Cryptocurrency Mining NZ – New Zealand’s Ultimate Guide (2022)

Ever wondered if it's possible to make or buy your own money printing machine? Enter the world of Bitcoin and crypto mining and discover how to build your own money printing machine in NZ.

Are you considering taking the leap into crypto mining by setting up your own personal money printing machine in New Zealand? Well if so, you’ve come to the right place. 😎

To help you on your mining journey, we’ve created the following guide to lay out the key info on getting started with Bitcoin, Ethereum, and other cryptocurrency mining in NZ.

If you have any edits, corrections or upgrades, please don’t hesitate to contact us. Enjoy!

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What is Cryptocurrency Mining?

Mining is traditionally associated with a pickaxe, but in the realm of bitcoin and cryptocurrencies, mining is done by cryptocurrency miners, which are computers.

Mining is essential for solving different mathematical equations. Miners can give a block solving solution by solving equations, and when they do, they are rewarded with the coins in the block (block reward + transaction fees).

Miners frequently coordinate and share effort (jobs) to solve a block on a pool because mining alone is difficult. Pool then divides the rewards from the blocks among the miners who participated and assisted in the discovery of the blocks.

Can you Mine Cryptocurrency in NZ?

Yes. It is absolutely possible to mine Bitcoin, Ethereum, and other cryptocurrency in NZ.

You can do this by running specialised software on your existing computer that will mine and create cryptocurrency revenues around the clock. You could also invest in specialised mining equipment.

  • You can mine Bitcoin, Ethereum, and other cryptocurrencies by running special mining software on your computer/s, such as NiceHash or HiveOS.
  • NZ is home to an active community of miners, who discuss and exchange advice and hardware on forums such as the NZ Crypto Mining Facebook Group
  • The price of electricity in NZ is quite high, compared to nations such as Iceland or China who benefit from a comparative advantage in electricity prices.

Helpful research resource: Electricity prices ranked by country.

Miners encounter a variety of obstacles in each country, depending on the unique environment in which they work. Miners in New Zealand have very high electricity costs so miners should adapt to running efficient machines and target the most profitable coins to maximize profit.

NZ crypto mining community portal

NZ Cryptocurrency Mining Community Portal

New Zealand is home to a plethora of crypto mining communities, primarily residing on Facebook, Telegram, and Discord. Online communities are a great way to source local information, discover rigs for sale in NZ and meet other Kiwis who are on a similar journey to yours.

Below is our glossary of mining communities in New Zealand:

Have a community for us to list? Please reach out to us! 

Mining Glossary

  • Mining: Mining is the process of making computer hardware do mathematical calculations for the Bitcoin network to confirm transactions and increase security. Bitcoin miners can receive transaction fees for the transactions they confirm, as well as freshly minted bitcoins, as a compensation for their efforts. Mining is a specialised and competitive market in which the rewards are distributed based on the amount of calculation performed. Bitcoin mining is not for everyone, and it is not a simple way to generate money.
  • Algorithm: The mathematics behind mining is called an algorithm, and it refers to the equations that your machine is solving. Usually, a coin can be mined using only one algorithm, but there are exceptions that run on multiple algorithms. Some popular algorithms are  SHA-256, Ethash, Equihash, KAWPOW, and others are some of the most popular algorithms.
  • Electricity costs: Aside from the hardware, electricity costs are the most significant overhead in cryptocurrency mining. Electricity costs vary by location. The Average cost of electricity in 0.26c
  • Proof of work (POW): A blockchain consensus mechanism involving solving of computationally intensive puzzles to validate transactions and create new blocks. 
  • Hashrate: Also known as “computer power per second,” hashrate is the rate at which your CPU can do blockchain mining operations. Your hashrate is a metric that quantifies your mining rate per second and is determined by your CPU and graphics card. Hashrate is usually measured in units of k (kilo, 1,000), M (mega, 1 million), G (giga, 1 billion), or T (tera, 1 trillion). For example, 1 Mhash/s indicates 1 million hash calculations are done every second. 
  • Pools: Pool is a mining cooperative. Miners are forming groups and mining together, then sharing the gains, because mining alone is difficult.
  • Mining difficulty: Each cryptocurrency sets its own mining difficulty, which affects how tough and complex it is to mine that cryptocurrency. The amount of miners determines the difficulty, which is managed and set automatically by the blockchains. Difficulty has an impact on which miners are efficient and how much hashrate and CPU are rewarded.
  • Block Reward: A way to congratulate a miner who has successfully verified a block. The verification of blockchain transactions generates new currencies, with the miner receiving a percentage of the total as a reward.
  • Computing/Computational Power: How quickly a machine can perform a task.
  • Hash: A mathematical function that unifies data.
  • KW/H: A unit of measurement for the quantity of power utilised in an hour (kilowatt per hour).
  • Mining Software: A piece of software that oversees the operation of the mining hardware. It also shows statistics like your miner’s speed, hashrate, fan speed, and temperature.
  • Mineable Coins: Coins obtained through the mining process. These coins are awarded to the miner who solves a complicated algorithm that validates a transaction and adds a new block to the network.
  • Mining Calculator: A calculator that will help you calculate your potential profit from crypto mining. We would recommend WhatToMine

