Sending cryptocurrency mining payouts to exchange deposit address.
Another common question from beginners who are new to mining is “Can I mine directly to an exchange account?” Can I mine Bitcoin, Ethereum and other altcoins directly to my Binance address, Kraken account or Coinbase wallet? Or should I mine to my own wallet and then transfer those coins to exchange?
Its up to you whether you wish to keep the coins in your wallet or transfer them to exchange.
If you are looking to hold for a long period of time then it is recommended that you setup a QT / core or electrum wallet for that particular coin for receiving mining payouts. If you are planning to trade / exchange your mined coins then from time to time you can transfer the desired amount from your wallet to the exchange.
But the question is can you mine directly to exchange account instead of setting up a separate wallet for each coins?
Sure, you can directly mine to your exchange account address. But there are certain things you should be aware of.
The following post will explain when to use wallet, when to send mining payouts to exchange and the points to note before mining directly to an exchange account / wallet address.
Why mine directly to exchange?
There are several reasons for one to send their mining payouts directly to exchange address instead of sending them to their wallet address that they own.
1. To avoid fees – With rising gas prices Ethereum miners started sending their ETH mining profits directly from mining pool to their exchange account.
Instead of moving coins between wallet and exchanges users are now transferring it directly from pool to their exchange account. This way they can avoid paying gas fees.
2. Taking profits periodically – If you are a person who takes profit from time to time then you can send your mining payouts directly to exchange account. By getting your mined coins directly to your trading account you can convert them to other coins or withdraw it as cash immediately.
3. Difficulty downloading separate wallets – Everyday mining difficulty and profit factor changes for every altcoin. Miners tend to switch between coins based on its profitability at that time.
It can get quite annoying to download and setup a separate wallet for each and every alt coin. For this reason instead of creating a separate wallet for each coin type users are mining altcoins directly to an exchange.
Mining directly to an exchange is a good option. But as we said there are few downsides to it.
Take note on the following points before you start mining to exchange.
Mining to exchange account
Whichever exchange it is; Binance, Kraken, Coinbase, Bitfinex, FTX or OKEx. Login to your exchange account, go to wallet / deposit section, find the coin you are willing to mine and then click deposit.
The exchange will provide you with a deposit address. You can use that exchange deposit address on your miner and it works the same way as your wallet address. This will send your mining profits directly from the mining pool to your exchange account.
From there you can either convert those coins or hold it. Its up to you. But this method of sending mined coins directly to some exchange is highly not recommended. Why?
Why you should not mine to exchange address?
Here are 5 reasons why you should not mine directly to your exchange deposit address. Bittrex and few others exchanges specifically mentioned not to mine directly to them for the following reasons.
1. Minimum deposit requirements:
Some exchanges require minimum deposits for certain coins. Before you use the exchange address for mining payout take note on the minimum deposit amount. If your mining payout falls below the minimum requirements then the coins will not be credited to your account.
Solution: Use a mining pool that allows you to set a minimum payout threshold. Or use services like NiceHash which acts like a wallet and that allows you to directly withdraw to an exchange.
2. Exchange deposit requires additional information:
For example this applies to Monero (XMR). Few exchanges require Monero payment ID for deposits. That is you need to use both the address as well as the payment ID to make a successful XMR deposit. The option to enter payment ID is only available on Monero wallets.
So if you are sending your Monero (XMR) mining payouts directly to exchange from mining pool then your coins will be lost.
Solution: Use a personal Monero wallet for receiving mining payouts. Then from wallet send it to your exchange account.
3. Exchange maintenance – Deposit / withdrawal suspension:
Exchanges often go through periodic maintenance to scale up their systems. It can be a regular system maintenance or a major server upgrade.
During temporary system maintenance exchanges will often suspend both deposits and withdrawals. If your mining payout is being sent while the exchange is undergoing system maintenance then those coins will be lost.
4. Deposit addresses can expire:
There are few exchanges which will generate a unique deposit address each time when you make a deposit. It doesn’t mean that the previous address provided to you has been expired. You can still use the same old address. But just make sure the exchange is accepting multiple deposits to the same address. Because some exchanges don’t.
Also there are certain circumstances. For example when the exchange updates its deposit processing system they will provide you with a new deposit address. Your old address might have expired and it could be no longer in use.
Solution: If you are mining directly to exchange then check your deposit address once in a while to ensure you are mining to the correct address.
5. Exchange might get hacked:
This is a rare scenario. The exchange where you are mining to can get hacked and all your coins will be lost forever.
Solution: Only mine coins to exchange what you wish to trade / withdraw. Once you’ve mined the necessary amount for trading point your mining profits to your wallet address where you control your private keys. Don’t keep much coins in your exchange account.
Basically you can mine directly to exchange account deposit address. It works the same as your wallet address and there is no technical factor stopping you from doing this. However this is generally a bad security practice.
It is best if you use your own wallet address for mining purpose. You don’t have to setup a core wallet for each and every coins. There are many popular multi-currency wallets which you can make use of. You can hodl the coins in your wallet. Then whenever you wish to trade / convert it to fiat you can transfer them from wallet to your exchange account.
Mining directly to Coinbase wallet?
This is again similar to the points discussed above. Sure, there are no issues in mining directly to your coinbase wallet address. However it is not recommended.
It’s not that coinbase don’t recommend sending mining payouts to coinbase wallet. But because it is unreliable.
At times due to heavy trading activities coinbase server goes offline and during such time your mining payouts may get lost. Coinbase takes no responsibility on a lost transfer.
You’ll have to contact the coinbase support team several times to recover those coins. It can become a hassle.
Anyways with that said, many users have been mining directly to coinbase and other exchanges for years without any problems. Before mining to exchange just be wary of the above discussed points.