Crypto Mining: Ultimate Guide to Mining Crypto

Crypto Mining: The Ultimate Guide

Crypto Mining: The Ultimate Guide

Cryptocurrency and decentralized finance (DeFi) has a bundle of opportunities for anyone to earn passive income with minimal effort and a bit of research. One of these opportunities is Crypto Mining. Although a bit more complicated than the other opportunities, cryptocurrency mining has one of the largest, if not the largest, earning potential. In this article, we will delve deeper into what cryptocurrency mining is and some things to consider before starting your mining journey.
Crypto Mining

Crypto Mining In More Detail

In order to understand what cryptocurrency mining is, it is important to understand what a blockchain consensus protocol is. Every blockchain needs a way to verify and process transactions in its distributed network. It also needs a way to define the rules of how the computers on the blockchain, referred to as peers, interact with one another in the blockchain network. All of this is achieved by the blockchain’s consensus protocol, which is the set of rules that defines how peers interact with each other, how transactions are processed and verified, as well as how miners on the network are rewarded.

How Crypto Mining Works

Now that we know what a blockchain’s consensus protocol is, let’s take a look at one of the most popular consensus protocols: Proof of Work. This is the first consensus protocol ever used in a blockchain network and was debuted in 2009 with the launch of Bitcoin. Proof of Work involves the peers on the network competing with each other to see who can solve the network’s complex mathematical puzzle first, every 10 minutes. The first step in this puzzle involves a miner taking all of the past, processed transactions on the blockchain and combining them with the unprocessed transactions on the network. The miner then takes these transactions, and a random number called a nonce and pushes the two data pieces through an encryption function to get an output. This output is then compared to the desired output that nobody knows except the blockchain itself. If the output that the miner gets is less than or equal to the network’s desired output, then the miner wins the round and is rewarded. If not, then the miner repeats the process, this time using a different random number for the nonce.

Is Crypto Mining Legal?

Cryptocurrency mining is 100% legal! However, depending on your jurisdiction you might have to declare any profits that you make after cashing out the cryptocurrency to your local revenue service. Other than that, cryptocurrency mining is completely legal.

Different Types of Mining Equipment

There are different types of devices that can be used for cryptocurrency mining. The device and number of devices that you choose will depend on your start-up budget and what cryptocurrency you would like to mine. Each cryptocurrency that can be mined comes with a different degree of difficulty. The reason for this is because of the number of computers that there are mining each specific cryptocurrency. If there are a lot of computers mining the cryptocurrency, as is the case with Bitcoin, then the difficulty is really high to make it more competitive. This is the reason why the difficulty plays a big role in determining what equipment can be used to mine the cryptocurrency of your choice.

Currently, you can mine cryptocurrency with your PC’s CPU and or GPU. There are also Application Specific Integrated Circuits, known as ASICs. These are machines that are built solely for mining cryptocurrencies and are a lot more powerful than a GPU or CPU. Some cryptocurrencies can be mined using your CPU and GPU. However, mining large cryptocurrencies like Bitcoin is only really profitable if you use ASIC miners due to the difficulty of mining these coins.

The Profitability of Crypto Mining

There are a few factors to consider when looking at the profitability of cryptocurrency mining. The largest factors are the cost of the mining equipment and the cost of electricity for the country that you mine in. With the popularity of cryptocurrency mining, the cost of ASICs and GPUs is hyperinflated which could increase the time before you break even through your mining operation. The next biggest factor that has an impact on the profitability of cryptocurrency mining is the mining difficulty of the coin that you are thinking of mining. As we mentioned in the previous paragraph, the mining difficulty of the coin that you are thinking of mining will influence which equipment you can use to mine it. This has a direct impact on your profits because ASIC miners are more expensive than GPU miners and GPU miners are more expensive than CPU miners.

These three factors make calculating the profitability of cryptocurrency mining fairly complex. Fortunately, there are a lot of online profit calculators that can give you an idea of what profits or losses to expect for a mining setup. A good example is NiceHash’s calculator. Simply enter the cost of electricity in your country, the equipment you’re planning on using, and the number of devices that you are going to use. Once done, click calculate and you will get a forecast of what the profits will be after electricity is deducted.

One way to increase your profits significantly is to join a mining pool. A mining pool groups the mining power of its users in a collective effort to mine more cryptocurrency. This is a more effective way to earn profits in cryptocurrency mining than if you were to mine alone with just your computing power. This is because the computing power in the pool is significantly larger than an individual miner. This increases the chances of winning the race to solve the network’s computational puzzle.

How to Start Mining Crypto?

