5 Issues to Consider Before Jumping Into Cryptocurrency Mining
At first blush, cryptocurrency mining may seem like a way to make easy money. You just let the software and hardware do the work. But experts say it's wise to consider these five issues before making the jump.
Although the values of a number of cryptocurrencies are down by half or more from their peaks of just several months ago, people are still considering jumping into cryptocurrency mining.
But before you attempt to build your own graphics processing unit (GPU) mining rig or take the simpler approach of using existing computers for their CPU power, you should consider the following five key risks.
Consider the Payback Period
Those planning to spend roughly $3,500 on a basic GPU crypto mining rig need to consider how long it will take to make their money back, Dev Horn, CEO of Ether Mining Company, tells ThirtyK.
“There are all these environmental factors that affect our profitability, and most people don’t think through the payback period,” Horn says. If people think the value of cryptos is rising and they can make back their investment in one year, that’s one thing. But if they don’t think they can make back their investment in one year, they may want to reconsider buying a mining rig, he says.
Avoid the Cheap and Illegal route
Users can also take the simple approach and use their existing computer to mine for cryptocurrencies. And some app developers and website operators may toy with the idea of harnessing the CPU power of their app customers or visitors to their websites.
Unless website operators and app developers receive explicit permission from users to piggyback on their computers’ processing power and electricity, however, they should avoid doing this, attorney John Wagster of Frost Brown Todd tells ThirtyK.
“Using someone else’s computer without knowledge would run afoul of the law,” says Wagster, who specializes in blockchain and digital currency at Frost Brown Todd. “Informed consent is required. They have to understand what they are consenting to.”
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