% and still yield farm liquidity pools for 75-300% depending on your appetite for risk and tax events. At these low prices I don't mind the tax events especially when the volumes and yields are so high. The more sustainable tax efficient model long term will be staking, lending, farming and then staking again. You could also leverage up this way. Self paying loans thanks to the liquid staking yield

There are security advantages to PoW, which is why you should learn about Ergo eUTXO model. It will do the smart contract DeFi things I mentioned above with the added security of PoW. The problem with PoS I see is the staking rewards just passively centralize the power over time, whereas PoW requires miners to actively replace and update their hardware which should force more decentralization over time. Although the large mining companies seem to be doing very well

Mining Ergo today is not very lucrative, but its DeFi is still very young. At $3 today off a $20 peak.. mine, hodl, sell when the price is right and it will be far more lucrative than Ethereum imo

I have ethereum PoS validators that will become much more lucrative when ethereum mining shuts down. I'll keep them but I'm not adding more. eUTXO DeFi will smoke it imo
 

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If you crypto mine in the winter, you won't need the gas to heat your house.
Apparently some Canadian communities are heating greenhouses with miners.

It costs money to cool the miners, so Canada is considered one of the best places with cheap electricity and free cooling
 

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Discussion Starter · #16 · (Edited)
If you crypto mine in the winter, you won't need the gas to heat your house.

If when Either goes to 2.0 I'll see how/if PoW mining is working/still profitable. If still profitable, then I will consider a filterbox extension on my furnace return air to input my generated heat (wintertime) with an inline fan. I can set a servo/relay on my thermostat and add an option to open/shut a valve based on weather the furnace will be running. If the furnace will fire then the relay will activate a 6" valve and allow warm positive pressure air into my return side of the furnace, thus reducing my house heating costs. If the furnace isnt running, the valve will stay closed and just pump heat outside. The Outside heat now has further options.... Yes a green house has crossed my mind. I could theoretically extend the growing season by a bit but I dont have much interest in gardening....

In the filterbox extension I can add a smoke detector, and if there is a positive signal it can change the down stream filtered air (kill the pressure fan, send air outside, cut the power in the box and activate a co2 reservoir). Basically kill the internals and do no damage with CO2, better than dumping dry-chem or water & send by-products outside. Likely would never be used but a fun project on my days off to setup. If PoW is still profitable. Which is yet to be seen.
 

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If PoW is still profitable. Which is yet to be seen.
ERGO is ASIC resistant and wasn't pre-mined or pre-sold to venture capitalists like the vast majority. Not since BTC has there been such a fair launch. This takes time because you actually have to mine it.. Ethereum skipped that with a pre-mine

Even if it is not profitable today, why not just hold for awhile? Imagine if you mined BTC years ago and just held. ErgoDEX recently launched. I was one of the first to use it mostly because it will also be on Cardano. Their algorithmic stablecoin looks very interesting as well (Terra Luna/UST algorithmic stablecoins are heating up)

ERGO is very under the radar but that could really change as ethereum miners look for a new network and dApps come online this year. Ergo shares the eUTXO model with Cardano PoS which is also just getting its first dApps and picking up steam
 

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The problem with mining is the hardware depreciates over time and the yields go down as it becomes more crowded.
The drop in mining profitability has been quite steep over the past few months. I suspect we'll see graphics card prices drop if they haven't already. Thanks for the suggestion about ERGO, will look into this.

The more sustainable tax efficient model long term will be staking, lending, farming and then staking again.
I looked into staking but I'm not thrilled with handing over keys. Staking a token like ADA which is non custodial would somewhat make sense but the ~5% annual return is not enough to compensate for the volatility of venturing away from BTC or ETH.

Crypto lending terrifies me. When I hear things like "up to 17% annual return" I am immediately skeptical. I looked into Celsius but I'm not willing to hand over my keys and there is minimal transparency about who is actually paying these 17% rates and if they'll continue to pay.
Maybe there is value in a non custodial lending solution?

Is farming the same as staking?

Lately I am more interested in learning about smart contracts. Not sure how I would monetize a smart contract? Create an open source voting system and license it to a small country? Sell a customer support contract?

It's a good excuse to learn a new language (Solidity). There's a good list of smart contracts here - Decentralized applications (dapps) | ethereum.org.
 

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It's a good excuse to learn a new language (Solidity). There's a good list of smart contracts here - Decentralized applications (dapps) | ethereum.org.
Join the plutus pioneer program if you can handle functional coding. There's a huge demand for smart contract coders at the moment. Solidity really took off since 2020 defi summer and now cardano is just starting to take off last month. You can very very easily monetize it by chatting with the devs but if you have to ask..

You are asking the right questions which should also lead you in the right direction but you have a long ways to go. Cardano will be able to earn staking yield and liquidity provider yield and farm yield at the same time while maintaining full self custody of assets. Things are developing fast and you'll never scratch the surface on here

The unrealistic yields are driven by incentive programs where new tokens are distributed (think sign up bonus) to drive volume and value into risky new protocols. Not for the faint of heart. Which is why most people hand over custody to something like Celsius to do the complicated DeFi work for them.. just like most people use financial services

Typically you want to sell the farmed "promo" tokens immediately because they are very inflationary when starting out. The ones that have a lot of potential and some kind of profit sharing for staking might be worth keeping.. but generally you want to swap back to the layer one token

Once ETH mining is phased out ETH staking will earn about 10% (depending on the tx volume) ADA could earn 5% liquid staking plus 5% liquid lending and then farming yield is typically much higher/speculative. You don't give up my keys staking ETH or ADA if you do it yourself
 

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Join the plutus pioneer program if you can handle functional coding. There's a huge demand for smart contract coders at the moment. Solidity really took off since 2020 defi summer and now cardano is just starting to take off last month. You can very very easily monetize it by chatting with the devs but if you have to ask..
Thanks. I plan to stick with Solidity and the Ethereum ecosystem for now due to larger market and lower barrier to entry.

Once ETH mining is phased out ETH staking will earn about 10% (depending on the tx volume) ADA could earn 5% liquid staking plus 5% liquid lending and then farming yield is typically much higher/speculative. You don't give up my keys staking ETH or ADA if you do it yourself
The non custodial staking interests me. But the rest...liquidity pools, lending and farming are beyond my comfort zone.

The technology in the crypto space is interesting. IF the crypto community can solve the complexity and risk challenges many "middle man" type industries will be disrupted by crypto - e.g. currency exchange, lending, payments, insurance, ...
 
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