What Is Hobby Mining?

The past decade has seen cryptocurrency mining transform at a rapid rate, with the main attraction being the growing adoption of Bitcoin (BTC) and several other proof-of-work (PoW) coins. Miners earn block rewards which can command huge value. Nevertheless, knowing how to mine Bitcoin or another cryptocurrency, requires a huge upfront investment. Some people may not have the resources or interest to pursue mining full-time. This is where hobby miners come into play. In this article, we will explain what hobby mining is, and how it differs in the subset of crypto mining.

What Is Cryptocurrency Hobby Mining?

Cryptocurrency hobby mining is a part-time crypto validation practice usually involving an individual mining setup. Cryptocurrency mining operations are highly competitive, which means professional miners must run their rigs for 24 hours, seven days a week. To compete, mining businesses these days need to build and operate farms with hundreds of dedicated mining devices.

This is not the case with hobby mining, as the miner is not necessarily driven by immediate financial rewards. Instead, hobby miners intend to use crypto rewards as a store of value and investment, rather than an income stream akin to business cash flow. Hobby mining was the de facto practice for Bitcoin and several PoW consensus-based protocols in the early years, as anyone could mine coins using their computer’s central processing unit (CPU) or graphics processing unit (GPU mining).

Related: Can crypto mining damage your GPU?

However, as more Bitcoin miners joined the network, the mining landscape has become highly competitive, phasing out the use of less powerful machines. Now, most hobby miners have turned their attention to building ASIC miners due to their higher efficiency – even for only a few hours a day. Others have moved to less competitive PoW networks like Monero and Dogecoin to earn cryptocurrency rewards.

What's The Difference Between Hobby Mining and Crypto Mining?

Hobby miners only tend to mine a few hours daily, both due to time limitations and a desire to keep running costs low. Commercial miners prefer to operate continuously online to give themselves the best chance of receiving block rewards. However, such operations are costly and require significant investment.

Additionally, hobby miners generally only use a single mining device – usually their CPU, GPU, or a singular ASIC/FPGA – as opposed to setting up hundreds of application-specific integrated circuit (ASIC miners) or field-programmable gate arrays (FPGA) miners. Depending on the situation, hobby miners can mine at their convenience, including when their computers are on and idle.

Hobby miners don’t play a huge role in securing the network. By contrast, commercial mining is responsible for about 80-90% of Bitcoin’s total mining capacity – meaning they are pivotal to verifying transactions on the network and maintaining the blockchain.

On the off-chance that a hobby miner wants to scale without incurring too many costs, they can easily join a mining pool. They can use the pool's hash power to solve cryptographic puzzles without owning any mining equipment. Once block rewards are earned, they are shared across miners linked to that mining pool.

Why Do People Engage in Cryptocurrency Hobby Mining?

Profitable cryptocurrency mining is often a serious business venture due to the competitive climate the nascent industry has taken in the past decade. Nonetheless, some people still engage in this activity as a hobby, even if profits are harder to come by. Firstly, hobby mining focuses more on getting acquainted with blockchain protocols than creating an income stream. Casual crypto miners seek to understand and obtain insight into blockchain technology and how cryptocurrencies work.

As a miner often owns the blockchain’s native assets, it is beneficial for them to contribute to the network’s security by running a node. Even though earning cryptocurrency rewards might not be the primary goal of hobby mining, it is still possible for casual miners to see decent returns. However, their ability to earn a solid income consistently depends on the hash power of their equipment.

Popular Cryptocurrencies for Hobby Mining

Earlier, we discussed how hobby mining for cryptocurrency is commonly done using PoW blockchain protocols like Bitcoin and Dogecoin. Bitcoin is the most popular coin for mining, but it will not be included in the list due to its high setup and running costs, which make casual mining difficult.

1. Ethereum Cash

A popular choice is the Ethereum Cash network. Hobby miners can still verify transactions on the Ethereum Cash network, a fork of the Ethereum blockchain that still uses PoW. Hobby miners can mine this PoW asset using software like GMiner and NBMiner. Another option includes joining mining pools or farms to team up with other hobby miners and increase the chances of solving a cryptographic puzzle on the Ethereum Cash network.

In terms of returns, at 90 MH/s, a power consumption of about 700W, and a cost per KWH of about $0.12, the user should be able to mine about 0.01030 ETC. If 1 ETC trades for $18.96, that's about $0.195288 per day. Successful miners receive 2.56 ETC for validating transactions.

