After the Bitcoin gained popularity in early 2009, mining of cryptocurrency became an arms race. Similarly, various other cryptocurrencies began gaining traction, and the digital market was abuzz with a horde of new cryptocurrencies, including a spin-off from Bitcoin called the Bitcoin Cash.
However, the field of cryptocurrency rewards only the worthy, and if you want to join in the action, you must take your time to learn the basics correctly.
The worth of Cryptocurrency Mining
Cryptocurrency mining is full of rewards, but it does not generate a regular income. Mining cryptocurrency as a hobby venture can help you earn a dollar or two per day. Particularly distinct digital currencies offer different rewards.
The few who are easily accessible for regular people to mine, offer up to a recoup $1000 in hardware costs in about 18-24 months. Often the reward earnings of cryptocurrencies are highly debated. As a regular income, cryptocurrency mining may not be a reliable way to earn substantial money for most of the people.
Profits often earned by cryptocurrency mining can be only labeled significant when someone is ready to invest $3000-$5000 in hardware costs which potentially results in earnings of $50 per day or even more.
How to mine cryptocurrencies?
To understand how cryptocurrency mining works, we must first understand what is it exactly and how it links to blockchain security.
While some parts of cryptocurrency “mining” metaphor are apt, it still fails to define its meaning. Often, you might come across people describing cryptocurrency miners as finding or making currency.
In simpler terms, the miners are responsible for various computations which protect the integrity and security of the distributed blockchain ledger.
The blockchain ledger keeps track of every transaction performed using the cryptocurrencies. As the reward for successful completion of these calculations, miners are often rewarded with the cryptocurrency which they were mining.
The Bucket List to mine cryptocurrencies
Before proceeding to become a cryptocurrency miner, you will need the following ten things.
- Something called as a cryptocurrency wallet. The wallet is a free private database which is password protected and stores most of your earnings by keeping a network-wise ledger of all your mining transactions.
- A free mining software package, for installing the OS on your mining hardware or mining rig. Always prefer software packages built from cgminer or stratum.
- Become a member of an online mining pool. A mining pool is a community of cryptocurrency miners who combine their computers to increase profitability and income stability.
- Membership of an online currency exchange so that you can exchange your virtual currency for usable currency.
- High speed and reliable internet connection with ideally 2 Mbps speed.
- Cool and air-conditioned space or a prominent location for setting up your mining hardware.
- You might need a custom-built computer designed for mining. Meanwhile, you can choose to use your current machine to start with, but the issue of not being able to use it when the miner is running entails that you keep a separate desktop for mining.
- The most important things are the graphics processing unit (GPU). You can even get a specialized processing device called a mining ASIC chip.
- To blow cold air across your mining computer, you might need a house fan. The cooling of your mining hardware is critical for successful mining as it generates a substantial amount of heat when the miner is running.
- Above everything, you need to possess a personal curiosity. Cryptocurrency mining requires a voracious appetite for reading and constant learning, because of the ongoing technology changes. Moreover, mining witnesses’ new techniques for optimizing cryptocurrency mining. The most successful miners often spend hours studying the best ways to adjust and improve their mining hardware performance.
The Essentials every Beginner must choose
Cryptocurrencies are termed to have outstretching impacts on the future of how the economics and currencies are driven.
In recent years Bitcoin has impacted how people are paid and given a new shape to the currency transactions between organizations. Using cryptocurrency, it is entirely possible for two unknown and unrelated parties to transact without any third-parties in between.
While cryptocurrency does have severe implications for the already existing financial system, the fact remains undeniable that it will ultimately impact a wide range of industries.
The first decision you must make before beginning your mining journey is deciding which cryptocurrency do you plan to mine. Even though Bitcoin is the most popular cryptocurrency, it turns out it is not so profitable to mine.
However, you shouldn’t worry as there are many cryptocurrencies that you can mine. The second most popular cryptocurrency is Ethereum, and it has quite a reputation for being hugely profitable from the mining angle.
