We bought an Ethereum mining rig with the hope of retiring early

The MyBroadband office’s first encounter with Ethereum happened something like this.

MyBroadband journalist Jamie McKane walked in one April morning, sat down, and said: “I’m going to buy this cryptocurrency Ethereum.”

We had no idea what he was talking about, but it sounded cool, so we said we were in.

After checking out various sites under instruction from Jamie, a few of us registered with Luno for Bitcoin, Poloniex for trading, and MyEtherWallet for Ether storage.

What happened in the weeks that followed our Ethereum purchase got us all on the cryptocurrency hype train – with Ethereum and Bitcoin reaching all-time highs.

Lets get us a rig

As we had not invested our entire life savings in Ethereum, we decided to pool some money together and purchase a mining rig instead of buying more of the digital currency.

While profit projections and calculations comparing investment vs the purchasing of a rig were on the to-do list, we ended up buying it because:

  • Someone said something about the “means of production” and quoted The Wolf of Wall Street.
  • It would be cool to have a mining rig – we are all tech nerds at heart.
  • If the mining failed, we could build sweet gaming PCs with the graphics cards.

We ended up buying a rig from Bitmart, which features six AMD Radeon RX 580 4GB GPUs.

The rig also features a 60GB SSD, 4GB of RAM, a motherboard with enough PCIe slots for the cards – attached via risers – and a basic Intel processor.

Rig

The rig came with Windows 10 and Claymore. Our set-up sees us connecting to an Ethermine.org mining pool, which pays us 1 Ethereum at a time to our wallet when earned.

Our rig’s reported hashrate to the mining pool is around 170MH/s, while our average effective rate sits at around the 160MH/s mark.

We’ve had the rig a week now, and the projection for our monthly earnings is sitting at around 3.2 to 3.3 Ethereum. At the time of writing, this worked out to $850 per month.

With the rig costing us just over R40,000, we should have it paid off before the end of the year.

Rig

Proof of Stake and the Ice Age

Before you get giddy with excitement from seeing the rig and go out and buy your own, there are a few things to take note of.

Cryptocurrencies and the blockchains they are based on are quite complex, and it is a good idea to do some research before getting involved.

There is also work being done on Ethereum, which may move it from a “proof of work” to a “proof of stake” set-up. If this happens, it will result in an exponential rise in block difficulty that will make blocks virtually impossible to solve.

There is also the “difficulty bomb” built into Ethereum, which makes mining a block increasingly difficult over time.

CoinDesk reported that starting from block 200,000, mining would become “progressively more difficult”.

“So much so, that by the end of 2016, an Ice Age would occur, meaning a point when the network freezes up.”

This did not happen, however, as Ethereum is continued to be worked on with the aim of improving it.

You must also take the cost of electricity into account when running your rig.

Again: do research before you buy any tech equipment, particularly something that costs your entire pay cheque.

Rig

Many options to choose from

While our rig continues to mine away, there are many other ways you can get involved in cryptocurrencies without a big capital outlay.

You can build your own rig – if you can get your hands on graphics cards – or buy a less-powerful, cheaper pre-built device from a retailer.

Investing your cash through an exchange is also an option, and there are many coins to choose – from giants like Bitcoin, to lesser-known options like Stellar.

As with any investment, don’t throw all your eggs into one basket and make sure you know enough to make an informed decision.

Rig

This is an opinion piece.

Now read: Luno’s plans for Ethereum and the future of Bitcoin

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We bought an Ethereum mining rig with the hope of retiring early