Update 11 July 2017: Since I initially wrote this article, NiceHash announced a change in withdrawal fees which makes them more favorable. Credit where credit is due.

Choosing the right bitcoin wallet for your NiceHash payouts is not a decision to be taken lightly. Depending on how much you can earn per day and what are your plans to use the earnings, there may be different solutions. Let’s see some scenarios.

Just Testing

If you’re just dipping your toe into this bitcoin mining thing with NiceHash, you should know that you will most likely not be paid at all. This is not because the service is a scam (very far from it!) but because it is heavily tilted against small, unproductive miners.

Assuming you have a low/mid-range to high-end video card, you can expect daily earnings anywhere around 0.0005-0.0015 BTC (as of June 2017). Payouts to NiceHash wallets are made daily, provided the seller has accrued unpaid balance greater than 0.001. However to do anything with ‘your’ coins in the NiceHash wallet, you have to pay a non-negligible withdrawal fee:

Amount Withdrawn	NiceHash Fee
Under 0.25 BTC	0.0005 BTC
Over 0.25 BTC	0.2% of amt withdrawn

This seems reasonable until you realize that if you want to withdraw 0.01 BTC, the withdrawal fee is 10%. I am not putting NiceHash at fault here; the growing transaction fees of the blockchain are a pain for everybody. But 10% is too damn much and I don’t like it. Update (11 July 2017): withdrawal fees have been tweaked to be much better for small withdrawals.

Spend or Hold?

Using your own wallet might be the better solution if you plan to earn & hold, or plan to spend bitcoin (as opposed to exchange coins for another currency and then spend that currency). Payouts are less regular but the coins are your own once remitted; you only risk the unpaid balance, which can be as small as 1 week’s worth of mining.

If you need to regularly exchange bitcoin for another currency (e. g. you want to pay your electricity bill from current earnings, as I have decided to do), the best thing to do is open a wallet with a bitcoin exchange like Coinbase who seem to be well-regarded. (Disclosure: I use them but dislike them a lot).

However you should never trust any ‘online’ (3rd party) wallet with large amounts of bitcoin that you may want to hold long-term. Your only sensible option there is to use a cold storage wallet.

Intend to Mine Regularly

If you are more serious about this and can regularly hit weekly payout targets, you should definitely use a personal wallet or a 3rd party online wallet. There are no advantages for you whatsoever in using a NiceHash wallet.

When to Change Payout Wallet

If you want to ditch your NiceHash wallet, you have to wait until you reach the payout limit but before the next payout date. Be aware of the withdrawal fee when you plan the dates! 0.4% or 0.001 BTC (whichever is greater, as of June 2017).

Different Wallets for Different Cards/Rigs?

God, no. You only need to use different miner names (8 character limit) if you want to keep track of the productivity of your video cards and/or mining rigs. Apart from that, direct all your payouts to the same bitcoin address. Earning enough to justify withdrawal is hard enough as it is.

Privacy Notes

Everything said above is valid so long as you are not bothered with privacy when mining bitcoin. If you do not want your earnings to be personally identifiable with you, then Coinbase is out of the picture (they want your legal name and will scan an ID before they let you do anything substantial).

 

Does anything of the above make sense to you? Do you disagree with my suggestions, or have a better idea to store your mining coins? Let me know in the comments below.