February 2018 will go down in my short personal history of GPU mining as the last month during which it was possible to make good yields using a small Nvidia mining rig. What happened?
I believe there were several trends and events that led to this outcome.
Reason #1: Zcash Performance
The big surge in the price of Bitcoin that started in September 2017 and ended that same December also caused a comparable surge in the prices of most altcoins. Among these altcoins were Zcash, Zclassic and Bitcoin Gold, which — along with the less known Zencash, Komodo, and Hush — used the Nvidia-friendly1 Equihash algorithm.
Zcash (ZEC) was a really good performer between October and December; it mirrored closely the appreciation of Bitcoin, but when BTC reached its USD ATH value on 16. December and then crashed, Zcash actually kept climbing; it reached its own USD ATH almost 1 month later.
I personally don’t care about the USD price of tokens per se, but I was still delighted to observe how the BTC value of Zcash more than doubled within a month. From 0.025000 (on 16. December) to 0.050000 (mid-January) to a record 0.056000 (10. February), before starting to decline.
Reason #2: The Zclassic / Bitcoin Private fork announcement
Zclassic is a fork of Zcash that removed the 20% Founders’ reward. Bitcoin Private (BTCP) is another fork that shoehorns zk-SNARKS (the anonymity feature that sets Zcash apart) into Bitcoin. To make the mousetrap more attractive, the creators of this second fork also promised an airdrop of BTCP tokens to all owners of Zclassic and Bitcoin in a 1:1 ratio. This created an initiative for (stupid) people to start hoarding Zclassic. Before the BTCP fork announcement, Zclassic was a dead token with no development, small trade volume and a stable price of around USD 1.5 per token. After the announcement, the price briefly reached USD 220 on 7. January and kept above USD 100 until the snapshot date (28. February) before crashing to USD 8.
These several factors (many profitable altcoins using Equihash; shortage of new GPUs; Bitcoin price rally Oct-Dec/2017; high priced ZEC and ZCL in Jan/Feb 2018) combined to create a GPU miners’ paradise. Many profitable coins were available to mine, and because there weren’t new batches of GPUs to pressure miners, there was room for everybody. Hash rates kept climbing, but the growing price of Bitcoin and altcoins, followed by the relative strengthening of altcoins vs Bitcoins meant that profitability was still to be found. As a matter of fact, my rig was making more BTC per day in January 2018 than last September!
Like all good things, this could not last forever. As soon as the ZEC/BTCP snapshot was taken, the price of ZEC crashed. Miners immediately abandoned ZEC and switched to mining Zcash. With so many people rushing in, hash rate skyrocketed and earnings quickly decreased by 30-40%. But the nail of the coffin was the recovery of Bitcoin from high $6000s/low $7000s to $11000s since the beginning of February. For those of us who don’t care about USD prices because we convert everything mined from altcoins into BTC, this means sharp decline — over 50% within less than ten days.
At the end of January, I was happy and more than a little dismayed to have earned about 0.039 Ƀ. At the end of this month (granted, February has 28 days vs 31 days in January) I netted only 0.019 Ƀ. This figure might have been higher had I exchanged/withdrawn my ZCL and ZEC tokens less frequently; I estimate about 15% conversion loss due to exchange and network fees. However, with the Bitcoin value of altcoins declining so rapidly, I thought it was wiser not to delay and to convert into BTC using small batches, whenever practical.
The February yield is not too bad of itself. However, the first days of March draw a very grim picture. At the end of the month, my yields may very well drop below my electricity costs. I am still considering whether to postpone this or to put my GPUs on the second-hand market where they can still fetch some value, before disgruntled wannabe Lambo owners begin to dump their hardware and leave cryptospace 🙂