Understand Grin mining income and early investment strategy in one article
Editor’s note: This article comes from: ChainNews（ID：chainnewscom）, the author of this article: Lianwen x TokenIn, reprinted by Odaily with authorization.
With the release of the mainnet of the popular anonymous coin Grin, whether to mine Grin or buy this new currency has become a hot topic of discussion in the community.
Grin, a project characterized by privacy and portability, is the first application of the privacy protocol MimbleWimble. It adopts the PoW consensus mechanism, no ICO, no pre-mining, no founder rewards, emphasizing complete fairness. As an open source project, the main creators of the Grin team are anonymous, and only use donations as the source of funds. Its development and operation are carried out by the community, and a high degree of decentralization is practiced, which has become the most commendable feature of Grin.
In addition, Grin's monetary policy adopts a relatively rare model of unlimited supply, which is released linearly, and the inflation rate decays to infinitely close to zero year by year. This rare currency supply policy also makes the value analysis of the project difficult, because many cryptocurrency investors have criticized this design for the extremely high inflation rate in the early days of the project.
Before the launch of the Grin mainnet, TokenInsight, a global token data and rating agency, published an in-depth report on the mining income and early investment strategies of the Grin project, and authorized Lianwen to publish it exclusively.
The TokenInsight research team made detailed calculations on the cost and income of Grin mining under different algorithms and scenarios, and boldly adopted a model. By observing the price and calculation of BEAM, another cryptocurrency project that also adopts the Mimblewimble protocol, after its mainnet launch It is quite innovative to predict the mining difficulty and currency price trend after the Grin mainnet goes live.
First, the core conclusions are presented.
Through the calculation of mining costs and income under different algorithms and scenarios, the TokenInsight research team believes that:
For the Grin project, it is almost impossible to recover the cost if a new mining machine is purchased for mining;
In Grin mining, NVIDA cards have more advantages in computing power and power consumption than AMD cards;
After the Grin mainnet is launched, the ar_scale value controls the income of the C29 and C31 algorithms, and miners need to choose the algorithm with the highest income according to the current ar_scale value and their own graphics card type;
Assuming that the electricity fee is 0.4 yuan/kWh, to calculate the mining income and cost of GTX1080Ti under the C29 and C31+ algorithms respectively, it can be seen that when the difficulty of Grin currency price is greater than 4.2 per thousand in M, mining Grin can at least Earn back your electricity bills.
For readers who pay more attention to the Grin project, TokenInsight provides corresponding investment strategies for different groups:
For the firm believers who are bullish on Grin for a long time:
You can gradually build positions regardless of the secondary market price.
For individual investors who do not have mining equipment and just want to hold a small amount for a short period of time:
Don't rush into the market, you can wait for the price to stabilize and then go to the exchange for trading.
For institutional investors who do not have mining equipment and just want to hold large amounts for a long time:
You can pay attention to the price/cost index to avoid being accidentally injured by miners selling and smashing the market, and gradually build positions when the price/cost index is in the range of 0.5-2.
For GPU miners who are bullish on Grin for a long time:
If you are optimistic about the project for a long time, you can pay attention to the price/cost index after selling the mined Grin at a high level in the early stage, and cover up your position in time when your own mining cost is lower than the exchange price.
secondary title
Starting from the basics: What is the principle of Grin mining?
If you want to understand Grin's mining strategy, you must start by understanding the mining principle of this project.
In order to balance the relationship between CPU/GPU mining and ASIC mining machine mining, Grin has created an algorithm system Cuckoo Cycle compatible with two mining modes, including the GPU-friendly C29 algorithm and the ASIC mining machine-friendly C31 algorithm.
The Grin team hopes that by controlling the proportion of blocks produced by the two algorithms, miners who use different equipment can get similar benefits. The purpose of this is to prevent the project from being monopolized by mining bullies in the early stage, and at the same time provide a controllable entry channel for scenarios where ASIC mining machines will inevitably appear in the long run.
Grin tries to solve the problem of high computing power and decentralization of computing power that jeopardizes the security of the blockchain through this dual-algorithm solution. This is highly consistent with the concept of "harmonious mining" proposed by Zcash during the Bloom stage. At the same time, the Grin team plans to upgrade the algorithm with a hard fork every 6 months, and change the block generation ratio of the two algorithms in combination with the distribution of computing power.
PoW Algorithm: Cuckoo Cycle
Grin uses a PoW algorithm called Cuckoo Cycle, which is an anti-ASIC algorithm. Compared with the SHA256 algorithm used by Bitcoin, its calculation process requires higher memory bandwidth than operation frequency.
