Best Cryptocurrencies to Mine in 2021 • Benzinga Crypto

Mining is the backbone of cryptocurrency. Miners run the network by processing and verifying all transactions and changes of state to it, and they get a cut of transaction fees for their trouble.  Huge warehouses filled with cutting-edge mining technology mine the largest cryptocurrency, Bitcoin, making billions of dollars a year in revenue. Crypto mining usually becomes more difficult as better technology is developed, but Bitcoin mining difficulty has nosedived in the last couple of months. 

Recently, Bitcoin mining experienced a major shift because of an impactful ban on cryptocurrency mining and services in general in China. Mining warehouses in China ran off of cheap electricity (often from burning fossil fuels), turning a massive profit, but they are being forced out of the country. This shift has made it significantly more profitable, at least in the short term, for small miners because they have less competition. It may be the perfect time to get a mining rig running and start earning crypto. 

Proof-of-Work vs. Proof-of-Stake Cryptocurrencies

Consensus mechanisms are the methods cryptocurrencies use to verify additions to the network and agree on its state. Proof-of-Work (PoW) and Proof-of-Stake (PoS) are by far the most widely used consensus mechanisms. On PoW blockchains, miners complete random and complex mathematical functions to verify blocks of transactions. It requires sophisticated and expensive hardware to compete with the computational power of every other miner on the network.

PoS mechanisms, on the other hand, verify transactions and single states of the network by checking validator nodes that require minimal hardware. Miners on PoS blockchains stake a certain amount of crypto and run validator servers to earn their cut of transaction fees. PoS is generally considered more decentralized than PoW because a network participant’s mining power is limited by the amount of the crypto they stake. For example, if a miner on a PoS blockchain puts up 1% of the total staked crypto, they can only mine 1% of the new blocks. PoW miners instead need to build up computational power to mine more blocks. 

Currently, the 2 largest cryptocurrencies, Ethereum and Bitcoin, both use the PoW mechanism. It’s unlikely Bitcoin will move away from its PoW mechanism, but Ethereum has made the switch to PoS a goal for the upcoming year. Ethereum is slated for a massive round of upgrades called Ethereum 2.0. The updates will alter the architecture of the blockchain to speed up transactions, lower transaction fees, dramatically decrease energy consumption and increase network security. The move to PoS will be one of the biggest alterations allowing for these benefits.

ASIC Mining vs. GPU Mining

Miners make use of 2 main types of hardware to mine PoW cryptocurrencies, application-specific integrated circuit (ASIC) and graphics processing unit (GPU) rigs. GPUs are designed for video editing and gaming but also happen to mine PoW cryptos well. Many crypto enthusiasts with gaming computers put their devices to use by mining their favorite PoW cryptocurrency when they aren’t gaming. 

ASIC miners are devices that are designed to mine 1 specific cryptocurrency (maybe 2). On the surface, this setup seems ideal. They are devices built exclusively for crypto mining, so they must be the best technology to use, right? The answer is more complicated than you might imagine and rests on the marked difference between these types of mining. 

GPU mining is almost certainly the better option to mine cryptocurrency for small miners without access to underpriced electricity. Some of the main factors in which GPU mining beats out ASIC rigs are its modular components, flexibility and residual value. GPUs can mine pretty much any PoW crypto, unlike ASIC miners, which can only mine whichever crypto they are designed for.

GPUs hold more value than ASICs over time because they can do more than just mining. Older ASIC miners quickly lose value because mining farms constantly upgrade their hardware to solve the cryptographic functions faster, leaving old models in the dust. GPU mining computers can be upgraded easily, unlike ASIC miners, by simply adding more (or better) graphics cards. ASIC miners also use boatloads of electricity, so they are less profitable in regions with high electricity costs. However, for warehouse owners with low electricity costs and fast access to new ASIC models, ASIC miners are much more profitable than scaled-up GPU rigs.

How Much Can I Make Mining Cryptocurrency?

