Today’s world is full of all types of new and varying technologies. Whether it’s smart vehicles, devices, smart home gadgets, or robots, we regularly experience the capabilities of modern technologies. A new-ish technology that has emerged is cryptocurrency. Cryptocurrencies like Bitcoin, Ethereum, and LiteCoin have also lead to cryptocurrency mining.
Cryptocurrency is changing the world we live in at a rapid pace. Chances are if you have access to the internet, then you’ve heard of Bitcoin. These digital currencies are growing at a fast pace, and the number of people who sell and buy them is increasing as well. As more and more people seek to learn about cryptocurrency, it’s important to educate yourself on what it is and how you mine it.
Table of Contents
What is Cryptocurrency?
Simply put, cryptocurrency is a form of digital money. It is specifically designed to complete online transfers or purchases. They give users the ability to make payments without the need for a government backing, banks, or any other third-party involvement. Payments made with cryptocurrency are typically safe and secure.
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What is Crypto-Mining Exactly?
Alright, so you have an idea about what cryptocurrency is, but how is it mined? Mining is essentially the method by which cryptocurrencies come into existence. People refer to it as mining because it is similar to the way we mine for gold or other valuable metals.
Some amount of cryptocurrency exists in the protocol layer, which is similar to the metals that reside underground. The goal of a miner is to extract the currency and bring it to the surface. Miners do this when they create a block of transactions and place them into a blockchain network. As a result, a new cryptocurrency is awarded to the miner.
That means that mining for cryptocurrency has two essential functions:
- New transactions are added to blockchain networks
- New cryptocurrency is released
How Does it Work?
Let's dive into an overview of how all this works.
Cloud mining offers a method to mine a specific cryptocurrency, like Bitcoin, without the need to have a lot of hardware and related peripherals often associated with mining. Companies that offer cloud mining give users the opportunity to open up an account and join in the mining process for a basic fee.
One of the perks of cloud mining is that it makes mining available to a wider variety of people who can join from anywhere around the world. Joining a mining cloud gives you access to a mining pool and requires you to purchase “hash power.”
If you’re part of the mining cloud, you have a share of any profits realized, and since the mining is done in the cloud, you don’t have to worry about energy or equipment costs.
Building Your Own Crypto Rig
Building your own crypto rig isn’t as simple as some people think, however, there are some steps you can take to make things a little easier on yourself. Perhaps the most straightforward method is to sign up for an account and download the software at nicehash.com.
The Nicehash software removes a lot of the technical complexity and takes care of it for you. It even uses an algorithm that tells the program when to switch if a more profitable method presents itself. You do have to pay a fee in return for the convenience of the software, but if you’re not interested in spending thousands of dollars in hardware, this is an excellent place to start.Next, you’ll set up a wallet on the same site, which will accrue money as you mine. Once you have earned at least $20, you can transfer the funds to your bank account if you want to.
The demand for mining hardware is high, so you want to make sure you don’t get taken advantage of when you begin looking. Find a company that has a good selection of graphics cards, and reach out to determine which one is the best value to mine cryptocurrency.
Your best bet is to reach out to a big box retailer to ensure that you are not getting ripped off, or at least use them as a starting point to validate prices against online prices. You’ll want to find a powerful GPU that is capable of handling a lot of intense processing.
The amount of RAM and the size of your hard drive do not have as much of a bearing on your ability to mine as you might think — 8Gb of RAM is plenty of power. If you decide you want to have multiple GPUs, then you might consider upgrading your RAM, but if you are content with one, then you shouldn’t have any problems.
Once you have all your hardware up and ready to go, find a community for the coin you’re interested in mining. If you want a good reference site for starting, visit simplemining.net, otherwise, try to find a site that aligns with the coin you want to mine and have at it!
Cost & Profitability
Is mining cryptocurrency profitable? Let's take a look at one way to make an educated determination.
If you need a good place to determine how much mining is going to cost you versus what your profit payout will be, take a look at this mining calculator. You can enter information like hashing power and power consumption, and the calculator will tell you your profit ratio and your profit per day/week/month/year. You can also choose between currencies via a colored tab lining the top of the calculator.
Types of Coin to Mine
There is no shortage of cryptocurrency to mine in today’s environment. Still, you want to make sure you do your research and determine which coin works best for you and your setup.
Here are the details on the hardware and software needed for mining Bitcoin.