In the future, the memory requirements will be improved by upgrading the algorithm, gradually changing from anti-ASIC to ASIC-oriented. Compared with CPU and GPU, ASIC is easier to obtain larger memory through customization.
Double PoW algorithm
Grin will use two algorithms based on Cuckoo Cycle: CuckARoo for GPUs and CuckAToo for ASICs. Among them, the combination of C29+C31 will be used when the mainnet is launched. The C29 algorithm operation requires 6GB+ of memory, and the C31 algorithm operation requires 11GB+ of memory.
In the initial stage of launch, the proportion of blocks will be set to be 90% of the blocks dug out by the GPU-oriented C29 algorithm, and 10% of the blocks dug out by the ASCI-oriented C31 algorithm. According to the current plan, it will be gradually adjusted to GPU 0% and ASIC 100% within 2 years.
secondary title
How to choose Grin mining equipment selection?
NVIDIA graphics card with 6GB+ video memory can be selected
There are currently two mining software, Grin Miner and GrinGoldMiner, available. Grin Miner supports Linux and MacOS systems, and supports CPU mining. NVIDIA and AMD GPUs need to install CUDA or OpenCL plug-ins. GrinGoldMiner only supports Window operating system and supports NVIDIA and AMD GPUs.
In the absence of ASIC mining machines, at least a GPU with 11G video memory is required for the operation of the C31 algorithm. Excessive video memory does not help much in improving efficiency, and the latest Turing architecture graphics card has a higher sales increase.
Grin Miner supports two mining modes: Mean and Lean. Mean has higher memory requirements and will run at the maximum speed, while Lean can run on relatively low-memory machines through multiple calculations, but the speed will be greatly affected.
GPU mining
CUCKAROO
Both NVIDIA and AMD GPUs can be used for mining. At least 5.5GB of video memory is required, and 6GB of video memory is recommended. Different plugins need to be configured in Grin Miner.
CUCKATOO
Mean mode: use GPU with 11GB+ video memory, support Pascal and Turing two GPU architectures, representative models are 1080TI and 2080TI respectively. Select the cuckatoo_mean_cuda_gtx_31 plug-in for the Pascal architecture graphics card, and select the cuckatoo_mean_cuda_rtx_31 plug-in for the Turing architecture graphics card. Due to the shortage of video memory during the mining process, all other tasks of the graphics card need to be turned off. The project team recommends disabling the use of this graphics card to drive the display.
Lean mode: Although both NVIDIA and AMD can mine using OpenCL in this mode, and the memory requirement is small, it is very slow and not recommended.
CPU mining
secondary title
How to choose an algorithm: C29 or C31?
The income of the two algorithms is jointly determined by the mining equipment's GPS31 computing power, GPS29 computing power, and the main network ar_scale.
C31 mining income = (GPS31 / 42) * weight(31) / difficulty
C29 mining income = (GPS29 / 42) * ar_scale / difficulty
weight(31) = 31 * 2^8 = 7936
The ar_scale parameter is adjusted once per block according to the proportion of two algorithms in the past 60 blocks. Through the adjustment of ar_scale, the proportion of blocks produced by the two algorithms reaches the target value. The setting when the main network is launched is: C31 accounts for 10% , C29 accounted for 90%.
Users can calculate according to the current network ar_scale and the GPS31/GPS29 value of their own equipment, and choose the appropriate algorithm. The calculation method is as follows:
ar_scale / weight(31) < GPS31 / GPS29
When the right side of the formula is greater than the left side, mining C31 algorithm has a higher yield, otherwise mining C29 algorithm is suitable.
secondary title
What will happen to the income if the C29 algorithm is adopted?
The TokenInsight team took the Cukaroo29 algorithm referred to as C29 as an example and the Cukatoo31+ referred to as C31 algorithm as an example. When a miner holds a GTX1080Ti graphics card, the Graphs provided by the two algorithms are similar to the hash rates in BTC of 4.08 and 0.522. Its power is about 220W.
When using the C29 algorithm, according to the data on January 11, the ar_scale fluctuates in the range of 1000, and the ar_scale values are 700, 1000, and 1200 respectively for calculation.
secondary title
What will happen to the income if the C31 algorithm is adopted?
You can use the chart to understand the income calculation using the C31 algorithm:
What is the cost?
The TokenInsight research team measured cost estimates using different algorithms.