Your potential profit depends on a few main factors: electricity cost and consumption, hash rate (how fast the mining rig can find solutions) and initial hardware costs. If you already have a working computer with one or more relatively modern GPUs, it likely will be profitable, especially while Bitcoin and Ethereum mining difficulty is low. Electricity consumption and costs vary significantly by each region and could make mining unprofitable. For example, mining would lose money in Hawaii where the average price of electricity is $0.31 per kilowatt-hour while the national average is about $0.13. With cheap electricity and a few thousand dollars of hardware, you could start making $600+ a month from a modern mining rig with multiple GPUs. Before purchasing mining equipment, enter your miner’s specifications and electricity costs into a mining profitability calculator to project your profit potential.

Best Cryptocurrency Mining Opportunities

1. Staking Ethereum on Coinbase

Coinbase provides an Ethereum 2.0 (Eth2) staking pool for its users to earn up to 5% APR on their ETH. Coinbase moves your Ether to the Eth2 testnet and stakes it in a validator node to verify transactions and earn fees. There are about 6,000,000 ETH staked on Eth2 validator nodes earning interest. The main downside of staking on Eth2 is that once your Ether is on the testnet, you won’t be able to send it back to the Ethereum mainnet until the 2 networks are merged (planned for late 2021 or early 2022). Also, Coinbase’s Eth2 staking is currently only available to U.S. customers (and not in New York).

2. Ethereum GPU Mining

Ethereum GPU mining is one of the most profitable and simple ways to mine cryptocurrency. You need a computer with basic PC parts: CPU, power supply, motherboard, RAM, a hard drive and most importantly one or more GPUs. Check a mining profitability calculator to see that your hardware won’t lose you money from high electricity costs. Amazon and other electronics retailers offer already built mining computers, but they are a bit more expensive. Make sure you still have a use for your new rig after Eth2 releases (like mining Bitcoin); otherwise you will just have to sell it. Now that you have the hardware, join a mining pool like Ethermine or Kryptex. It’s pretty simple to join, and each has detailed explanations on their websites. 

3. Kryptex Mining Pool

Kryptex might be the easiest and fastest way to start mining with your computer. Just go to its website, sign up for an account, install the Kryptex program and start mining. The program runs a benchmark test on your computer to choose the best mining algorithm for your hardware. It even tracks multiple algorithms all the time to ensure you’re running the most profitable one. Payouts from Kryptex are always in Bitcoin, so you don’t need to worry about swapping mined altcoins. It boasts profits of about $95 per month with a modern gaming PC or even up to $615 per month for a mining rig with multiple high-performance GPUs. Like all other mining opportunities, you need to ensure your mining venture will be profitable with the Kryptex mining profitability calculator.

4. Bitcoin ASIC Mining

ASIC mining is even simpler than setting up your own GPU miner if you have the necessary starting capital. The most important step of setting up an ASIC rig is choosing the device. ASIC miners are expensive and can become obsolete in a year or less as new technology is developed. Make sure the purchase makes financial sense with a mining profitability calculator. Remember that mining with high electricity costs, especially using ASIC miners, can lose you money. If you decide it is profitable and buy an ASIC device, you need to configure it with a guide from the manufacturer or get help from mining pools with ASIC support to get it running.

Is Mining Crypto in 2021 Worth It?

Historically, mining Bitcoin and Ethereum has become less and less profitable (in BTC and ETH, not necessarily USD) as more miners join the network. After China’s recent push to remove Bitcoin miners from its country, Bitcoin difficulty, the metric describing the amount of computation required to mine the next BTC block, has plummeted. It fell more than 40% since its peak on May 15, 2021, according to BTC.com. Ethereum difficulty has also dropped significantly since its peak, but it’s only about 20% lower than its high in May. 

While mining difficulty is much lower right now, that likely won’t continue to be the case. This trend doesn’t mean it won’t be profitable for you, especially if you already have the hardware. Joining a mining pool is easy and may be worth your time. If just investing in cryptocurrency isn’t enough, putting your PC to work to earn even more might be perfect for you. 