Initially, mining Bitcoin with your CPU was the only way a user could mine. However as network became more secure and Bitcoin became more challenging to earn miners found new and innovative methods for mining. Unfortunately, you could mine with your CPU for years and never make a coin.
Around 18 months into the Bitcoin network, someone discovered that the GPU was much more efficient at mining. As a result, the CPU gave way to the GPU. That meant a substantial increase in mining power while using far less power per unit.
Next in the evolution of Bitcoin mining came FPGA, or Field Programmable Gate Array. That was the first among many pieces of hardware designed specifically for mining Bitcoin. While users didn’t see the same increase experienced moving from CPU to GPU, they did realize a benefit through power efficiency.
Now, serious Bitcoin miners make use of the ASIC as mentioned above (Application Specific Integrated Circuit) chip. These chips are made to do one thing and only one thing: mine Bitcoin. The benefit of an ASIC dramatically outweighs the fact that it just does one job. An ASIC chip increases hashing power by 100x while reducing overall power consumption.
You can mine Bitcoin in two ways: through a Bitcoin mining pool or with a Bitcoin cloud contract. If you decide to join a pool, be sure you have a cryptocurrency wallet so you’ll have a place to keep your Bitcoin. Set your miners to connect to your mining pool and you’re ready to go. Now every block your pool generates is divvied up among all the members of the pool accordingly.
Here are the details on the hardware and software needed for mining Ethereum.
With Ethereum mining, there are two basic types of hardware: CPUs and GPUs. Using a GPU means you’re going to get a higher hashrate, which means you’ll have the ability to complete puzzles at a quicker rate. Setting up multiple GPUs allows for greater performance, but can take a little longer to build. Unfortunately, at this time, ASIC chips are not available for Ethereum.
Once your hardware is ready to go, you’ll want to install mining software. If you are familiar with command line syntax, you can install Geth to begin mining through an Ethereum node. Otherwise, you can download it and follow the instructions for your operating system.
When you have the software installed, your node will be able to speak with other nodes, creating a connection to the Ethereum network. Not only does this allow you mine Ether, but you can also create and send your smart contracts and transactions via the command line.
Here are the details on the hardware and software needed for mining Litecoin.
Similar to Bitcoin, you used to be able to do the majority of your mining with your CPU or GPU, however now it is much more profitable to use ASIC miners. If your goal is to gain exposure to mining, your CPU and GPU will work fine; however, if you want to lower costs and get serious about mining, you’ll want to go with an ASIC chip.
If you decide to go the route of an ASIC miner, these typically come installed with mining software on them. If not, look for a Litecoin mining pool like Antpool or BitMain to get started. Make sure you have your wallet available so that when you receive your piece of the award for completing a block, it gets deposited in the right place.
Here are the details on the hardware and software needed for mining Dash.
Just like with Bitcoin and Litecoin, Dash mining is most profitable if you’re making use of an ASIC chip. There are Dash specific ASIC miners, so keep an eye out as they are very difficult to obtain. Bear in mind that you may also need to buy a Power Supply Unit since your miner doesn't include one.
Solo mining with Dash isn’t profitable, so you’ll want to join a mining pool to get started. Be sure to look for a reputable pool, so you’re not getting scammed. Find an existing Dash P2Pool to get favorable mining times and fees.
Be sure that you have your wallet setup to receive Dash currency. There are both desktop and mobile wallets available, but if you decide to hold large amounts of coins, you may want to look for a hardware wallet like Trezor or Nano S.
Here's a quick review of some of the software you'll need for mining cryptocurrency.
As we discussed in the previous section, you want to make sure you have a secure cryptocurrency wallet to send, receive, and store your digital currency. Depending on which coin you decide to mine, there may already be a recommended wallet available.
Your wallet does not store the cryptocurrency itself, but rather a private key that shows you own a public key which connects you to a specific amount of currency. Additionally, your wallet behaves like a personal ledger which records all your digital transactions.
Typically you want to use the endorsed wallet for the coin you’re mining. For instance, Bitcoin has Bitcoin Core Wallet, Ethereum has MyEtherWallet, and Litecoin has Litecoin Core. You can also use a custodial wallet like Coinbase which lets you keep all your funds on their exchange, which doubles as a wallet.
Here are some of the more common programs you'll use when mining cryptocurrencies.
Bitcoin Core is explicitly designed to correctly determine and identify the validity of blocks on the blockchain. This program also offers a secure wallet you can use to send, receive, and store any Bitcoin you own.
