9 June 2020
What comes into your mind when you think about the word mining? Most people think about laborers trying to dig out some precious metal for manufacturing; for others, mining reflects riches. Crypto mining is a combination of both.
This article will look at what cryptocurrency mining is, methods of cryptocurrency mining , and what crypto coins you can mine. Let’s jump in.
Before we explain what crypto mining is, it is important to discuss the process of production of fiat currency and its circulation into the economy.
Fiat currencies are produced, circulated, and controlled by central authorities such as central banks and government authorities.
On the other hand, cryptocurrency is known for its decentralized nature, thanks to blockchain technology. This means that cryptocurrency is not controlled or owned by any central body. You are fully in control of your money.
So, if there is no central body to govern crypto, who creates the new coins? This is where crypto mining comes in.
Cryptocurrency mining is the process by which transactions are verified and added to its blockchain’s digital ledger.
The mining process involves crypto miners competing to solve complex mathematical problems. They do this by using hash functions associated with a block containing transaction data.
The first miner to solve the mathematical problem is rewarded by being able to authorize the transaction. They also receive a small amount of the network’s cryptocurrency.
There are several ways you can go about cryptocurrency mining. We will cover the four main ones here.
This is the easiest way to mine cryptocurrencies without putting in much effort. Cloud mining involves paying a mining corporation a specific sum of money and renting out their mining machine (rig) and the mining process itself.
Throughout the agreed-upon rent period, all the earnings that the rig makes minus the maintenance and electricity fees are sent to your crypto wallet.
The corporations that offer cloud mining services have extensive mining facilities with multiple rigs stacked and operating together. They also have a wealth of knowledge about crypto mining.
Cloud mining has gained massive popularity because it allows those who can’t buy their own rigs to participate in cryptocurrency mining.
To get started with cloud mining, you have to:
The general expectation is that you will break even at the half-year mark. However, with crypto prices being highly volatile, it’s hard to be sure.
This method uses processors to mine crypto coins. Anyone with a desktop computer can mine crypto using this method. However, the returns trickle in slowly, and they are way less than the amount you use to pay for electricity bills and cooling, so this method of crypto mining is not a good option.
This is the most popular way of mining crypto because it is highly efficient and relatively cheap. Although the construction of the mining rigs is expensive, the hash speed and the general workforce of GPU mining is excellent.
GPU rigs use graphic cards to mine crypto coins. A standard rig is comprised of a rig frame, 2 to 8 graphic cards, a processor, cooling, and motherboard. A well-built GPU mining rig with more than average performance costs about $3000. Although that is a hefty sum, the investment is worth it.
ASICs (Application- Specific Integrated Circuits) are special devices designed to perform a specific task such as crypto mining.
When compared to other mining methods such as CPUs and GPUs, ASICs produce insane amounts of cryptocurrencies. However, they are a hot topic for controversy. Why? Because they have such high earnings and hash rates that other miners using GPUs and CPUs cannot keep up. Another reason is that ASICs can twist the economies of cryptocurrencies. Can you imagine the chaos that would ensue if one miner with an ASIC firm got the majority of a crypto’s earnings?
With so many options available, you must be wondering what the best way to mine crypto is. Well, the answer boils down to your budget, the cryptocurrency you want to mine, and the amount of effort you are willing to spend.
If you are operating on a low budget and don’t want to put in a lot of effort, cloud mining is the way to go. If you have a reasonably decent budget and don’t mind the work, you can build your own rig or buy one and use GPU mining. You can also go for ASIC mining, if you are not afraid of the controversy.
Some of the crypto coins you can mine include:
Some of the non-minable cryptocurrencies include:
Many people view crypto mining as a highly profitable investment, and it is. However, it is important to note that crypto mining is not a quick way to riches. It requires investments in expensive equipment with high computational power as well as reliable internet and electricity.
Also, remember to do thorough research before investing in crypto mining so you don’t end up losing your investment.