Mining Equipment Glossary

  • Graphics card: A piece of computer hardware that can be used to mine cryptocurrencies and is designed to render graphics. Graphics cards come in a variety of sizes, shapes, and prices, and not all graphics cards are created equal. A core graphics processing chip, known as a GPU, is found in every graphics card. It is the beating heart of your graphics card.
  • Asics: ASIC stands for Application Specific Integrated Circuit, and it is a machine that is solely used for mining. It is only capable of mining one algorithm and is not capable of mining any other algorithm. ASICs are used to mine bitcoin. 
  • Mining rig: To say the least, the word “mining rig” is fairly broad. It could refer to a single computer dedicated to cryptocurrency mining, or it could refer to a larger setup with a number of graphics cards charged with finding new blocks.
  • Power Supply: A power supply is an electrical device that provides electrical power to a load. A power supply’s principal job is to convert electric current from a source to the proper voltage, current, and frequency for powering a load.
  • Risers: PCIE stands for Personal Component Interconnect Express, and it is a sort of device connection. It’s a video card expansion slot that connects to the motherboard. It enables high-frequency communication between hardware components.
  • Motherboard: In general-purpose computers and other extensible systems, the motherboard is the main printed circuit board.
  • Cpu: Central processing unit (CPU), principal part of any digital computer system, generally composed of the main memory, control unit, and arithmetic-logic unit.

Types of Mining In NZ

What is Solo Mining?

Solo mining, as the name implies, is mining on one’s own. It’s the most expensive option, but you get the most special prize for your efforts. You also miss out on sharing the profits of other miners.

Advantages: The undeniable benefit of solo mining without a pool is that you obtain the entire payout in one hand. If your equipment discovers the block’s required value, you will receive the entire profit; for example, the Bitcoin network’s current value is 6.25 BTC. Solo mining is great if you have a large setup of miners. 

Disadvantages: Finding blocks as a solo miner is like winning the lottery. Nobody knows how long it will take: a week, a month, or years. Solo Mining also requires a huge amount of hashing power, which will come at a huge cost.  

What is Pool Mining?

Pool mining is similar to a collective that contributes to the mining process. You participate with your limited processing power and are compensated based on your hashrate. 

Advantages: Pool Mining demands less hardware and electricity from each individual participant, increasing the likelihood of profitability. This is ideal for a casual miner with multiple rig setup. While an individual miner may have a slim probability of locating a block and earning a mining reward, collaborating with others greatly increases the chances of success.

Disadvantages: As mining pools can be great! They do have their disadvantages. Firstly they are required to divide up any potential rewards, meaning that the share of profit is lower for an individual participating in a pool. Bitcoin mining is dominated by a small number of mining pools, such as AntPool, Poolin, and F2Pool. Although many pools do make an effort to be decentralized some pools don’t. The establishment of a small number of powerful mining pools goes against bitcoin’s and other cryptocurrencies’ intrinsic decentralized structure.

What is Cloud Mining?

Cloud mining refers to the purchase of hashing power from machines that you do not own.  Payouts are usually provided on a daily or monthly basis, with a few terms that you should read before signing up for such a programme. Make sure you understand cloud mining, what it implies for you, and how it compares to buying coins directly rather than signing a cloud mining contract before you do anything.

Advantages: As Cloud Mining might sound very risky, It can be profitable and a great alternative if you don’t have the facilities for these types of machines. 