Electrum is a wallet viewed as a lightweight Bitcoin client. It interfaces with the Bitcoin network without requiring users to download the blockchain. Electrum’s source code is open source, so many alternatives have popped up for other coins, including Litecoin and Dash.
Jaxx is another lightweight Bitcoin wallet that uses Bitcoin’s network without forcing users to download the entire blockchain. It provides storage for a variety of coins including Bitcoin, Dash, Ethereum, Litecoin, and many others. The benefit of Jaxx is that it simplifies coin ownership for users and allows easy platform access.
Exodus is well-known as a multi-cryptocurrency, user-friendly wallet. This wallet supports a myriad of digital currencies, including Bitcoin, Ethereum, Litecoin, Dash, and many, many others. If you’re interested in mining an altcoin, there’s a good chance you can use Exodus wallet.
Mining Programs Used for Different Operating Systems
There is no shortage of programs available when it comes to mining for cryptocurrency; however, different operating systems offer different options. Some programs are available on multiple operating systems but may have different features.
Here is a rundown of some of the more popular cryptocurrency mining programs available on Windows, Mac, and Linux operating systems.
- Miner Gate
- Mine Peon
- BFG Miner
- CG Miner
- 50 Miner
- CPU Miner
- Ufasoft Miner
MinerGate is an easy to install mining program that mines the currency that currently provides the best profit. It uses your personal computer and can mine multiple cryptocurrencies at the same time using your CPU and GPU. MinerGate is a reliable option for mining and offers excellent support if needed.
MinePeon is an open source cryptocurrency mining platform. Explicitly for use with FPGA or ASIC, MinePeon reside on an ArchLinux framework. You can run MinePeon using a Raspberry Pi 1 or 2 and is considered a reliable alternative to mining digital currency on your PC.
EasyMiner is a miner which provides a GUI for Android, Linux, or Windows. It is currently optimized for ARM, x86, and x86-64 architectures, and works best to mine for Bitcoin and Litecoin. This mining software configures your Bitcoin miners based on need and offers graphs so you can quickly view the performance of your cryptocurrency mining activity.
BFGMiner is a miner that works with your CPU, GPU, FPGA, or an ASIC chip. This program is written in C, which makes it a cross-platform solution that can be used with Linux, Mac, and Windows operating systems.
Some unique benefits of the BFGMiner software include support for routers that are compatible with OpenWrt, mining with LLVM OpenCL, integrated fan control and overclocking, and ADL device reordering.
CGMiner is perhaps one of the most commonly and widely used miners among those mining for Bitcoin. It is based on the code of CPUMiner and offers many features like remote interface abilities, fan speed control, multi-GPU support, self-detection of new blocks, and CPU mining.
50Miner is one of the easiest mining software to set up. It offers self-detection of new blocks and supports both Litecoin and Bitcoin. 50Miner provides an easy-to-use GUI and works so that all you have to do is log in. This program also provides some handy built-in widgets and keeps all settings in a configuration file.
BitMoose is an open source, free Bitcoin mining program. It gives its users the ability to run under a windows service that is operating in the background. If you’re comfortable with it, you can configure your miners in the settings, or you can modify them via an XML file. BitMoose includes a console host and an easy to use GUI.
Poclbm is a Python miner who makes use of your GPU. It uses the OpenCL framework to perform its hashing very quickly and works with Nvidia and AMD video cards.
Poclbm-mod is a more efficient version of Poclbm. It uses Python and OpenCL platforms while using Getwork for mining purposes. One interesting thing about Poclbm-mod is that it includes both a CLI build and a GUI, which means you can use the version you prefer.
CPUMiner is a simple to use software that utilizes your CPU for mining. That is a great option for beginners looking for an easy way to learn more about mining in general. You can use it to mine Bitcoin, but don’t expect a whole lot otherwise. In addition to Bitcoin, you can use CPUMiner to mine Litecoin.
The Ufasoft Miner performs pooled mining and can use either your CPU or GPU to mine. Ufasoft Miner was originally only a CPU miner but implemented GPU capabilities in 2011. It offers users two GPU options: AMD CAL API and OpenCL.
- NiceHash Miner
- Diablo Miner
- RPC Miner
- BFG Miner
NiceHash Miner is very easy to use and uses your CPU and GPU to mine for the cryptocurrency. It offers an intuitive GUI and gives users the ability to turn on their computer and start mining quickly. NiceHash mines for the most profitable currencies and provides excellent support if needed.