2. Dogecoin

Another popular PoW protocol is the lovable Shiba Inu-representing Dogecoin. Launched in December 2013 by Jackson Palmer and Billy Markus, it is a joke cryptocurrency meant to satirize the surge of several alternative currencies (altcoins) following the popularity of Bitcoin. Dogecoin is a fork of the Litecoin network. It runs on the Scrypt algorithm and is one of the most popular meme coins in the ecosystem.

Dogecoin is quite inexpensive and has an unlimited supply, so the network mining parameters are more relaxed. Hobby miners can solve the protocol's puzzles with their CPU or GPU when using high-powered computers. Dogecoin incentives miners to participate with a block reward of 10,000. Using mining hardware with 1200MH/s, a power consumption of 325W, and an electricity cost of $0.10 could generate about 51 DOGE daily or about $3.48 in revenue ($0.068 per coin). Those interested in mining DOGE can use a calculator to preview potential earnings.

3. Monero

The Monero blockchain should be the first stop for any privacy-focused individual. A PoW-powered network, Monero’s infrastructure allows users to transfer value among themselves without displaying any sensitive details. The network jumbles or mixes transactions to make it hard to identify the real ones.

The blockchain protocol also requires miners to verify transactions by solving cryptographic puzzles. Interestingly enough, Monero’s RandomX algorithm is ASIC-resistant, meaning ASIC miners cannot validate transactions on the protocol. According to the development team, the Monero network aims to maintain an egalitarian mining system that allows anyone to mine its native XMR asset using their computer’s CPU or GPU.

In terms of profitability, at 420 KH/s, with a power consumption of 450 Watts at $0.12/kWh, the miner could generate about 0.0632 XMR per day – or about $10.5 for validating transactions. It is quite easy to start mining the privacy coin, making it a viable option for hobby crypto miners.

Is Hobby Mining Profitable?

Can part-time mining be a profitable and fulfilling hobby? The answer is dual-faceted. Hobby mining can be an interesting endeavor for technologists looking to dabble in the decentralized ledger landscape while earning little in return. However, it cannot substitute for an income stream as energy consumption can easily erode profits. In addition, the time it takes to mine 1 Bitcoin can take years depending on the amount of hardware used.

Additionally, earning block rewards can be quite tasking, especially as a solo hobby miner. This is due to the enormous competition out there. Top-tier cryptocurrency mining companies have hectares of land running hundreds of thousands of hardware mining rigs to provide them the edge needed in solving Bitcoin math problems.

Competing against these mining giants can be challenging for hobby miners on both a short-term and long-term basis. This also means that income from mining will be inconsistent – miners may go days or weeks without earning a cent. A mining pool can offer slightly better odds of earning cryptocurrency rewards, but it may not be financially practical for some hobby miners due to the required investment.

For those who enjoy hobby mining, it is critical to stay up-to-date with any changes in regulations regarding cryptocurrency mining and taxation. While some governments do not tax small-scale mining operations, this may not always be the case.

Factors to Consider When Selecting Cryptocurrency To Hobby Mine

The simplest way to test for profitability is by using a mining calculator. Depending on the PC builds, mining Bitcoin may be more profitable for one hobby miner, whereas another may benefit from participating in the Monero network. Finding a platform that allows users to input their specific hardware can help investors decide which coin to hobby mine.

The difficulty level is another key metric to consider. The mining difficulty level depicts the amount of computing resources needed to validate transactions on that network. This is often determined by the number of miners participating in the protocol. If there are more miners, the mining difficulty will spike, while a low turnout would reduce it. So while mining Bitcoin is more profitable given the asset’s high value, it is very difficult due to the high number of miners on the network.

The last aspect to look into is market trends. When hobby mining an asset, the smaller rewards lend themselves to building a crypto portfolio rather than receiving real-time income. This means hobby miners should stick to coins that they believe have good long-term fundamentals that will grow in value. Hobby mining obscure, hype-based cryptocurrencies may be a lost effort.

The Future of Cryptocurrency Hobby Mining

Cryptocurrency hobby mining has come a long and there are still many milestones to scale. The mining industry is starting to enjoy mass appeal due to the growing interest in blockchain technology. So just how far can crypto hobby mining go?

New and improved cost-efficient mining technologies are being introduced by the day. For instance, most passionate crypto miners alternate between using a GPU or FPGA miner since both allow for the mining of multiple cryptocurrencies. This enables them to earn across several protocols with zero limitations.

If crypto mining continues to become more competitive in the future, the efficacy of hobby mining might take a hit. However, the improvement and lowering costs of mining hardware should help hobby miners keep pace with the growing mining market. Either way, cryptocurrency hobby mining should be performed based on learning about the technology and not as a means to earn big profits or evade paying crypto taxes.

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