GPU Mining: How to Price a New GPU
GPU mining cryptocurrencies is a simple and effective method to make extra money. Last week I published a simple and easy to follow guide that is not only free but could use your current computer hardware.
If you have a modern gaming PC with a strong GPU (graphics card), you have what it takes to start putting $10.00 in your pocket each day.
Now, what if your computer isn’t strong enough? Or you’re looking to upgrade and add another GPU?
This article is about how to value a new Gaming PC or GPU to determine if it is a good buy or if you should pass.
As always, you have questions reach me on Twitter: @StephenWealthy_ and direct message me about a particular GPU or Gaming PC deal you’re looking at.
My goal is to help you get mining as cheaply as possible so you can take advantage of cryptocurrencies and make money.
Determine electric costs
GPU Mining requires electrical energy, and we convert that energy into cryptocurrency. Most often, this currency will result in Ethereum or Bitcoin. We then sell it on exchanges and move the money to our bank accounts.
Here is my electrical bill – please keep in mind this does not include mining operations. This is my home electrical bill and I’m showing for illustrative purposes because you will be running this from your home.
Image Caption: While my rate is $0.0549 / kWh, I pay more like $0.165 kWh after charges and riders.
The important thing here is to not fixate on the rate, but to focus on the total cost and divide that by the energy usage.
Why?
Because as you use more energy, the charges and fees will increase too. So, while I pay $0.0549 / kWh, it’s more like $0.165 / kWh for my home.
The point here is that the final electrical rate you pay will be higher than your advertised rate and we need the complete all-in rate. This all said, the charges don’t scale 1:1 so as you use more you will get some economies of scale.
My all-in electrical rate for my mining rigs is $0.10 / kWh. We will use this rate for the rest of the article. This is also the common benchmark most miners use for comparison on YouTube. Some people are under, while others are over this rate.
Determine daily revenue
Okay, now that we have our input costs, let’s determine what our revenue will be for the GPU or Gaming PC we have our eyes on.
As stated in the starters guide, we want one of the following GPUs:
– Nvidia 10XX with 6GB or more
– Nvidia 1660 Ti / Super
– Nvidia 20XX
– Nvidia 30XX
– AMD 5600 or better
– AMD 6XXX
On top of this, we want to make sure that they have at least 6GB of VRAM.
Why 6GB?
When crypto mining, each GPU must load a DAG file into the VRAM.
What’s a DAG file?
DAG stands for Directed Acyclic Graph and without going into details, it is a crucial file in crypto mining. DAG file size grows over time, exactly every 30,000 blocks with Ethereum, or every 100 hours. The DAG file must be loaded into the GPU memory while mining. If the GPU does not have 4GB or more, then Ethereum mining is not possible. It is a hard limit.
So, while we now need 6GB or more, it is better to ensure the card has 8GB or more. But as a hard limit, you now need >4GB and so 6GB is the new minimum.
Okay, now after we have the minimum memory set, we now need to determine how profitable the chipset or graphics processing unit (GPU) will be.
There are three sites I use to calculate revenue:
First: Whattomine.com
This is my favorite because it shows unbiased view of all cryptocurrencies that are mineable. I realize the interface is a bit clumsy, but after you’ve used it a while, you’ll get familiar with it.
The most important thing is to get your GPU correct, enter in your realistic electrical rate, and focus on the income number at the top after you hit calculate.
The output will look like this:
The highlighted number is all you need to worry about. The rest are about network difficulty, block rewards, equivalence in Bitcoin, and other metrics you’ll learn later.
We know for this 3070 GPU we will be making $3.99 per day. The benefit here though, is that we can see the other coins that are mineable and how much we could make per day by GPU mining these too.
This is an important thing to monitor as we will mine these after Ethereum 2.0 is implemented.
Second: Kryptex.org
Kryptex.org is an easy way to do an apples to apples comparison across different GPU makes and models. I personally like the ease of use, but the numbers seem to be a bit off all the time. However, the inputs are constant, so the end results are comparable across GPUs.