Before you start, it is important to be aware of the amount of effort that cryptocurrency mining takes. This effort is largely just making sure that the miners are running, because if the miners are not running you aren’t making a profit. If you’re not making a profit, then your time to break even will be longer. If you are a tech junkie that likes to play with computer hardware, then it won’t be a problem for you. Worst case scenario is that you just have to spend more time maintaining the equipment. If you are not into the hardware and tech side of things, or you don’t have the time to sit and watch your machines, then cloud mining is a viable option for you.

Cloud mining is a cloud-based service that allows you to buy a portion of mining power in large rigs that are owned by a company. This company then maintains the mining hardware and pays you according to the percentage of the company’s hardware that you own. This is a less profitable way to mine cryptocurrencies and will lead to a longer break-even period because the company takes a fee for maintaining the hardware. This approach does however take the burden of maintaining the hardware by yourself away. The best option for you really depends on you.

Once you have decided if you want to maintain the mining equipment by yourself or make use of a cloud-based provider, the next step is to choose which cryptocurrency you want to mine. Once you have chosen the cryptocurrency, or cryptocurrencies, that you would like to mine then you’ll need to research the cost of the hardware needed and the profitability of mining with the hardware. Refer to earlier in this article to see how to calculate the profitability of mining equipment.

After you have completed all of the above steps, you will now need to purchase your mining equipment. If you are going to mine with a GPU and already have the GPU, then you can skip this step. An unfortunate reality is that there are a lot of scammers when it comes to cryptocurrency, especially in the cryptocurrency mining space. So, it is important that you do your own research into trusted vendors before purchasing any equipment from anyone. The best way to do this research is to join groups on social media platforms such as Facebook, where you can ask members of the groups where to purchase equipment from. You’ll also get great tips on what cryptocurrencies to mine and what equipment is the best.

The Best Crypto Mining Platforms

Apart from cryptocurrency mining pools, there are a few other platforms that you can utilize to mine cryptocurrency. Let’s take a look at some of the top platforms that make it easier for you to mine cryptocurrency.


SLUSHPOOL Mining Pool

SLUSHPOOL is a veteran in the cryptocurrency mining pool space. With a 2% pool fee and 0% pool fee for some supported ASIC miners, SLUSHPOOL currently mines approximately 3.5% of all Bitcoins. This is a great pool for a beginner to start with as it comes with added 2-factor authentication for extra security on user accounts and a mobile app for easy monitoring of your cryptocurrency miners’ performance.


CryptoTab Browser

This is a unique platform that allows you to mine cryptocurrency while browsing the internet. Furthermore, CryptoTab Browser offers automatic algorithm switching. This basically means that profits are maximized by switching between mining different cryptocurrencies. The platform also promises that there will be no battery drain or overheating while mining with its custom web browser.


Cruxpool

Another mining pool, Cruxpool, gives users the ability to mine ETH, ETC, BEAM, and Ravencoin. Cruxpool charges a 1% pool fee.

The Best Crypto Mining Rigs

As mentioned, you can mine cryptocurrency with a CPU, GPU, and ASIC miner. There aren’t a lot of cryptocurrencies that will result in profits if mined with a CPU. The most popular ways to mine are GPUs and ASIC miners. Ethereum mining with GPUs is the best way to mine as there are no ASICs available to mine Ethereum. Some of the latest GPUs in the market are really expensive, so it’s important that you do some research on which GPU would be best. You can get about 3 to 3.5 years out of a GPU before newer generations make it obsolete. However, a little bit of research will help you find a GPU that is reasonably priced and still has the potential to generate profits for a few more months before the introduction of newer generations. Currently, a 1080 Ti GPU is a good GPU to use because it is reasonably priced due to its age and can still perform.

Another great piece of equipment to mine with is an ASIC miner, which is built specifically to mine cryptocurrency. If you can afford to purchase one, an ASIC miner is the most ideal cryptocurrency mining rig to mine with due to its power.

The Best Cryptos for Mining

There are a lot of cryptocurrencies that can be mined. However, the most popular are Bitcoin and Ethereum. Bitcoin can only really be mined with ASIC miners because of the current mining difficulty. ASIC miners can also be used to mine Litecoin. The great thing about mining Litecoin with an ASIC is that not many people are mining this coin with ASICs and the project is a sleeping giant.

As mentioned, Ethereum is also popular in the cryptocurrency mining community because it is GPU-friendly. Also, Ethereum has an algorithm that makes it impossible to mine with ASIC miners. This makes Ethereum mining more accessible and cheaper to mine when compared to Bitcoin.

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