Crypto miners | What They Are, How They Work, And A Profitability Formula
160% APY in 40 days? Is It Legit? The Definitive Guide To Miners
Crypto Miners have boomed, all of a sudden they are everywhere and the people who got in early are making good money. You may be wondering what crypto miners are and if you can still make good money with crypto miners so that's exactly what I will be telling you.
What are crypto miners?
Not to be confused with mining rigs, crypto miners are dapps where you deposit your money and earn a high interest rate daily. These rates can range from 3%-10% daily.
How does it work
The miner dapp pays out from the balance the contract holds. The contract balance is the total amount of money deposited in the dapp by users and (I think unclaimed rewards). Essentially, every time someone invests money, the contract balance goes up and the money deposited gets used to pay interest for others. You have a good chance of making money with these miners if people invest after you since then their deposits are being used to pay interest and the contract balance goes up. You will understand more how they work and how to calculate profitability as you continue reading.
Now here's the catch, you can't ever remove your initial investment. The only way you make money is if the pool has enough money in the contract balance to keep paying the interests of the depositors(one of which is you). You need the pool to be able to keep paying interest till you recoup your money. Using the formula below, you can solve that question.
Calculating profit and loss (read all the calculations, it will make sense put together)
How long the miner will pay interest for
(I feel like something is off via the formula but I also don't see what is off, please let me know if you know what it is)
Contract Balance*highest yield = daily payout rate — — Contact balance/daily payout rate=how many days the miner will pay for
The answer you get is the number of days the miner will payout interest without any added funds. After this point, the miner stops working because of a lack of funds.
Contract balance is public and can easily be found. It may be on the miner's website or you can ask in a social media channel of theirs.
How long it takes you to recoup your money
Because you can't remove your initial deposit, take the apr your pool offers and divide 100 by the number. This answer will tell you how many days it will take for you to recoup your money. If the amount of days it takes for you to recoup your money is greater than the number of days the miner will payout for, it is likely you will lose money and only recoup part of your initial investment. If it is the other way around, it is likely you will make money and recoup your investment.
Assumptions in the calculations (READ)
This calculation assumes that
No money will ever be added to the pool (better to be conservative)
They are no wallets that got in early and are holding a lot of the coin that could rug pull and take all the profits (if earnings are part of contract balance this point is valid
That everyone is using the highest apr option (to be conservative)
This calculation and article is not financial advice and is purely for entertainment purposes. It provides a simple way to see your ROI by using a crypto miner.
I will do an example of calculating an apr of a miner and its profitability
For this example, I will use BNB Factor, a BNB miner.
BNB Factor has 4 earnings options the highest being 4% daily so we will use that for our calculations. The contract balance currently is 2239 BNB. The contract balance can be found here.
2239*4%=89.56 BNB (this finds the amount of BNB paid to miners daily)
The daily payout rate is 89.56 BNB
2239/89.56=25(days) (this tells us how many days the miner can payout paying the highest apr before it stops paying)
100/4=25 (25 days to recoup money using miner)(4 is the % the miner pays out)
In summary, it will take 25 days to recoup our money and the pool will payout for 25 days. If more money is added to the pool during the 25 days it is likely you will make a profit.
Contract Balance*highest yield = daily payout rate — — Contact balance/daily payout rate=how many days the miner will pay for
100/by the apr the pool pays out = Time to recoup your money
Time to recoup money>How many days the miner will pay = you will probably lose money (risky)
Time to recoup money<How many days the miner will pay = you will probably make money (risky)
As you can probably tell, crypto miners are incredibly risky and you should always do your own research before making any investment. This article is for entertainment purposes only.