No problem.
Most home miners use one of 2 most natural strategies: they either cash crypto ASAP (selling at market price) or they accumulate it until the price goes up (selling at last price in a "mining period").
Hedging means choosing the third option: selling at the first price - the one true when you start mining. So the essential mechanism is simple:
you sell first and produce afterwards.
Mining companies (I mean physical commodities: coal and stuff) are contracted - they sign an agreement with a buyer that - at some particular moment in the future - they'll ship their product for some agreed price (hence the instrument name:
futures). But since we're talking about small volumes here, you don't have to find a contractor (someone who will really buy your crypto). You can buy a futures contract (a financial instrument) on a crypto exchange and just sell it later.
I will use BitMEX in this example (which doesn't mean I recommend this site - it was the first google result for "ethereum futures").
Here's their contract for ETH/BTC:
https://www.bitmex.com/app/contract/ETHU17
Once you get this, you're not affected by ETH variability any more - just that of BTC (because you know how much BTC you'll get for your ETH).
Example:
Lets say it's 2017-06-19 and ETH is worth 0.14 BTC - you like the price, so you buy the contract above for some
Y ETH.
Lets assume that today is exactly the moment when you accumulated
Y ETH. You sell both the contract and the ETH (for BTC!).
What is the total outcome? You get as much BTC as if the ETH price was 0.14 during these ~10 weeks (while in reality it was different).
The lucky part of this is that BTC went significantly up lately. So how much did you make in USD?
Exactly as much as if you were just mining ETH and cashing as soon as possible - like most do - ... if the price was constant ~$582 (0.14*4160).
In reality you'd usually hedge (secure yourself with contracts) in the currency you're earning/spending the most. So if you'd get an ETH/USD contract in the above scenario, you'd be mining at constant $360 (the price from 2017-06-19) - still not bad.
Does this sound complicated? I guess it might, but it's pretty simple to perform. If you don't feel very well with these kind of activity, you could ask someone for help. I guess in 2017 everyone has a friend working in finance.
Where's the catch?
Of course financial instruments are not free (someone is taking your risk after all). What I've described above would cost something like 3% of the revenue, so even over 10% of profits (if your GPUs aren't effective and electricity is expensive).
Unnecessary sarcasm. And spending money on something
is not investing if you don't do it for profit.
You see, here's where our approaches differ. I do believe there is more to life than just answering questions precisely. Sometimes you can share a bit of additional information/wisdom as well.
If someone asked on this forum about the most effective way to commit a suicide, would you call an answer "cyanide poisoning" more helpful than "don't do it"?
Also, I don't think you're as straightforward in answering questions as you might think.
If someone asked "which $10 cooler would be best for my overclocked 7700K?" you would tell him that this is no good and he should get a better one, wouldn't you?
According to more experienced miners here, it's not as easy as you say. Rigs need maintenance (at least resetting when they crash and cleaning). Someone has even called it a "full-time job" (although I do believe he had a bit more gear than you do).
And I've said before that I'm not talking about a situation when someone is doing this for fun. But some people in this topic were clearly after the profit and they weren't warned that at least some of those recommending mining see it as a great hobby.
At least one guy here said he is betting on mining
to pay his mortgage/taxes!
BTW: I have to point how your (and other mining fans' here) opinion on mining evolved in this thread:
1) Great profitability (June): basically free money; no risk; one should cash out instantly; ROI in 2 months!
2) Decreasing profitability (July, early August): surely will go up; don't cash out - hold BTC because it'll be worth 10x more.
3) Awful situation we have today: it's a great hobby.
Correct, isn't it?
