Google searches for ‘cryptocurrency mining NZ‘ are reaching record highs as Bitcoin and Ethereum hit $80,000 NZD and $3,000 NZD per coin, generating a new influx of Kiwis interested in making money in one of the world’s fastest-growing industries.
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.
TLDR: Mining is one of the best ways to accumulate crypto, and it’s easily possible to mine Bitcoin, Ethereum, and other cryptos in NZ. New Zealand is home to an active community of miners with who you can rendezvous to learn more about NZ’s unique mining environment. NiceHash and HiveOS are popular mining software in NZ.
Follow our NZ crypto mining guide and soon you’ll be earning cryptocurrency in your sleep!
What is Cryptocurrency Mining
“Cryptocurrency mining is the solving of cryptographic equations through the use of computing power. Miners automatically process transactions on the cryptocurrency blockchains, acting as the communal powerhouse that keeps the networks running.”
Whenever a transaction takes place on a blockchain, it is first presented as an encrypted puzzle, which needs to be deciphered before it is legitimized as a completed transaction.
This is the job of the cryptocurrency miner; a computer or network of computers who run specialized mining software designed to solve transaction puzzles and legitimize transfers.
To incentivize more computing power to support a blockchain, miners are rewarded in cryptocurrency for leasing their computer’s processing power to help support the network.
This is why each crypto transaction incurs a small transaction fee (network fee); a reward provided to the miners for processing and authenticating transactions on the blockchain.
All around the world, tens of thousands of individuals are running crypto mining software on their laptops, PCs, and dedicated mining machines, all motivated by the profit they receive for contributing computational power to the blockchains. This is called mass collaboration powered by collective self-interest.
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 using your existing computer and running specialized software which will mine and generate cryptocurrency profits around the clock. Alternatively, you can invest in dedicated 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.
In every country, miners face various challenges based on the unique environment they are operating in. New Zealand, for instance, has very high electricity costs so miners should adapt to running efficient machines and target the most profitable coins to maximize profit.
Can You Make Money off Crypto Mining in NZ
Although NZ electricity prices are high, mining is currently very lucrative with many coins reaching their all time high recently. Many top coins are at peak profitability as of writing.
- To maximize profits, Kiwis are incentivized to mine the most profitable coins possible.
- Ethereum is usually preferred by NZ crypto miners over Bitcoin, due to better profitability.
- Some high-end graphics cards are currently making $15 NZD+ a day in profit after power.
- We recommend using whattomine.com to discover the cryptos with highest profitability.
Cryptocurrency mining profitability by coin, courtesy of https://whattomine.com/.
How to Mine Bitcoin and Cryptocurrency 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?
While embarking on your research phase, I’d heavily recommend consulting with other Kiwis who are already mining, such as the fellas in the NZ Crypto Miners Facebook group.
- 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. We’d recommend checking out Daichi’s NZ Miners for more info.
- Crypto mining rigs consume a substantial amount of electricity, which will be your primary ongoing expense aside from overhead investments in hardware.
Mining Bitcoin Vs. Mining Ethereum
ASIC miners are expensive, can be very hard to acquire due to high demand, and with high power costs in NZ, we would not recommend purchasing one.
Note; As more miners are added to the network, the mining difficulty increases, therefore reducing profitability. With this in mind, you should carefully consider if investing in such equipment is a good long term investment in itself. The video below explores this.
Ethereum is currently the most profitable cryptocurrency to mine. This can be done with an ASIC, however graphics cards designed to be used for gaming are very efficient and profitable for mining Ethereum.
The plus side to using a graphics card is also the fact it has great resale value.
Tips for Mining Ethereum in NZ
- Research power costs; power in NZ is about $0.22 ~ a kw/h. Try comparing different power suppliers in your area to find what one provides the best rate.
- Graphics cards are 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.
- You may be looking at the current profitability and thinking about making a big investment. Unfortunately, due to the current global shortage of graphics cards with COVID19 and the cryptocurrency bull run, many stores are either out of stock or have a 1 graphics card per customer policy. The second hand market is currently plagued with scalpers asking for ridiculous prices.