This is to say, I like to use this site if I’m standing in my local store and need to see how profitable a 3060Ti is against a 3070 or 3080Ti.
It is also an easy site to use on your phone.
Third: Nicehash.com
If you plan on using Nicehash.com as your mining software, it is a good idea to use their profitability website.
Taking the same parameters as above, this is how much they report:
Fairly close, plus it’s nice to see the monthly revenue.
Determine Current Payback Period
Now that we know what it will cost us, and how much daily revenue we can expect from GPU mining, it is time to calculate the payback period.
Now, important for you to know, it is a common benchmark to demand a 6-9 month payback window for GPU mining.
This is even more important now that we know Ethereum will enable proof of state next March, and then drop the difficulty bomb next June.
What’s the difficulty bomb?
The difficulty bomb will disable mining of Ethereum. Yes, we will mine other coins after this, but it would be very desirable to get our original investment back before this date.
As of writing today, November 29, 2021, until March 31, 2022, we have 122 days. From today until June 30, 2022 we have 213.
So, this card is worth $849.87 if we used the June 30th deadline. However, this is too simplistic because the card still has value for gamers after this deadline.
Also, there will always be another crypto to mine, which adds speculative value. So, let’s call this a 30% premium over direct mining profits.
This is to say by June 30th we believe we could sell it on the secondary market for $255, and the next person could mine another coin or game with it.
I don’t think that is unrealistic at all, and I think you could sell it for more than that.
Will Ethereum 2.0 Even Arrive on Time?
Moreover, we just never know if Ethereum will deliver on time. So, add this all together and this card is worth at least $1000 – $1200 depending on if you have 3 fans, and if the card is built by a reputable brand
Wait, reputable brand?
Yes, I have tried many GPU brands during my mining career. My two favorites are EVGA and ASUS. I would pay a premium over another brand to buy one of these. My least favorite, and again, this is just based on personal experience, is Zotac, Gigabyte and MSI.
I’m sure others have had impressive results with these; however, I find EVGA, and ASUS are more stable, cool better, and mine with less troubles. Let’s give this a 10% premium for a reputable brand.
Crypto Rises or Falls?
Lastly, we need to factor in the possibility that the crypto market could rise or fall. Of course, I’m bullish on Ethereum and the supply of new Ether is being constrained daily. If you look at the following chart the annual inflation rate is now 0.56%. For those that are familiar with Bitcoin, this is below the annual inflation rate of Bitcoin!
Yes, the Yearly Issuance Rate is 4.10%, but that is because EIP-1559 was launched in August, and that is what is forcing the new inflation rate down to 0.54%.
Look at the Stock-to-Flow ratio!
That is the highest of any asset, yes even higher than Bitcoin.
This means at the current issuance rate; it would take 184 years to replace the current supply. So Ethereum is turning into a scare store of value with decentralized finance utility.
When you’re mining Ethereum, you’re creating something of value and that commands a premium. The odds of the price increasing between now and June 2022 is extremely high. Ethereum is still a risky asset, so I would only give the GPU a 10% premium.
This brings us up to 40% over direct mining profits in today’s prices
Pricing Summary So Far:
Direct mining profits baseline before June | 213 X Daily Profit: $839.99
Secondary Market Resale | +30%: $1,091.99
Crypto Price Increase | +10%: $1,201.19
Reputable Brand | +10%: $1,321.31
For an EVGA 3070 Non-LHR GPU I would be willing to pay $1,320, for the same chipset but made by Zotac I would pay $1,200.
LHR? WTF?
This has been the worst thing to happen to Ethereum mining. It stands for Lite Hash Rate and it was introduced in early 2021 to combat GPU shortages caused by Ethereum miners.
They hardcoded a limiter into the chipset, so their GPU’s do not mine as fast as their non-LHR equivalents.
Guess which one is impossible to find now! Non-LHR!
While AMD does not have this limit, they are not as efficient in the first place.
