Expensive ETH Desposits to Kraken, or Why Exchange Mining Should Be Avoided
With the recent boom of crypto mining and more specifically Ethereum (ETH) mining there are a lot of new users joining the mining ranks and they start making newbie mistakes that we forgot about long ago. We are taking about the very easy direct mining to an exchange-generated Ethereum wallet address or with other words when the mining pool is directly paying the mined coins to a crypto exchange where you can sell or trade them. There is a big convenience in doing this, but there are also some pitfalls that may cause you to lose money and you may not even be fully aware of that fact.
Most crypto exchanges do not charge deposit fees to their users, but they do usually have a minimum number of coins to be deposited in order for the deposit to be credited to your account. They do however charge a small withdraw fee in order to pay the transaction fee, though some exchanges charge ridiculous withdraw fees that have nothing to do with the actual fees. The general rule is not to mine directly to an exchange and to transfer your crypto coins there only when you need to sell them or trade them, not to store them long term. Now we’ll get to a good example why currently it is not wise to mine Ethereum directly to the crypto exchange Kraken where there is a variable for ETH deposits and you will see in a moment why.
– To see the Kraken’s cryptocurrency deposit fees and minimums explained…
The Kraken crypto exchange has a minimum requirement of 0.05 ETH for a deposit to be credited to your account at all, so if the transaction is for a lower amount you will not see the coins in your account. There is also what they call a “Variable on-chain fee to move into Kraken’s wallet” that is only available for Ethereum deposits. This variable fee you pay apparently depends on the number of transactions on the Ethereum’s blockchain at the moment, when the number goes up, the fee also goes up. With the peaked interest in ETH at the moment as you can expect the fees are also very high, but this means that depositing Ethereum to Kraken at the moment can be pretty expensive to you, especially for smaller amounts or regular daily deposits from mining.
If you have scheduled a daily payout from a Ethereum mining pool with a low minimum of 0.05 ETH directly to your Kraken address, then at the moment you could easily get 0.01 or 0.005 ETH from that transfer deducted, because of the exchanges’ variable fee to move the coins you transfer from your exchange wallet to their consolidated wallet. That “small fee” currently means that you pay $8-$16 USD just to have your ~$80 USD deposited in the exchange, of course the fee will be very similar for both 0.5 ETH and 5 ETH, but for small amounts it is just way too much. So, be extra careful when mining directly to an exchange such as Kraken and make sure if you do you are aware of the specific requirements and fees that the exchange has!
OhNoCrypto
via https://www.ohnocrypto.com
admin, @KhareemSudlow