One of the main reasons cryptocurrency has really taken off and people have started looking at it as a profitable option is because many people have made millions due to cryptocurrency. That has encouraged others too, that if they want to make money, then this is a good option.
If, like many other people, you have gained an interest in cryptocurrency and are seeking an opportunity in this field, then continue reading this article because I will be explaining how you can mine cryptocurrencies. But before I talk about ways to mine cryptocurrencies, I will explain what it is and why so many people are interested in cryptocurrency mining.
What does Cryptocurrency Mining mean?
To start with a basic and very simple definition of cryptocurrency mining, it would mean that a machine performs a task so that you can get a hold of cryptocurrency. Additionally, it can also be seen as the process by which any transaction that occurs amongst users is noted in the public ledger of the blockchain. Mining is also the process that allows further coins to be introduced in the market. This way, cryptocurrency can also go on without the need for any third person having to be involved.
If we were to look at examples of cryptocurrencies that can be mined, then Bitcoin is a really good example to look at as it has been a very successful cryptocurrency to be mined. You should also remember that not every cryptocurrency can be mined, as the likeability of any cryptocurrency being mined is dependent upon the consensus algorithm. It is called Proof of Work.
So like I mentioned earlier, these processes are carried by any machine. This can be of any sort, such as your laptop. In order to get a hold of even a small amount of cryptocurrency, your computer has to carry out certain processes. Those processes done to acquire cryptocurrency are called Proof of Work. It consists of math equations, and the complexity level depends upon the number of miners interested in the mining pool. Let’s move on to how we can mine cryptocurrency.
The whole process consists of much more than what can be seen at a surface level. In this procedure, the miner is just a node that gathers all the transactions that happen in the network, and it then places them into blocks. When you want to mine a block, first, you have to hash every transaction that has been drawn from the memory pool. But before this step takes place, the miner node includes a step, which can be considered as a transaction in which they transmit rewards to themselves. This is called the Coinbase transaction. It basically causes coins to be created without anything.
Once each of these transactions is hashed, they are then assembled in a manner that is called the Merkle Tree. As you continue the process of hashing, in the end, the top of the tree is achieved, at which there is a single hash. This point is called Merkle Root. It goes on and on, and this is quite a complex method to grasp for new miners.
But it all shows that at every point a miner is welcomed into the network, it causes the complexity to increase. As well as raising the difficulty of hashing, and in the same manner, if miners exit from the network, then the difficulty level of hashing decreases. Mining basically requires miners to continue hashing blocks constantly. As soon as a correct hash is found, it is reported back to the network by the founder node. Then it is checked by other nodes to confirm its validity, and if it is valid, then they just add it to their blockchain copy and continue mining blocks.
Even in between miners, there is competition because if two of them report a block at the same time, it results in a race to the next report. A block can also get left behind, which is called an orphan or stale block.
Ways of Mining Cryptocurrencies
Although there are many ways on how you can mine cryptocurrency, I will be discussing the four main ways.
The First one – Cloud Mining
This is considered the easiest method of mining cryptocurrencies. It is also one of the most preferred ones as you do not have to put a lot of effort in. This method includes paying a person, they can be a company, and you basically pay an amount to get access to their mining machines. This machine is called a ‘rig.’ When you rent out their mining machine, all of the profits that it makes are directly sent to your cryptocurrency account. But the cost excludes the expenses of maintenance and electricity.
Companies as such that allow miners to rent out their mining machines have really big mining facilities that consist of farms. A single farm consists of multiple rigs that are placed on top of one another, and they all work together. These farms essentially help the company to have lots of rigs, and therefore they can mine cryptocurrency property.
This is a factor that has helped cloud mining to become really popular because it caters to those people who cannot afford their own rigs. So even those of you who do not have the capacity nor the interred in having your own rigs can still mine cryptocurrency. You just have to reach out to such companies and then rent out their existing rigs. This way, for whatever duration of time you want, you can profit from their rigs and acquire cryptocurrency.
Within cloud mining, you can choose one option out of the two. The first is the free version, and the second is paid. It is expected that most people would be interested in the free version. However, it has lots of factors you should be wary of. Problems such as the slow speed of mining and other unnecessary conditions should be looked out for. On the other hand, if you choose the pain version, then you choose an online cloud mining host. They usually offer lots of plans, ranging from 4 to 5, and these go in the order of low prices to higher prices. At times you might get lucky and come across hosts which allow you to choose what sort of plan you want and make it unique to your needs.
Once you have chosen the plan, all you need to do is pay the due amount to the host. Next, you sign up for your cryptocurrency wallet, and that is all. After this, you can start mining. When choosing the plan, keep in mind that each plan charges differently and is for different lengths of time. The first one, which is the standard plan, costs an amount between $500 to $5000 and is for at least two years to eternity. The break-even is expected in between 6 months to 1 year and then the time for profits starts after that.
The Second One – CPU Mining
As opposed to the previous method of mining which used rigs, this uses processors as a way to mine cryptocurrency. Nowadays, most people do not prefer this method of mining, as much as they used to before. A lot of reasons have caused this change, one of them being that this method of mining is very slow. At times it takes so many months, yet no profit is made. This method is considered a waste of money because rather than really profiting and making a lot of money, you actually have to spend more on the electricity and to cool the processor. But this form of cryptocurrency mining is suitable for those that have desktop computers. This way, anyone who has a computer and the space to download a couple of programs can proceed with CPU mining.