DiabloMiner is a GPU miner that allows users to perform hashing computations quickly and efficiently. It uses the command line and works with ATI Stream and Nvidia drivers, which will enable users to establish a terminal for program usage. DiabloMiner supports a large number of pools, and can quickly switch in the event of a failed connection.
RPC Miner is a mining software with a simple GUI that uses peer-to-peer technology. That allows it to operate without the need for a centralized authority. It is a decentralized digital currency gives its users the ability to make payments to anyone in the world no matter where they are located.
BFGMiner is the first MacOS native app available for mining Litecoins, Bitcoins, and Altcoins. It’s the most powerful, yet the most straightforward route to mining cryptocurrencies for Mac. You can also find support for dogecoin, vertcoin, darkcoin, and many others included.
If you want a simple experience or the full command line experience, this app is essential for anyone wanting to mine or monitor mining on their Mac.
- CG Miner
- BFG Miner
- Easy Miner
CGMiner might be the most popular miner currently in use among those mining for Bitcoin. It resides on top of the original code from CPU Miner and offers many features. Some of its more prominent capabilities include multi-GPU support, CPU mining support, self-detection of new blocks, fan speed control, and remote interface abilities.
BFGMiner is very similar to CGMiner in that it offers many of the same features. However, BFGMiner focuses on ASIC chips instead of GPUs. Additionally, BFGMiner offers fan control and overclocking, along with LLVM OpenCL mining capabilities.
EasyMiner offers an easy to use GUI which wraps around a combination of the BFGMiner and CGMiner software. This software provides support both the stratum mining and Getwork mining protocols. EasyMiner supports both pooled and solo mining efforts.
This mining software provides graphs so you can see the performance of your mining activity, as well as configuring your miner automatically. Additionally, EasyMiner includes GPU and CPU mining support, fan speed control, self-detection of new blocks, and remote interface capabilities.
Cloud Mining Programs
- Genisis Mining
The HashFlare cloud mining service came into being by experts from the cryptographic hardware company, HashCoins. Founded in 2015, Hashflare has since become one of the largest providers of the computational power behind mining for litecoin, bitcoin, ethereum, and many others.
Making mining accessible to common users as well as crypto enthusiasts has always been at the forefront of everything HashFlare does. Since 2016 they’ve increased the variety of equipment used for mining.
Developers, engineers, and other specialists, in conjunction with partner companies, successfully provide services to over two million users.
Founded in 2013, Genesis Mining now owns mining farms all over the world, including Europe, Asia, and the Americas. However, the exact locations are not available to the general public for security reasons.
Genesis Mining is a transparent cloud mining service. It is one of the largest and most popular providers for cloud mining Ethereum, Bitcoin, and others. It’s even registered with the SEC for mining fund of Bitcoin.
Hashing24 has had its hands in mining Bitcoin since 2012. Their facilities in Iceland and Georgia use modern ASIC chips to deliver maximum performance and efficiency. Hashing24 is a recommendation of the BitFury website as one of the best cloud mining services available.
Minex aggregates Bitcoin cloud mining contracts worldwide. Contracts vary from company to company according to the terms they collect on packages. They balance these terms according to algorithms and strategies.
Minex managers always work to find the best offers to add to your package. The goal is to provide you with diversified packages that offer the best rewards. Minex erases the barrier between real and virtual markets, drawing you ever closer to a dream that seems both crazy and unrealistic.
Bitcoin changed the preconceived notion of virtual markets being worthless, and Minex enhances the value by transforming your money into virtual prizes and translating those to the real world.
Affordable and profitable cryptocurrency mining starts with Minergate cloud mining. Minergate provides everyone with the possibility to join a pool for a very low fee and offers cloud mining of fourteen different altcoins.
They also have a partnership with Hashing24 to provide additional bitcoin cloud mining. Interchangeable hashing power between coins makes this a smart contract because you’ll always get the highest possible profit available.
Created by a team of cryptocurrency enthusiasts, Minergate started with bitcoin but has since expanded the pool for multiple altcoins. They also introduced an option to mine different coins simultaneously without a decrease in hashrate.
Hashnest is a product of the innovation of the Bitmain Corporation. This cloud mining platform offers investors a share in the mining process of Bitcoin without having to invest in the hardware, equipment, or maintenance.
Cryptocurrency enthusiasts can now mine for Bitcoin without spending the money up front to set up the tools need to do it. Plans start at 1GH/s, allowing investors to decide what they want to invest in cloud mining.
