Nicehash Vs Miners
Most people start out mining crypto currencies with Nicehash because it’s reliable and very easy to use. After you get a bit more experience you will probably start experimenting mining coins direct.
Because of this a lot of people seem to think that Nicehash is only for beginners and that once you understand what you are doing, you should use alternative miners. This is actually a common misconception – mining coins directly is not always more profitable than Nicehash.
In fact for your average miner, I strongly believe over the long term Nicehash will consistently outperform direct mining of any other coin.
Nicehash Selling your Hash Power
Before we look at why, we first need to understand what Nicehash is and how it works. Because Nicehash always pays you in bitcoin, a lot of beginners wrongly assume their rig is mining bitcoin directly. This is absolutely not the case – GPU bitcoin mining ended several years ago, you are in fact not even mining coins for yourself.
What you are actually doing is offering your mining rig for hire to people who will pay for your rig’s hash power. They will always pay you in Bitcoin, no matter what they want to mine with your rig.
It’s sometimes easier to understand how this works from the buyers point of view. Assume I want to go and mine some ethereum, but I don’t have my own rig so I want to hire someone else’s – effectively I’m looking to buy hash power.
Nicehash will let me put in the maximum bid I’m prepared to pay for some hash power. Alongside me are thousands of other people all doing the same, all competing to buy hash power. This creates a competitive market of hash power buyers.
Alongside Ethereum there are other people looking to buy hash power to mine Monero, Z-cash, Electroneum and every other alt currency you can think of.
As coin values increase, or difficulty decreases, the amount buyers are prepared to bid increases for that coin. As prices drop, or difficulty increases, the amount people are prepared to bid for that coin falls.
The clever part for you is that Nicehash will constantly match the most profitable bids to your hash power. Nicehash will then automatically switch mining algorithms to meet the highest bids. Effectively you will always be mining the most profitable coins at any one point, but on behalf of someone else.
Won’t I get paid less than mining direct?
Logic would dictate that if someone is buying your hash power, they must be making more money mining direct, than they are paying you?
You would think so, but this is in fact not always the case. Many people want to buy a significant amount of hash power, for instance if they are solo mining. These buyers will pay pretty close to, or in fact even more than the coin is worth mining directly.
Some people are just banking on the coin they are mining going up in value and are willing to pay a premium for the privilege of not having to buy their own hardware and maintain it.
Don’t believe me? Well check out What To Mine and you will often (but not always) find Nicehash in the top 3 most profitable algorithms, quite often at number 1.
Nicehash – Switching Algorithms
Even if mining certain coins directly is sometimes more profitable, you have to be on the ball 24/7 ready to switch around as the price of different coins rises and falls.
A recent example is Electroneum, an alt coin which launched on November 1st 2017. Due to security issues the ico coins were locked down and the only coins you could get were from mining. As the blockchain had only just gone live, the difficulty was very low.
This caused a huge spike in the demand for hash power for the cryptonight algorithm. For the first few days nicehash earnings tripled, my rig went from making $10 a day to $30. Whilst the price has now dropped back again Electroneum is still one of the most profitable coins to mine.
Now if you were aware of this coin and got in on the launch, then you may have made some decent money mining direct. However, if you missed this you would have already lost out on significant profits that would have been made with through Nicehash.
Nicehash – Bitcoin is King
The next huge benefit from mining with Nicehash is always getting paid in Bitcoin. Bitcoin is still the king of cryptos and I’d much rather be paid in Bitcoin than any other alt. If you are mining an alt coin and holding you are effectively gambling that coin will go up in value. The truth is it could easily fall in value, destroying your profits.
Whilst the same could be said of bitcoin, you can probably be more certain about the long term future of bitcoin than 99% of alt coins.
Real life example:- Take my September 17 earnings from a 6 GPU rig. Back in September I was earning roughly $8 a day on Nicehash. I was paid a total of $230 in bitcoin for one month.
Since September the price of bitcoin has more than doubled. So I now have $480 for September. If I had mined Ethereum direct I would probably have had mined around $230 Ether. Over the same period Ethereum has only increase 50%, which means my $250 would now only be worth $350.
Now I know bitcoin doesn’t outperform alts every month, but on the whole which currency would you rather take the gamble with? Which is the least risky? I think most people would agree Bitcoin.
Simply put Nicehash pays you in the market leaders currency and is very easy to use. In my opinion Nicehash provides you with the least amount of risk to your capital and the most consistent gains.