It is best if you use a computer and not a laptop, because of the amount of energy that is used up, a laptop would overheat and burn. But for newcomers interested in starting out meaning, they might have a computer but not the funds to afford a host mining plan. Therefore this form of cryptocurrency mining is preferred amongst really enthusiastic and new people in this field.
The Third One – GPU Mining
Amongst all methods of mining, this is by far the most popular one and is a favorite amongst miners. Even on the internet, GPU rigs have risen as the most commonly searched and accessed mining form. Even cloud miners use GPU rigs to mine cryptocurrency. Their services are commonly preferred because although the quality of it is amazing, they still offer reasonable prices. For GPU mining, only the process of building the actual rig costs a lot, but the rest of the process, such as the hash speed, is all manageable.
In GPU mining, graphic cards are used for cryptocurrency mining. The GPU rig uses these cards specifically so that it can mine the cryptocurrency. One rig is composed of a couple of integral things, which are a rig frame, a processor, cooling, a motherboard, and graphic cards. For one rig, at least 2 to 8 graphic cards can be used. In order to build one GPU mining rig, it is important to remember that if you want a high-quality rig that has outstanding performance, too, then it will cost you around $3000 or so. This is a really big amount, but you should consider it as an investment because it is very worthy as compared to CPU mining.
If you are one of those people who have recently started looking at ways to mine cryptocurrency and do not want to waste time nor money, then this is a really good option. Unlike CPU mining which requires a lot of money to maintain the process but does not provide profits as quickly, this is a different and much more effective method. Like I mentioned earlier, even cloud mining utilizes GPU rigs which are really effective and give you your money and time’s worth. Through this cryptocurrency mining method, you can speed up the process, which essentially means that revenues would be generated quickly too.
The Fourth One – ASIC Mining
First of all, ASICs, which stands for Application-Specific Integrated Circuits, are unique devices. In the cryptocurrency world, they are carefully designed so that they can carry out an individual job with the utmost care. In recent times, ASIC has gotten a lot of attention in this field because it produces lots of cryptocurrencies. So much so that even GPU and CPU are not comparable to ASIC. There is one downside to it, which has also been a leading reason why ASIC, at times, is not chosen to be the best cryptocurrency mining option. It is also why this did not come at the top of the list, even though it helps generate revenues largely.
There is only one reason, but it is quite a concerning one, as to why ASIC is considered as a conflicting choice of mining cryptocurrencies. They basically steal from other miners, specifically those who use GPU or CPU rigs. This use of machinery upset a lot of people in the mining industry as it goes against the legality of these users. But ASIC is a very influential company and therefore has not been stopped till now. They use this method so that they are at the top for hash seeds and get a lot of revenue. ASIC has also played a role in manipulating the cryptocurrency economy. But so far, they have not been able to reach out to the whole economy. Rather ASIC is just limited to a couple of cryptocurrency economies. This has posed a threat and a huge problem because a huge quantity of earning is going to one company. This makes it very unfair.
Which is the best option for mining cryptocurrency?
Out of the four options that I have provided you with, it is up to you to choose which suits you the best. But when you are making the decision, it is important that you consider some things before you decide. The first one is regarding the budget. Would you want to invest when you start mining? Will you be able to invest an amount? If yes, then what would be your range? Secondly, you have to think about the rig. Are you interested in owning a rig? Or is that too much, and you would much rather just rent one through a company? And if the rig is not right for you, then you can always choose to go for a desktop computer.
Once you have thought about these key questions, then you can decide which one to pursue. But overall, people have loved cloud mining and GPU as they have proven to be the most resourceful and valuable options. Both of them do not have issues like the ones present with CPU mining which is mainly to do with the speed, and unlike ASIC, they are not controversial. There is also no guarantee as to what ASIC’s future might be. If they continue to pursue this conflicting nature of stealing, then people might not let it go on.
So if you are interested in having your own rig, then GPU mining is meant for you as it gives you the option to build your own rig. But if you are not interested in owning your own individual rig, and you do not want to wait, then CPU mining is a great option. It lets you start straight away and is completely free. On the other hand, if you want to take a risk and get heaps of earnings in a very short time, then ASIC is clearly the option to choose. Lastly, if you want to take a completely different path that is not involved in rigs or machines, then I would suggest choosing cloud mining.
Choose your Cryptocurrency
This is a part that you cannot skip because if you want to choose a mining method, it is also dependent upon which cryptocurrency you intend to mine. A few of the cryptocurrency favorites, as we are all aware, are Bitcoin, Dash, and Ethereum. But it is important to remember that though Bitcoin is one of the most successful and profitable ones, it is the most difficult cryptocurrency to mine. The main reason for this is that because a lot of people are after this cryptocurrency, it has become a really popular coin. Therefore the competition has doubled, and people are so desperate that they just want to acquire even the tiniest amount of Bitcoin. The wait has increased. This means that to get even a little bit of Bitcoin, you would have to wait for a long time.
This is why Ethereum or cryptocurrencies which are not extremely popular are recommended. This way, you would not have to wait really long, and you can still mine and earn. Once you have decided on the cryptocurrency, you can choose the mining method too.
As the fame of cryptocurrencies has risen very rapidly over recent times, people’s interest in crypto mining has also skyrocketed. This article has shown that there are many ways that you can choose to mine cryptocurrency. You have also been provided with enough details regarding different cryptocurrency mining methods. You can choose the one you think is a good one for you.