Mining cryptocurrency allows you to enjoy a potential monetary return without having to buy any cryptocoin outright. Bitcoin is probably the most obvious mining option, but given the difficulty involved in mining and the increasingly low return, many people are opting to mine other altcoins. There are many different options out there today, though, so how do you tell if a coin can be easily mined? How do you determine if it’s actually worth your time or not?
Can It Be Mined?
One of the first things to consider is whether the altcoin you’re thinking about can even be mined. Many cryptocurrencies are moving to alternative consensus algorithms that don’t allow mining in any capacity. For instance, several newer altcoins use DPoS (dedicated proof of stake) rather than PoW (proof of work). In these instances, the coin cannot be mined at all. So, the first thing to remember is to check if the coin you want to mine can actually be mined.
Look at the Published Rate of Return
While the rate of return won’t tell you exactly how much you might earn mining the coin, it can give you a good idea of what to expect. In addition, it allows you to compare two or more altcoins so you can narrow down your options and make an informed decision here. For instance, NEO had an average rate of return of 31620.81% in the first two quarters of 2017, while PIVX had a 25971.53% rate of return during the same period. Obviously, NEO has a far higher rate of return, which means you’re more likely to turn a profit here.
Value of the Coin
While the rate of return for the coins you’re thinking about is an important part of your decision, it’s far from the only one. You also need to think about the price of the coin, at least in so far as that affects what you will earn from mining it. To use the NEO and PIVX example once more, at first glance it seems like NEO is the no-brainer choice. However, when you dig into the situation, you will find that PIVX’s value is actually higher than NEO’s meaning that while you might see a lower rate of return, there’s a chance that you will actually see more money for your mining efforts.
Newness of the Coin
Bitcoin is a great example of many different things in the world of cryptocurrency. One of the most important examples it serves is to highlight the fact that mining altcoins becomes more and more difficult the older, more stablished, and more widely adopted the coins become. For instance, mining bitcoin in the beginning was relatively easy. However, as the number of possible bitcoins has dwindled, the difficulty involved in creating new blocks has increased commensurately. So, you must determine how old the coin is and the popularity of the coin before you decide that mining it will be a good idea.
Number Released and Other Considerations
Finally, there are several other considerations you will need to make before you decide to mine a particular type of altcoin. One of those is the number released initially, and if the issuer plans to release any more in the future. Over time, the number of available coins will decrease, and the difficulty in mining new ones will increase. You should also consider other factors that might affect a coin’s scarcity or difficulty in mining. For instance, consider Ripple. While Ripple cannot be mined, it is interesting in the fact that several coins are destroyed for each transaction. This means that not only is there a limited number available, but that number is shrinking and will continue to do so.
These are just a few of the things you’ll want to consider before deciding on whether or not a particular altcoin is right for your mining needs.