The Essential Guide To Mining Crypto

Cryptocurrency is everywhere at the moment, from advertisements online to sponsorships at sporting events, and with 2.3 million people in the UK holding assets in the digital currency, it’s a booming industry.

Meanwhile, away from the investors, people are now mining the digital currency from their home, with some earning over £250,000 for their efforts. But it’s not as easy as just getting yourself a mining rig and turning it on. There are associated costs to go with it, the main one being the cost of the power needed to keep them running, with some miners paying up to £4,000 per month on their electricity bills. However, if it’s something you’re interested in, it may be worthwhile considering your options.

So, let’s take a look at how you can get started searching for your piece of the digital mine.

Which crypto can I mine?

While over 10,000 different currencies are in circulation, it can be difficult to choose the right one.

For people heading into the space for the first time, the names which maybe stand out the most are Bitcoin, and Ethereum, which may be familiar as they are the most referenced currencies. Meanwhile, on the other side of the (virtual) coin, there’s Monero and Ravencoin.

However, it’s important to note that not all crypto can be mined by individuals; that’s a common misconception. Take Chiliz, the crypto behind fan tokens. They’re an NFT usually affiliated with a sports team or athlete, which offer certain benefits to fans. They’re backed by Chiliz, which cannot be mined. Fans can purchase them, but they are limited in supply as they have all already been created, although not all of them are in circulation at the moment. However, currencies such as Ravencoin and Monero are available to mine along with the most popular two, Bitcoin and Ethereum.

But what is crypto mining?

While mining creates new coins, it’s also a process that includes validating transactions on a blockchain network, which adds them to a ledger. For new miners to be rewarded with the coins, they need to solve mathematic equations, which are in the form of hashes; these are compressed or truncated digital pieces of data. The hashes are made to secure the data transfer on a public network; miners compete to unlock the code to add the block to the ledger and receive their reward, the currency. Each block has a hash that relates to the one created before it and so on, right back to the first block, thus forming the blockchain; this validates each block. Only validated miners can mine and provide these transactions, so the proof of work protocol is in place; this also adds an extra layer of security from external attacks.

How to start mining

As we’ve already alluded to, you need a rig to start your mining journey, and to do so; you need it loaded with specific software to solve the mathematic equations which create your pieces of the currency. To mine crypto, your set up requires a motherboard, a high-end GPU to deal with the performance requirements for mining and a solid cooling system. This is the cheapest avenue to get into mining providing you can get your hands on a GPU in the current climate with the shortages.

A rig with an application-specific integrated circuit (ASIC) is that option; although these come at a higher cost, the benefit is they can mine for more currency as they’re specifically designed to do the job. But no matter which option you choose, you need a stable internet connection too, and you need to be a member of an online crypto mining pool.

One other option is cloud mining, which is a relatively new development that allows miners to leverage the power of dedicated crypto mining facilities. There are suppliers online where you can rent a rig; while it’s the most hands-free way of mining, the associated costs of the rental will cut into any profit you may make.

Mining Pools

These pools allow miners to combine resources to give them a better chance of finding and mining the blocks in the blockchain. If the pool finds success, the reward is shared across the pool in proportion to each miner’s contribution. Most mining applications come with a pool, but miners are free to move between them whenever they choose. Meanwhile, others join to make their own, but it could be argued that the official platforms are more stable and reliable with regular updates and better tech support should it be needed.