All this means, is you just need to be careful what Nvidia GPU you are considering for purchase. Be on the safe side, and always assume you’re buying an LHR GPU. If the seller has a non-LHR GPU, they will let you know because they are rare and command a premium.
Back on the whattomine.com website you will need to carefully pick the GPU so you make sure you are valuing the correct GPU. Here is what the family of 3070 GPU’s look like.
How does this impact the valuation?
It has an impact on the revenue and therefore the profit. It needs to be taken into consideration and will drop the price you should be willing to pay.
So here is what I would pay for a 3070, 3070Ti and 3070 LHR assuming we’re looking at an EVGA FTW3 model of GPU using the pricing model I explained above:
3070: $1350 USD
3070Ti: $1250 USD
3070LHR: $950 USD
The pricing model explained above accounts for the LHR by appropriately discounting the revenue once you put it through whattomine.com.
Well, Good luck finding those prices!
Yes, I know they are difficult to find. But if you go to your local retailer (yes walk in), you might find these estimates above MSRP and you could buy at a reasonable price! If they have no stock, ask if you could be put on the wait list.
But what About Buying a Gaming PC instead of just a GPU?
Great question!
We’ve been too focused on the GPU so far, and you’re right, we need to circle back and cover a Gaming PC.
First, repeat the steps already mentioned for the GPU. Again, we always need to value the GPU inside the machine first and then determine how much extra we are willing to pay for the other parts.
Modern CPU’s, motherboards, RAM, power supplies, the fans, and the case need to be factored in. These alone should be worth at least $1000. Sometimes a good CPU and Motherboard alone can command $1000 these days.
So taking the non-reputable price we just calculated above we add $1000. Therefore, a modern Gaming PC with a 3070 Ti should not be priced above $2150 if we are going to use it for mining.
Recent example
Let me show you a recent example of a client I worked with to price out a Gaming PC for mining purposes.
Image Caption: This is a Dell Alienware Aurora R12 Gaming PC. Armed with a 3090. This will be a mining beast!
Let’s price this out with the 3090 GPU from whattomine.com:
Baseline: $1,635.84 USD
Secondary Resale: $2,126.59 USD
Crypto Market Increase: $2,339.25 USD
Gaming PC Package: $3,339.25 USD
Client’s Price in CAD: $2,669.50 CAD
Client’s Price in USD: $1,871.40 USD
Monthly Income (After electric): $230.40 USD / $288.50 CAD
When my client sent me this offer, I didn’t hesitate. I told the client to Add to Cart… BUY! HURRY!
Since Nov 25, 2021, the client tried to buy another, but they are out of stock now.
Ethereum 2.0 Impacts to Mining
The most common question I get when it comes to mining is what will happen once Ethereum moves to proof of stake and turns off mining?
This question is based on the fear that by next June Ethereum mining will be shut off and then you’re left with mining equipment that is useless.
Valid question, valid fear.
However, you need to remember, that there are numerous crypto coins that can still be mined. Whattomine.com lists them all out.
Auto-mine the Most Profitable
Yes, it is also true that all the other miners will be competing across these same coins and profitability will drop, however a neat little trick is you can switch coin to coin and NiceHash will mine the most profitable.
This means, after Ethereum is no longer mineable, I’ll switch to Nicehash and use their auto-mining algorithm to ensure I’m always mining the most profitable coin at any given moment. They will convert the coin immediately to Bitcoin, and I then receive the payment as one stable cryptocurrency instead of numerous speculative coins.
Conclusion
I hope this has given a good framework and guide to how I price and value GPUs and Gaming PCs.
When the offer is above my price, I just let it go. When its near my pricing model, I also just let it pass. But when its well below market, like it was for my client, it’s a quick pull of the trigger. No brainer. Money in the pocket.
I hope I can help you put money in your pocket too.
Follow me on Twitter: @StephenWealthy_
My Direct Messages are open, and I would love to help and assist you get into crypto mining.
In the meantime, read my free guide and see just how easy it is to get a Gaming PC mining while you’re not using it.