Disadvantages: One of the most significant disadvantages of cloud mining is that you are relying on someone else to mine cryptocurrencies, which may easily be a scam, so be sure you are using a reputable cloud mining provider. Most scam cloud mining services operate anonymously, making it near impossible to know who owns/manages the platform. China, for example, used to house a large number of cloud miners since the country provided inexpensive electricity. Recently China has cracked down on this and forced them to shut shop or shift elsewhere. 

Pros & Cons of Cryptocurrency Mining

Pros of Mining 

Let’s look into Advantages of Mining cryptocurrencies in 2022

To get started, you don’t need any technical knowledge or experience. Cryptocurrency can be earned in a variety of ways. While an investor can buy from exchanges, he or she can also directly inject hash power and strengthen the network’s security by using trusted, reputable top Bitcoin mining providers. 

There is some leeway. The interesting thing about cryptocurrencies is how volatile they are. If prices rise, a miner may be able to earn extraordinary, once-in-a-lifetime returns, ensuring his financial security. But it doesn’t stop there. Cryptocurrencies are censorship resistant and global by nature, which means they can be used as a store of wealth in times of uncertainty or financial crises. 

Lastly It is impossible to steal a coin if you own its private keys. Private keys are secret codes that allow the owner to spend his or her money. They are essentially digital signatures that verify ownership. There is no practical way to deduce one private key from another, which is unique.

Cons of Mining 

The most frequently mentioned disadvantage is the energy consumption required for cryptocurrency mining, as well as the associated hardware costs.

Bitcoin mining, and mining in general is a financial risk because it is possible to invest hundreds or thousands of dollars in mining equipment only to see no return on that investment. Another disadvantage in terms of power use. The majority of crypto miners run their computers 24 hours a day, seven days a week, consuming tremendous quantities of electricity. 

In mining pools or cloud miners, there is a risk of fraud. Even the greatest mining pools have been found to be misleading in their operations, scamming investors and individuals who mine Bitcoin at home. Miners should only work with trustworthy mining pools and mining services who have been vetted and rated by the blockchain community.

Lastly, due to the volatility and continual fluctuation of the cryptocurrency market, there is a good chance that you will lose money. We’ve all seen how the cryptocurrency market may be inundated with frauds. As a result, exercise extreme caution and always DYOR.

Ethereum Mining In NZ

Ethereum is the most profitable coin to mine right now. This can be accomplished with an ASIC, however graphics cards meant for gaming are very efficient and profitable for Ethereum mining. The advantages of using a graphics card is that it has a high resale value. Graphics cards are far less expensive to run and have a high return on investment (ROI) ranging from 200 to 350 days, depending on your power rates.

Advantages

Let’s dive into the benefits of Mining ETH. Anyone with a computer can technically mine. (A significant amount of computation power is required.) Ethereum’s value has risen at an essentially consistent rate over the last few years. 

Secondly you get to have Ether! First and foremost, the most obvious reason you’re going to receive your own Ether. Furthermore, when you mine a block, you are entitled to transaction fees for all transactions that occur within it.

Disadvantages

There are a few disadvantages that should be covered. Firstly It is costly to set up a mining rig. Even if you receive your money back and possibly make a profit, you’ll have to wait a long time. 

Another important disadvantages is  ETH 2.0 will be implemented in the near future which will phase out Proof of work (mining) completely. The timeframe for this is vague but is roughly about 1 year away. Graphics cards can be noisy and produce heat which may keep you up at night. One card may be okay but if you are going to be mining with multiple, we recommend finding an area away from your bedroom with good airflow.

Bitcoin Mining In NZ

Mining Bitcoin in NZ

What is Bitcoin Mining?

The process of mining involves both administering the blockchain and producing new bitcoins. Bitcoin miners’ task is to evaluate and validate past bitcoin transactions before creating a new block to add the information to the blockchain. The mining method entails employing intrinsic hash functions related to the block that holds the transaction data to solve complex mathematical problems. Various bitcoin miners battle ferociously to solve a difficult mathematical puzzle. 

Is Bitcoin Mining Profitable In New Zealand?

Absolutely! Bitcoin mining is profitable, but it’s a little more complicated than that. Things were easy in the beginning. BTC mining. Today, the expense of running a Bitcoin miner is higher, but the rewards (in terms of BTC) are smaller, with current block payouts of only 6.25 BTC following the 2020 Bitcoin Halving. 