Crypto Mining Alternatives

Mining is not the only way to passively earn cryptocurrency. BlockFi and Celsius each provide interest-bearing crypto accounts offering far higher rates than savings accounts with major banks. With a BlockFi interest-bearing account, you could earn up to 4% APY on Bitcoin and Ethereum deposits and even more with stablecoins like USDC and DAI. Check out the platform’s interest rates to learn what you could make with your crypto. 

Celsius offers similar cryptocurrency interest-earning accounts with an even longer list of supported cryptos. It has great interest rates that are even higher for users outside of the U.S. If you don’t want to go through the trouble of setting up a miner or if your energy costs are too high, BlockFi or Celsius can be alternative passive income streams. 

Best Exchanges For Buying Cryptocurrency

So many optimal trading platforms offer cryptocurrency trading that it’s difficult to choose the best one. U.S. investors looking for a crypto-specific exchange with incredible security and a multitude of features and supported tokens should check out Coinbase and Gemini. If you are looking for a platform that also offers stock and ETF trading along with cryptocurrencies, Webull and Robinhood are fantastic options. All 4 of these platforms make trading cryptos extremely easy on desktop and with simple apps on iOS and Android. 

Commissions

Account Min

$0

1 Minute Review

Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs. 

You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.

Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.

Best For

• New cryptocurrency traders
• Cryptocurrency traders interested in major pairs
• Cryptocurrency traders interested in a simple platform

Pros

• Simple platform is easy to operate
• Comprehensive mobile app mirrors desktop functionality
• Coinbase Earn feature rewards you with crypto for learning about available coins

Cons

• Higher fees than competitors

Best For

Intermediate Traders and Investors

Commissions

$0

Account Min

$0

1 Minute Review

Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.

Webull is widely considered one of the best Robinhood alternatives.

Best For

• Active traders
• Intermediate traders
• Advanced traders

Pros

• Commission-free trading in over 5,000 different stocks and ETFs
• No account maintenance fees or software platform fees
• No charges to open and maintain an account
• Leverage of 4:1 on margin trades made the same day and leverage of 2:1 on trades held overnight
• Intuitive trading platform with technical and fundamental analysis tools

Cons

• Does not support trading in mutual funds, bonds or OTC stocks

Commissions

. 25% or less

Account Min

0.00001 BTC

1 Minute Review

Gemini is a cryptocurrency exchange and custodian that offers investors access to 26 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.

Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader. 

In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.

Best For

• New investors looking for a simple mobile and web app
• Experienced investors who need a more advanced platform with more tools
• Users looking for a 1-stop-shop to buy, sell and store all of their coins

Pros

• Easy and quick signups — can get started in as little as a few minutes
• Multitude of platforms to accommodate traders of all skill levels
• Hot wallets include insurance to protect your from theft and hacking attempts

Cons

• Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app

Commissions

Depends on security and leverage

Account Min

$50 for US and Australia; $200 everywhere else

1 Minute Review

eToro, headquartered in Cyprus, England and Israel, has provided forex products and other CFD derivatives to retail clients since 2007. A major eToro plus is its social trading operations, including OpenBook, which allows new clients to copy trade the platform’s best performers. Its social trading features are top notch, but eToro loses points for its lack of tradable currency pairs and underwhelming research and customer service features

Best For

• U.S.-based cryptocurrency traders
• Social and copy traders
• Simple user interface
• Community engagement and following other traders

Pros

• Expansive network of social trading features
• Large client base for new traders to imitate

Cons

• U.S. traders can only buy cryptocurrency
• Only 15 cryptocurrency pairs available

Cryptocurrency Investing vs. Mining

If you have a gaming computer (or any PC with solid GPUs) and live in a region where electricity isn’t too expensive, you might want to start mining cryptos with it. Although you need to consider a few downsides to putting your tech to work, the question of investing versus mining gets more complicated if you don’t already have the hardware. Cryptocurrency mining will probably turn less and less profit as time goes on whereas investing in any specific crypto might not. Both options are volatile and you might lose or make money either way. It’s up to you whether you think the start-up cost will be worth more in the long run when invested immediately or built up slowly with a mining rig.