Profitability Comparison of Proof of Stake (Masternode) and Proof of Work (Mining) Blockchain Systems


Ever heard of cryptocurrency mining and what it entails? Or have you considered the now popular term amongst crypto enthusiasts which is Masternode? As should be understood, mining and Masternodes share similar connectivity with the blockchain and thus both give passive income.

A recent debate in the cryptosphere is gradually building up as to the most profitable venture of these two cryptographic models. Before a mild conclusion is given to these thoughts, let's understand these concepts.

Understanding Cryptocurrency Mining And Investments

Cryptocurrency mining, or crypto mining, is a process in which transactions for various forms of cryptocurrency are verified and added to the blockchain digital ledger. This process is competitive amongst other miners who compete to solve complex mathematical functions in order to verify any particular transaction within a block.

Everything in blockchain thrives based on their cryptographic nature and the first successful (some are considered lucky) miner to crack the code that helps or aids a transaction to get verified gets rewarded with a small amount of the cryptocurrency being verified.

The complexity of Cryptocurrency mining is neither imaginary nor in writing alone, it actually is complicated and expensive to own an efficient mining rig that can better help a miner outcompete other miners aiming to verify a transaction within a particular block.

Mining is done by running extremely powerful computers (known as ASICs) that race against other miners in an attempt to guess a specific number.

As of today, one of the most popular Bitcoin miners Bitmain’s Antminer S9i (14Th) costs around $499 to over $1531.26 depending on the vendor from which you are buying from and from data obtained from https://www.asicminervalue.com/miners/bitmain/antminer-s9i-14th, the expected return from the miner is $2.71 per day, $81.20 per month and $974.34 per year.

It is noteworthy to understand that these miners consume a huge amount of electricity and factoring an annual electricity bill of $1482.62, a standard Antminer S9i would be running at a deficit of $508.28 Before we draw any comparison, let’s consider Masternodes;

A Peek Into The World Of Masternodes

Masternode is a cryptocurrency full node, computer wallet or a decentralized server, providing support to the network by keeping up to date and a real-time copy of a blockchain of the given cryptocurrency and for this service rendered, a small amount of the currency is earned in return.

Masternodes establishes an alternative means of keeping record on transactions occurring within the blockchain through Proof of Stake and does so such that it gives a good level of anonymity to such transactions.

The Masternode model was first operational in the Dash coin but has since seen the emergence of new decentralized altcoins adopting the Masternode model.

To own a Dash Coin Masternode, you would need 1000 Dash coins which is the minimum amount required.

The price of Dash Coin as at the time of this writing is $89.69 which means you would need a total capital of $89690 to invest in Masternode. Alarming as this amount seems, masternodes.pro, a website with a detailed statistical update on the performance of Masternode coins, the Annual return on investment of Dash Coin Masternode is currently fixed at 7.19% which means that an $89690 investment would generate a profit of $6448.711 within 1 year.

This initial investment might be high but there are also other Masternode coins even with higher Return on Investments ROI but Dash Coin is brought under this analysis based on its performance and stability thus far.

A Word On Both Income Generation Models

Running both masternode and mining rigs costs money. It is a fact that the stress might be more in the case of Mining rigs and also in power consumption whose costs vary from one country and/or city to another.

Masternodes, however, offers a more flexible means to investment as the bulk of the work is done by the Masternode service providers after investing.

Final Words

As should be understood, this article aims at comparing the similarities of both proof of work and proof of stake and by no way recommends one investment means over another. There are miners who make a reasonable amount of profit while there also exists miners who may run at a loss.

The Cryptosphere is volatile in itself such that facts and data changes often and every investment should be approached with current and accurate data and information

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