As a result, ASIC mining is not only a worthwhile hobby, but also a profitable one. The tough part is that you have to consider a slew of factors before plunging into the space, the most important of which being the cost of electricity as in New Zealand the price per KW/H is very high, also the price of the machine.

Final Thoughts on Bitcoin Mining  We would not recommend getting an ASIC miner because they are expensive, difficult to obtain owing to high demand, and have significant power costs in New Zealand. Remember as the number of miners in the network grows, the mining difficulty rises, lowering profitability. In light of this, you should carefully examine if purchasing such equipment is a suitable long-term investment.  

Mining Bitcoin Ethereum Cryptocurrency In Minecraft NZ

How to mine Bitcoin and other Crypto in NZ?

To begin mining Bitcoin and cryptocurrency in NZ, start by answering the following question to help set the stage for your crypto mining journey. 

  • What cryptocurrencies will I mine?
  • Where will I store my cryptocurrency mining rig?
  • What computer or devices will I use to mine?
  • How expensive will my electricity costs be? How can I make it cheaper?
  • Would it be better for me if I just buy cryptocurrency instead?

Now Consider:

  • If you’re serious about exploring mining, you’ll want to invest in dedicated crypto mining hardware such as graphics cards, offering increased efficiency and greater profits.
  • You can buy pre-built mining rigs from other Kiwis, or buy the parts individually and set up your own system. 
  • Crypto mining rigs consume a substantial amount of electricity, which will be your primary ongoing expense aside from overhead investments in hardware.

Lets dive into the process of building a rig for GPU mining rig and what an Asic is.

GPU Mining NZ Ethereum

GPU Mining in NZ

Now you have an understanding of what Cryptocurrency mining is. Let’s talk about what kind of hardware is required for GPU mining 

  • PCIE Riser: This allows the use of PCIe X1 slots. Currently these are hard to come by, some options are on Trademe. We highly recommend only using quality risers that use Molex/PCIe power connections; using Sata has been known to cause issues such as fires as the maximum wattage output from Sata connections is less than PCIe/Molex.
  • Motherboard: A motherboard with at least 5 PCIe slots (including 16x and 1x slots) for additional cards in the future. Motherboards with multiple M.2 slots are also useful as these M.2 slots can be converted into additional PCIe risers using the correct M.2 to PCIe powered adapter.
  • CPU: A powerful CPU is not required for mining Ethereum, the cheapest option for your motherboard will do the trick.
  • Ram – 4GB is all you need.
  • Power supply – Platinum rated 1000W + is recommended. Depending on your mining setup you could get away with an 850W unit. But ensure that there is enough individual power connections for each of your GPU’s and the other hardware that requires power such as the risers.
  • Mining Frame: Custom Frame might have a design

Mining Software

Mining software is essentially what makes POW coins work by simply adding the desired program to run your rig. Below we will go over some user-friendly programs that we recommend.

What is Nicehash?

NiceHash Mining ecosystem

NiceHash is a popular cryptocurrency mining platform. They are the largest hash power broker marketplace, connecting hash power suppliers or miners with hash power buyers. It’s highly user-friendly, and it’s a great place to start for beginners. Bitcoin is used for all payouts (btc).

After you’ve signed up with NiceHash, you’ll need to download and install their software before you can begin. As your equipment mines, you may use their app or website to keep track of profits and choose which currencies to mine based on profitability.

Hive OS

HiveOS is an all-in-one mining rig monitoring and management solution. Hive OS has the advantage of allowing you to control all of your rigs from a single dashboard. We recommend using this if you have a specialised mining rig.

Hive OS is compatible with all Nvidia GeForce and AMD Radeon RX series graphics cards. They also have a huge selection of asics

start worker setup image

Tuning your rig

For starters, cooling is an important factor in mining because it has a direct impact on total profitability. Your GPU and other components will survive longer and break down less frequently if you keep them well ventilated and in a NON-humid environment. Overclocking/underclocking your graphics cards correctly is critical to this process. In the following paragraphs, we’ll go through what overclocking is in further detail.

Overclocking & underclocking in a mining context?

