Today I spent a little time looking at alternatives to GPU mining.
The obvious alternative is ASIC mining. Bitcoin, Litecoin, and DASH all have profitable ASIC miners. The problem with these really is availability- you have to wait months for the really good ones, and the money you have to put down is not insignificant. They really are profitable, and it’s worth going down that route if you don’t mind playing the waiting game, and absorbing the risk of having valueless hardware if crypto ever crashes. Computer hardware based mining really has very little risk of loss of investment, as there is always an alternative market on which to sell them if mining were to ever collapse.
So, what else is there? It’s an often ignored fact that hard drive mining is a thing. It’s called Proof of Capacity, and in many ways it makes a lot of sense.
The coin that uses this method is called Burst. At the time of writing it has a not insignificant $22m market cap, and is traded on a handful of major exchanges including Poloniex and Bittrex- that means it’s a serious coin.
The technology behind burst is also pretty solid. There is a fair explanation of it here, but what you need to know is that it’s a block-chain based coin, featuring smart contracts, and pays out a block reward based on miners tying up hard drive space.
The main difference of course that sets Burst aside, is that mining by Proof of Capacity (hereafter PoC) uses almost no electricity. GPU and ASIC mining are perfectly good methods of determining reward, but they waste a ton of electricity. I read recently that crypto was using up as much electricity as a small country (citation needed). In today’s world where we are supposed to live green lives, that kind of doesn’t fit. Proof of Stake has been touted as the future to solve this problem, but the 5% annual return the Eth devs recently hinted at isn’t really on a par with the returns from mining.
So, PoC then actually makes a lot of sense. So much so in fact that I seriously evaluated the option of setting up a mining operation for Burst. Sadly, that maths does not work out.
It’s pretty easy nowadays to get a large amount of storage pretty cheap. 3TB hard drives, the used sort that datacenters don’t want any more are fairly easy to find for sale at around £60. The problem is that 3TB at today’s Burst price works out a return of about £3/month. That’s a 20 month return, without including all the other additional costs. That cheap hard drive will probably hold most of it’s value over a year period, but that’s still just not good enough.
I love the idea of having a room full of hard drives, but a 20 month ROI is hard to stomach unless you’re rolling on a huge scale. Even a £100 280X card from ebay mining ZEC offers a 9 month return after paying for electricity. Had I an unlimited credit source, but lacked for electric supply, then perhaps it could make sense.
So, right now there isn’t really a PoC coin that is worth mining, at least not for my circumstances. I will be keeping an eye on Burst, as I really hope that it’s value increases to the point where I could consider revisiting it.