Among them, if the C29 algorithm is used, assuming that the graphics card used is GTX1080Ti, and its electricity cost is 0.4 yuan/kWh, the electricity consumption of each mined Grin under different difficulties can be obtained as shown in the figure:
And if the C31 algorithm is used, assuming that the graphics card used is GTX1080Ti, and the electricity cost is 0.4 yuan/kWh, the power consumption of each Grin mined by the C31+ algorithm under different difficulties can be obtained as shown in the figure:
Where is the cost and revenue balance?
According to the above analysis, when the electricity fee is 0.4 yuan/kWh, the mining income and cost of GTX1080Ti under the C29 and C31+ algorithms respectively, the TokenInsight research team came to the following conclusions:
secondary title
Predictions: Where Will Grin's Price and Difficulty Go?
Everyone wants to predict how the mining difficulty and currency price will go after the Grin mainnet goes live. TokenInsight uses a bold model to find indicators that can be referred to by observing the changes in price and computing difficulty after the mainnet launch of BEAM, another cryptocurrency project that also adopts the Mimblewimble protocol.
The following is the difficulty increase rate of BEAM and the exchange price performance compiled by the TokenInsight team:
Through analysis, the TokenInsight research team believes that:
After Grin goes online, the price may rise first and then return to a rational level. The difficulty will remain at a stable level after a rapid increase.
The TokenInsight research team pointed out that the Grin block reward is about 60 per minute per block, while the BEAM block reward is 100 per minute per block, of which 20 belong to the team. The initial circulation of BEAM is 1.67 times that of Grin.
Infer Grin-related information from BEAM's price, difficulty, and price/cost laws over time:
About difficulty:At the beginning, Grin will pour a lot of computing power like BEAM after the main network goes live. The difficulty will be greatly improved on the day of launch, and after a certain period of time, the difficulty will gradually stabilize.
about the price:In the current bear market environment, it will be difficult for digital currency to maintain a high price. The initial circulation supply is small, and it is a seller's market. Later, as supply and demand gradually balance, it is expected that the Grin project will return to rationality after maintaining a high price for a period of time.
About mining cost:As the difficulty of Grin increases, the cost of mining Grin also increases. When the difficulty of mining is stable, the cost of mining Grin will also be stable.
Regarding price/cost laws:secondary title
What is the Grin mining economics strategy?
In response to the various analyzes above, the TokenInsight research team gave answers to several people's most relevant questions.
When will the existing GPU mining machines be used for mining and when will they be sold?
Referring to the performance of BEAM, the difficulty of Grin is relatively small on the first day of mainnet launch, and the early price is relatively high. It is relatively a better choice to start mining immediately on the first day of launch and sell it in time. It is recommended that miners check their theoretical income and electricity costs at all times, and calculate the real-time comparison between mining costs and exchange prices.
Do I need to rent cloud GPU for mining?
To rent a GPU for a week:It is not recommended to rent cloud GPU products with a minimum lease period greater than 1 week. With the influx of GPU computing power, the difficulty increases, and Grin will most likely become unprofitable like BEAM in a short period.
To rent a GPU for an hour:Based on the GTX1080Ti11G graphics card rental price of 5 yuan/hour, referring to BEAM's difficulty performance and price performance, within one hour of the mainnet launch, its rental fee and income can only be just balanced. If the difficulty and price trend of Grin’s launch is close to that of BEAM, if there is no GPU mining machine or CPU, it is a good choice to rent GPU by the hour.
Do you want to buy a computer/mining machine for mining?
It is not recommended to buy a computer host for mining.
Because computers have a large number of components that do not generate computing power, compared with professional mining hosts, they do not have an advantage in computing power per unit hardware cost, nor do they have an advantage in power consumption per unit computing power. So is it recommended to buy GPU mines? What about machine mining?
It is not recommended to buy GPU miners for mining.
secondary title
Summary: Grin investment strategy
For the firm believers who are bullish on Grin for a long time:
You can gradually build positions regardless of the secondary market price.
For individual investors who do not have mining equipment and just want to hold a small amount for a short period of time:
Don't rush into the market, you can wait for the price to stabilize and then go to the exchange for trading.
For institutional investors who do not have mining equipment and just want to hold large amounts for a long time:
You can pay attention to the price/cost index to avoid being accidentally injured by miners selling and smashing the market, and gradually build positions when the price/cost index is in the range of 0.5-2.
For GPU miners who are bullish on Grin for a long time:
If you are optimistic about the project for a long time, you can pay attention to the price/cost index after selling the mined Grin at a high level in the early stage, and cover up your position in time when your own mining cost is lower than the exchange price.