Overclocking and underclocking is the process of editing the original factory configured settings of your graphics card(s) in order to improve mining efficiency, hash rates, and reduce power use. Here is a base summary of overclocking settings that RedPandaMining has published. Overclocking settings examples.

What are the downsides to Overclocking?

When you overclock your graphics card, you’re usually voiding your warranty. This is because as you overclock your GPU you are changing the operation parameters that were set at safe levels from the factory. Running the GPU on different settings may result in more wear or damage on the GPU components, ending up in failure or a shortened life. However, if overclocking settings are configured properly for mining, the total power consumption should be significantly reduced and the long term effects of the adjustments shouldn’t be too significant.

Overclocking Programs

Windows 

Msi afterburner mining

Asic Mining in NZ

The underlying ASIC chip, which stands for application-specific integrated circuit, is often intended for a single purpose, such as audio processing or managing a cellular conversation. It’s designed to “mine” a certain cryptocurrency in this case. Bitcoin can be mined with using a ASIC miner, this is done on the SHA-256 Algorithm.

Asic Miner Considerations

Before Investing Thousand of dollars into a Asic, We will list some key factor to be considered.

  • What Tokens can be mined? The number of coins that can be mined with ASICs is significantly fewer than the number of cryptocurrencies that can be mined with a GPU mining setup. Bitcoin, Litecoin, Ethereum, and a few other cryptocurrencies can be mined with ASICs
  • Rig Location  While GPU mining rigs can be set up in one’s house, ASIC miners are substantially louder and produce significantly more heat. This means that a home is not the best place for an ASIC miner, and other options such as a basement or garage should be investigated.
  • Power Consumption Although the latest generation of ASIC machines are more energy efficient than GPU rigs, they still require a lot of electricity. If an ASIC miner is installed in one’s home, the electrical wiring system may need to be upgraded to meet the additional power load.
  • Mining Pool  Mining pools enable miners to combine the power of their ASIC miner rigs to mine bitcoin and share the rewards for successfully minted blocks. When choosing a pool, take into account its reputation, size, and payment policies
  • Return of Investment (ROI) Is the return on investment large enough to warrant the ASIC miner’s upfront cost and continuing running expenses?

Pros & cons of Asic Mining

Pros of Asic Mining

At the moment, all serious miners, including professional installations, mine with various types of ASICs. They are the most energy efficient miners on the market, and they are also the quickest hashing engines. If you consider yourself a serious miner, you should only use ASICs to mine bitcoins.

  • Asics are the faster mining machine as they are designed to mine cryptocurrencies.
  • Asics are very energy efferent per unit of hashing.

Cons of Asic Mining

If you’re still thinking about buying a Bitcoin ASIC miner consider all of these issues below, keep in mind that an ASIC miner cannot be repurposed. This type of hardware is specifically designed for SHA-256 coins, therefore it can’t be used for anything else. You’ll be able to point it to other coins, with Bitcoin Cash being the most profitable after Bitcoin, but that might not be the best option for you.

  • Cost to Entry.
  • Very competitive.
  • Hardware is built for One specific Algorithm EG SHA-256.
  • They must be constantly monitored, To ensure hashing correctly.

Useful Websites & Links

Useful Websites we would recommend while researching. 

NZ Crypto Mining Taxes

Taxes

The New Zealand government classifies profits earned by crypto mining as taxable income.

“In most cases, cryptoassets you get from mining (such as transaction fees and block rewards) are taxable. You may also need to pay income tax on any profit you make if you later sell or exchange your mined cryptoassets”

”For more information on NZ crypto mining tax obligations, you can view the IRD’s mining information page here.

Conclusion 

Mining cryptocurrency is currently incredibly profitable, but like with many wonderful things, this might not be the case in the future. We advocate conducting research before investing your life savings into a flashy new mining setup due to the ever-changing and evolving nature of Cryptocurrencies. I hope I’ve provided you with the necessary information and tools to start your own mining operation! 

Contributors:

Nic Turnbull

Harry Satoshi

Daichi Tang

Table of Contents

Disclaimer: All content in this guide is intended for educational purposes only and should not be interpreted as financial advice. As an individual, you are entirely responsible for how you conduct your investments and manage your cryptocurrency interests. It is exclusively your own responsibility to perform due diligence and Cryptocurrency NZ recommends taking extreme care and caution with crypto and are not responsible for the outcomes, management, or oversight of your activities.