Why your Ethereum mining rig is now worthless

At one stage, it was considered a sane investment to buy six graphics cards, strap them to a bare-bones system, and run the machine at full speed 24 hours a day to mine virtual currency.

In early 2017, for example, you could make around R7,400 per month mining Ethereum with a six-GPU rig.

The steady decline of cryptocurrency prices throughout 2018 made the returns from mining less attractive, although it was still possible to squeeze out a profit from an efficient GPU mining rig.

Those who held onto their mining rigs in the hope of a resurgence in their profitability are in for some bad news however, as the act of mining Ethereum with this hardware is no longer worth it.

Profitability and hard fork

The dynamic payback period calculators on CryptoCompare adjust according to the difficulty of the blockchain and the dollar value of earnings – and they tell a depressing story.

Running a GPU mining rig with graphics cards, that used to be relatively efficient, will now lose you money each month. And even those which are profitable will take around 23 years to pay for themselves.

This can be attributed to the overall decline in the price of Ethereum and the development of application-specific integrated circuit (ASIC) miners, which can mine the Ethereum blockchain far more efficiently than consumer graphics cards.

One ASIC miner in particular – the Antminer E3 – has completely taken over the Ethereum blockchain’s hashing power and it is so powerful compared to a GPU that if you were to buy one today you could pay it off with your earnings in under a year.

Buying any Ethereum mining hardware today would be a mistake, however, as the Constantinople hard fork – which is set to occur on 28 February 2019 – will reduce block rewards and lower profitability for miners even further.

The hard fork aims to further the migration of Ethereum to a proof-of-stake consensus mechanism that will eliminate the expensive electricity demands of mining hardware and hopefully result in greater distribution of nodes.

Ethereum price 26 Feb 2017-2019
Ethereum price: 2017-2019

Graphics card value

If you still own a functional Ethereum GPU mining rig and have not yet repurposed the hardware to upgrade your gaming desktop, you might consider taking the system apart and selling the graphics cards.

Many South Africans have been faced with this situation, and the second-hand desktop GPU market remains flooded with Radeon RX 580 and GeForce GTX 1060 graphics cards – which made great Ethereum miners.

According to listings on second-hand desktop marketplace Carbonite, you can pick up an AMD Radeon RX 580 8GB or GeForce GTX 1060 6GB for R2,000, which is far less than miners paid for their GPUs at the height of the cryptocurrency mining hype cycle.

It is also important to note that many gamers will not be interested in purchasing your graphics cards if they were used for cryptocurrency mining, as this can void the warranty of the card and can also shorten its lifespan.

You may therefore be better off cutting your losses and repurposing the hardware into gaming machines.

Now read: Using an overseas Bitcoin exchange under SARB regulations

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Why your Ethereum mining rig is now worthless