One of the first issues of a man first embarking on the path of the producing digital money is the desire to know how much one can earn and is it profitable to do business on the mining cryptocurrency?

Despite the simplicity of the question, the answer is not so obvious.

The fact is that you need to know a few important parameters and understand their influence on the final result to determine the exact income figures. Some of the parameters depend on the hardware and software used for the work, and part depends on the type of cryptocurrency, and remain part depends from actions of other users.

Let’s look at the factors that determine the profitability of the producing cryptocoins and the ability of the user to increase an income from the mining.

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The processing power (hashrate) – depends on hardware and its capabilities, as well as from the used programs. Sometimes optimization or replacement of the miner software can improve the performance by 20-30%. The same equipment has the different performance depending on the mining algorithm.

The complexity of the network (network hashrate) is the total computational power of the equipment of all users which are mining this cryptocurrency. The smaller total complexity of the network the greater your chances to successfully find a block.

Block reward – is how many coins you get when you find a code for which the payment is laid. The algorithm in almost any digital currency has a formula of change the size of the reward per unit over time.

For example, the payment for a block of the bitcoin decreases in two times every 4 years (now it is 25 bitcoins for each found unit).

The rate on the exchange (bid) – is the price of the coins on the cryptocurrency exchanges. As a rule, alternative cryptocoins are traded on exchanges for bitcoins and then earned bitcoins can be transferred into euro, dollars and other familiar currency.

Mathematically the profitability of any cryptocurrency can be calculated by using the formula that determines the average earnings of the miner depending on its computing power and coin that it mines:

Earnings (1 MH⁄s per day) = (Block reward) × 20.1165676117) / (Complexity ) × (Rate,Bid)

This formula is valid for any of the mining algorithms. The specific fork is determined only by the size of the reward for the block and by the current complexity of its production.

You need also to consider that the same hardware shows different Hashrate (computational power) depending on the used algorithm. Table below presents the background data about the performance of AMD graphics cards, depending on the algorithm that used by developers of different cryptocurrencies.

Comparative computing power of the ATI GPU for different algorithms relative to the Scrypt algorithm

PoW algorithm Scrypt Qubitcoin Groestl Skein Blake-256
Hashrate 1 MH/s 7,22 MH/s 27 MH/s 317 MH/s 3,85 GH/s

The data from the table can be used to analyze and compare the performance of processors for different algorithms.

The block reward as a rule changes rarely and remains constant for a long period of time. But the rate on the exchange and the current complexity can change quite rapidly during the day both the larger and the smaller side

Modern software for producing cryptocurrencies can monitor the change of complexity of the process for each coin and its price in real time, and switch to the mining of the most favorable fork from the list.