Hashnest ranks among the best cloud mining services around the globe. The firm has expertise in the continually developing bitcoin mining arena and thoroughly understand the use of ASIC chip technology.
Hashnest currently has its hands in the construction of Antminer rigs, allowing for the global production of bitcoin.
NiceHash connects buyers and sellers globally to create the largest crypto mining marketplace in the world. This idea of a shared economy establishes an operation connecting these two critical components, enabling investors the access they need to computing power for mining many different cryptocurrencies.
Currently, the NiceHash cloud mining operation has over 160,000 miners daily.
Using the Eobot site, you can use your CPU or GPU to mine Bitcoin and other cryptocurrencies. It’s an excellent solution for mining cryptocurrency and then easily converting it to a payment method that you send through PayPal.
Currently, Eobot supports Bitcoin, Litecoin, Namecoin, BlackCoin, Ripple, Dogecoin, Reddcoin, Dash, CureCoin, BitSharesX, Monero, StorjcoinX, Stellar, Counterparty, Peercoin, Paycoin, MaidSafeCoin, and NXT. You can these cryptocurrencies using as many computers as you want.
While MineOn offers Bitcoin mining services to all its clients, their expertise lies in mining hardware. Their wide range of ASIC chip mining products provides a wide range of options for mining Bitcoin. While these pieces are expensive up front, they could potentially pay for themselves quickly based on the exponential increase of the value of Bitcoin.
Many mining strategies are floating around, but you'll have to decide which one makes the most sense for you and your expectations for mining cryptocurrency.
Mining the Most Profitable Coin
This method of mining makes sense if you’re in it to make money. Why would you do anything else? Use a mining profitability calculator like the one mentioned previously to determine which one offers the best return based on your rig. Just remember that the coins that are the most profitable for you might be coins that offer a low market cap.
Additionally, you can visit whattomine.com to get a good idea of which coin to mine on any given day. This site uses the current valuation of the coin plus the difficulty of mining the coin to provide a good idea of which coin might be the most profitable.
Of course, if everyone knows it’s the most profitable, the value of that coin at the end of the day may not be what it was when you started mining it.
Mining the Coin You Believe Will Be the Best Investment
You can use speculative mining to try and determine which coin you believe will be the best investment in the future. Some think that Bitcoin will always be the most profitable cryptocurrency on the market; however, that may not continue to be the case, and it may not still be the best investment.
Something important to remember no matter how confident you are in the future of a cryptocurrency: never go all in. If you do, you might end up losing everything. Set aside time each month to mine new coins that have just hit the market and have a low hashrate. You never know when a coin might blow up and you’ll already have some sitting in your cryptocurrency wallet.
Mining the Most Profitable Coin and Buying Coins That Offer a Better Investment
This is another type of speculative mining, but instead of spending time mining coins with low hashrate, buy them with your profits from the coins you do mine. It This lets you dedicate 100% of your time to mining the most profitable coins while setting aside coins you believe to be a better investment in the future.
Mining Coins with a Low Hashrate and Hope
We’ve already mentioned mining coins with a low hashrate a few hours a month, but this strategy is different. With this method, you’ll spend the vast majority of your time researching little-known or newly released coins and setting your rig to mining them.
The hope is that as you accumulate these coins, they’ll gather traction in the market and become more profitable. At that point you can sell the coins at their high, then point your rig to another new or unknown coin and start the process over.
Whether you plan on mining cryptocurrency as a way to make money or you just want to educate yourself more on how it’s done, mining can be a rewarding, worthwhile experience. There is no shortage of available currencies to mine available today, but remember to do your research before you set out on your journey.
Watch for scams and other shady behaviors looking to take advantage of your desire to mine cryptocurrency. Remember that it mining might be challenging, but can be worth it over time. No matter what, get your rig ready, download your software and set up your wallet so you can have some fun mining digital currencies!
About the Author: Justin Caldwell
Justin lives in Kansas City with his wife and four crazy children. Along with writing about cryptocurrency part time for SurveysSay, he also writes about home automation and financial technology. In addition to non-fiction, he also enjoys writing speculative fiction novels, short stories, and flash fiction. He enjoys steak, BBQ, and take inspiration from many authors including Isaac Asimov, Stephen King, and C.S. Lewis.
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Last update on 2021-03-06 at 02:11 / Affiliate links / Images from Amazon Product Advertising API