Ethereum Mining Risks
- Ethereum is due to implement ‘EIP 1559’ in July which will cut profits by roughly 25-35%. EIP 1559 is “A transaction pricing mechanism that includes fixed-per-block network fee that is burned and dynamically expands/contracts block sizes to deal with transient congestion.”
- 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 1-3 years away.
How to Mine Ethereum
Because ETH mining only requires a graphics card with more than 4GB Vram, it’s totally viable to earn passive income from the graphics card in your gaming PC while not in use.
However if you are looking to create a mining rig with multiple graphics cards, you will need:
- 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 Molex/PCIe power; using Sata has been known to cause fires.
- Motherboard: A motherboard with at least 6 PCIe slots for additional cards in the future.
- 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.
- Mining Frame: These are currently very hard to come by in NZ however a cheap shoe rack will do the trick.
Cryptocurrency Mining Glossary
Graphics card: An item of computer hardware designed to render graphics, which can be allocated to mine cryptocurrency. Graphics cards range in quality and price, and not all graphics cards are born equal. Each graphics cards contains a central graphics processing chip, called a GPU – the beating heart of your graphics card.
GPU: A graphics processing unit is a computer chip inside a graphics card, responsible for the actual mining process. The quality and mining output of your graphics card is measured by your GPU.
Electricity cost: Electricity costs are the main overhead in mining cryptocurrency, hardware aside. Electricity costs differ depending on your location and are measured by $NZ cents per kW/H. (kilowatt per hour). Example: My NVIDIA GPU 5000 mines Ethereum at 0.26c kW/h.
Hashrate: Known as ‘computer power per second’, hashrate is the speed at which your CPU is able to perform mining actions for the blockchain. Your hashrate will depend on your CPU and graphic card and measures your mining rate per second. 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.
Mining difficulty: The mining difficulty set by each cryptocurrency determines how difficult and complex it is to mine a specific cryptocurrency. Difficulty is regulated and determined automatically by the blockchains, depending on the number of miners. Difficulty impacts what miners are efficient, and how much miners are rewarded for contributing hashrate and CPU.
How to Set up a Cryptocurrency Mining Rig
Firstly, select which equipment you will use to mine crypto. Perhaps you’ll use your gaming PC while it’s not in use, or instead invest in dedicated mining equipment and go all out.
Regardless, building or selecting your rig will very much depend on your unique situation. For guides on building mining rigs or learning about the potential of your gaming PC, Youtube will be your best friend.
Assuming you already have a machine ready to go or an old laptop or gaming PC you’re keen to bring back from the dead, let’s jump into how to actually begin mining in New Zealand!
Setting Up Cryptocurrency Mining Software
The best and easiest mining software from our experience is NiceHash; mining software that automatically taps into your GPU and does all the hard work for you. Really, it is so simple, your only job is to provide computational power.
NiceHash website: https://www.nicehash.com/
Once you’ve signed up with NiceHash, you install their software and click start. From there, as your machine mines, you can use their app or website to track profits and select what coins you want to mine based on highest profitability.
- For a dedicated mining rig we recommend using HiveOS. This is based on Linux and has many great tools which allow you to monitor and manage your miners remotely from your cellphone or laptop.
- Overclocking/Bios modding (AMD cards)/undervolting are essential if you are looking to get the most performance out of your cards. RedPandaMining has great guides on how to do this.
- Profitability constantly changes due to network demand. We recommend checking https://whattomine.com/ and https://etherscan.io/ daily to keep up to date.
- You can discover what GPUs are the most profitable with this tool: https://2cryptocalc.com/most-profitable-gpu
Now that you’ve got your foot in the door and understand the basics, you will start to piece together each element of the mining process and begin to optimize your process and machines for maximum output.
Tax and Mining in New Zealand
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.
Cryptocurrency mining is currently very lucrative but like all good things, it will not always be the case. Due to the ever-changing and evolving nature of the cryptocurrency world, we recommend doing research before you invest your life savings into a flashy new mining rig.
Before sinking in the big bucks, you can easily start mining from your laptop or PC. This will save you some money and potential mistakes, and help you understand why bigger mining machinery is better.
It may take a bit of tinkering to keep your mining rig stable with the most efficient overclock settings. But once you have set this up, you will be earning money in your sleep!
Daichi Tang, NZ crypto miner and research partner for this guide. Cheers mate. 🙂