1. CPU vs. GPU
Be it Bitcoin or Ethereum or any other cryptocurrency for that matter; mining has grown very competitive. If you are looking for sizable payouts then, your computer needs not only be fast at the types of hashing operations required, but it also needs to efficient on power consumption.
An Intel-style Central Processing Unit (CPU) chip which is considered as the fastest processing chipset isn’t very fast when it comes to hashing.
However, GPU is another type of chipset which is adept at hashing faster it is specifically designed to accelerate graphics, usually 3D graphics for games and filmmaking. Meaning that you might need a system which supports multiple GPUs for mining cryptocurrencies which can be deemed as profitable.
For the sake of comparison, a 2-year-old, iMac which has a quad-core 3.2 GHz Intel Core i5 6th Generation processor and boasts of 32 gigs of RAM is 100 times slower than a system with a newly compatible GPU installed.
Thus, a fast and a pretty expensive computer you would be able to earn only pennies if the GPU doesn’t get sufficient memory and space for mining operations.
2. Mining System Selection
As stated earlier cryptocurrency is all about using a system with the right set of compatible GPUs than an expensive system like Mac family for a simple and apparent reason that a PC would far away from being cost-effective.
After thorough research and professional statistics, GPU benchmarks for Ethereum mining can help you determine which GPUs will make mining easy and useful for you. The top choice of experts and critics alike is the Nvidia GTX 1070. While it a generation or two old, the GPU is not only cost effective but a powerhouse of solid performance also.
Moreover, you can search for a PC sporting the Nvidia GTX 1070, and you will find several. The manufacturer doesn’t make a much difference when it comes to mining.
The memory and processor seem hardly appealing if you have the right GPU because those aren’t very important for mining. Hence, a PC with too much memory or a faster processor is nothing but a waste.
Furthermore, you don’t need a hard disk with too much space. Basic SSD size more than enough when it comes to cryptocurrency mining.
3. OS Selection
From many choices to consider, excluding MacOS which can be quickly ruled out at the start, the preferred OS for running miner operations are Linux and Windows. Since Linux is free and it performs well in all the departments, experts often suggest that you use Linux OS as your mining OS.
However, not everyone is accustomed to working with Linux. To begin with, Windows does seem like the most user-friendly OS.
For professionally efficient mining, there is a special-purpose Linux distribution called EthOS that is also available. Regarding performance and compatibility, Linux and Windows stand toe to toe.
4. Subscribing to a Wallet
Now that you have selected most of your hardware components the last thing you need before you begin cryptocurrency mining is a cryptocurrency wallet to store your earnings.
For trading the mined cryptocurrencies, you need a cryptocurrency wallet. The cryptocurrency wallet does not differ majorly from the other payments wallets. It can be seen mainly as a set of encryption keys that control your blockchain account. The wallet services are free to use and easy to manage.
Coinbase is one the most popular wallets out there and also have an iOS app. While you can use Coinbase for storing your mining rewards, we suggest that you research various other wallet options as well.
Security is the vital aspect of a wallet, and if you lose your keys, then you end up losing all your earnings as there are no password reset options available on the blockchain.
5. Selection of a Mining Software
Various cryptocurrency mining offers open-source clients written in C++ and Go languages. If you are an expert in the development and feel confident using a compiler or a command-line, then you can use these open-source clients. (for us).
However, if you want to trudge down an elementary route, you can choose to use a pre-built Windows GUI client called WinEth. With the capability of easy download and installation on Windows, WinEth is the perfect mining software as it is also available for free. But it comes at a price as it takes 1% of your earnings for making things easier for you.
The trade is incredible provided the simplicity it offers.
6. Mining Pool Registration
As mentioned earlier cryptocurrency mining requires constant learning for methods to improve the effectiveness and efficiency of your mining hardware. But as a beginner, you might not be aware of the changing technologies, so it is better if you join a mining pool.
Earning rewards through mining can be tedious for the popular currencies like Bitcoin and Ether thus, it is a suggestion that you don’t go at it alone. To smoothen the profits, every small miner should join a mining pool.
Mining pools consist of groups of various miners who collaborate with other members to improve the efficiency of the mining hardware and earn better and quicker rewards. Hence, as a beginner, you must join a mining pool as it will help you understand the world of cryptocurrency better.
Moreover, you may also find people who will genuinely help you to increase the efficiency of your mining hardware, suggest GPUs based on your budget and help you get hardware components for cheap.
7. Getting Up and Running with Mining
Once you have assembled all the hardware components essential for mining, you can proceed with the installation of the mining OS and mining software onto your system.
For first-timers, we suggest that you go through various other articles and YouTube videos for assembling and setting up your mining hardware.
Once done run the mining software and enter the wallet ID keys corresponding to your mining wallet. On successful mining, your mining pool will deposit the basic earnings to your portfolio.
Start the mining software once you have added the credentials of your wallet. The GUI will then detect all the GPUs and will display the graph of your hashing rate. You earn a “share,” once you start mining the cryptocurrency based on the amount of hashing you are contributing to the mining pool.
Each share that you earn translates to a small amount of the cryptocurrency that you mined, and it will further deposit in your account. After following the aforementioned guide, you can pat yourself on the back as you have finally become a miner.
8. Tuning the System Performance
Being a cryptocurrency miner, you need to do more than setting up a mining system. For every mining beginner, it is necessary to ensure that the performance overhead does not flush out your mining rewards. Hence, it is a must that you are well versed with techniques to tune your OS, software or hardware components so that your mining system performs efficiently.
The first thing to note is that you must let the OS install and run updates periodically, Thus, turn on the automatic updates features as new updates mean a lot of patches to improve the performance of your system. Don’t worry if it seems to take several hours of downloading, disk crunching and required several reboots.
Get the latest drivers for all the GPUs so that your GPUs can work faster and efficiently. Also, deactivate the antivirus as you don’t want it to interfere with your mining. Set the appropriate power management settings on your system to ensure that your PC does not turn off or go to sleep when it is idle.
9. Measuring Power Usage
Cryptocurrency mining is believed to be electrically intensive. Different statistics and reports estimate cryptocurrency mining use more electricity than any other industry in the world. While it might not appeal to you much, but understanding the energy consumption relevant to cryptocurrency mining is an essential aspect of ecology and economics point of view.
To understand the power usage better get a few WiFi-enabled Smart Plugs which track the power usage.
Not only are they easier to set up but they even estimate the power usage precisely without any extra efforts. If you notice a reading about 0.15 KWh / hour then, you can be assured as it is roughly the same power drawn by a couple of incandescent light bulbs.
You can earn considerable profits from cryptocurrency mining approximately around $3 / day worth of the cryptocurrency you mined. After subtracting the factors involved such as electricity it roughly sizes up to $80 / month.
Cryptocurrency mining is profitable, but at the same time, there are various overheads costs involved which shouldn’t be neglected. These expenses include the cost of power, the price of Ether and the consistency of the mining payouts over time. However, it will not generate huge rewards for you.
After thorough research and communicating with experts you will realize that you can gain a lot of efficiency by combining multiple GPUs in a single mining system. Thus, it allows you to divide the cost across various hardware components like CPU, motherboard, RAM, hard drive and multiple GPUs. Thus, dramatically increasing your efficiency thereby boosting your mining profitability.
Mining rigs made from a dozen or more GPUs have become very common, and a mining rig like that can help you earn a thousand dollars a month or maybe more.
For beginners, it is always preferred that you start by creating single GPU mining rigs as an educational experience. Not only it will be fun, but it will immensely be enlightening also. Once you are set, then you start building bigger rigs with various GPUs.