Cryptocurrency mining celebrated its 13th anniversary in January 3, 2022. Most people have only heard about crypto mining using high-end computer hardware.
What is Crypto Mining?
Most people don’t understand the process cryptocurrency mining. Finding digital coins is a complex procedure; you have to understand the blockchain technology on which Bitcoin and other cryptocurrencies are built. The hundreds of existing digital currencies are based on the blockchain’s core concept; they are designed as secure, decentralized, and unchangeable.
Every individual transaction is encrypted, and once an encrypted transaction occurs, it’s added to a “block” until a predetermined number of transactions are recorded. Once that happens, the block is added to a chain; this is a publicly available blockchain. Privacy remains the cornerstone of cryptocurrency, and, as a result, the transactions remain anonymous. Since their location is decentralized, they can’t be controlled or manipulated by an individual or an entity.
The blocks are heavily encrypted and create a complex mathematical puzzle that can only be solved using powerful computer hardware via your CPU and related graphics cards. The procedure involved in solving the mathematical puzzles and adding them to the blockchain is called cryptocurrency mining.
Miners authenticate the transactions and keep the infrastructure running, and get rewarded with a miner’s fee in the form of the block’s coin. Payment is based on the amount of hardware you contribute to solving the puzzles. By design, cryptocurrencies are created once a block is solved and are distributed fairly among the miners, thus increasing your supply of coins.
Mining digital currencies are like all other business; it rewards the early adopters. Bitcoin was the pioneer decentralized cryptocurrency that hit the market in 2009. Still, it has been followed by several others, including Bitcoin’s spin-off called Bitcoin Cash, Ethereum, Litecoin, Ripple, etc. You can still plunge into the cryptocurrency rush as long as you learn the basics.
Anyone courageous enough to start mining Bitcoin in 2009 should have earned thousands of dollars, but plenty of others lost money as well. Experts now advise against mining Bitcoins for newbies targeting a small-scale investment; the mathematical difficulty levels, acquisition, and maintenance costs make it out of reach for consumer-level mining.
Mining vs. Investment
One important thing you want to remember is that everything cryptocurrency-related remains volatile, and mining is included. From crypto price changes to hardware price fluctuations and not exactly knowing what you will earn makes it more uncertain than cryptocurrency investment. You want to ensure you understand the risks involved before you venture into the mining route.
How to Start Mining
If you are going to do cryptocurrency mining, you can choose between cloud mining and personal mining. Cloud mining involves renting mining hardware and someone to do it for you, so you get paid for your cryptocurrency investment; this requires a smaller investment compared to personal mining. Personal mining takes a significant investment, and you need specialized hardware that is not so cheap to buy or run; pick up your calculator before you choose. We shall briefly discuss how to do cloud mining.
Step # 1: Pick a Mining Company
Start by renting hash power from a cloud mining company; the firms have committed data centers for cryptocurrency mining. Since they are centralized, they purchase mining machines in bulk and use the best methods to generate electricity. Most companies offer a specified amount of GigaHash Seconds of mining power for a fee.
Important: Make sure to do your research as there are alot of scam websites out there.
Step # 2: Select a Mining Package
Picking a mining package involves deciding what volume of hashing power and cross-referencing you will afford. In the ideal case, the more you play, the better the return on investment. Most mining companies will assist you in making a choice based on the market value of different cryptocurrencies, mining difficulty, and cross-referencing with your desired hashing power. Since these numbers fluctuate, you want to consider the market trends before deciding.
Step # 3: Choose a Mining Pool
The next step involves choosing a mining pool; you get to choose the global mining team you want to join. There are pros and cons of belonging to different mining pools, but the best results are joining an established mining pool. This increases your chances of earning through cryptocurrency mining, and it works in both cloud and personal mining.
Once you belong to a pool, you will begin cloud mining, and within days or weeks, you should see some cryptocurrency in your account. While some cloud miners encourage members to keep reinvesting, you may want to start withdrawing some of your crypto coins and storing them in a secure cryptocurrency wallet.
The Most Profitable Cryptocurrencies to Mine
More people are becoming interested in digital currencies, and the amount of cryptocurrencies is also growing. Most people saw cryptocurrencies surge in value in 2021, and even though the price correction in January saw them come down, there is still a lot of potentials.
The best cryptocurrencies to mine are the most promising ones: they are developed and upgraded regularly to ensure reliability and stability. You want to carefully choose what digital currencies to mine if you are going to ensure profitability. Several factors determine profitability, including equipment cost, the hash rate, power consumption, cost of electricity, and course, and the current coin price. The best way to determine profitability is to use unique mining calculators.
If you are interested in immediacy, you want to point your mining rigs towards cryptocurrencies as profitable as Bitcoin, Ethereum and others in the same league. If, on the other hand, you are looking for something long-term, ensure that you choose a coin that has long-term potential for growth.
As more people get interested in the cryptocurrency rush, making the right choice becomes more difficult. This is because it takes more expensive equipment to locate the most profitable coins. Take the time to understand everything about cryptocurrency mining, and if you decide to join in, don’t take too long before jumping into the pool.
Tom is a long-serving freelance writer who specializes in the blockchain and cryptocurrency niche. You may even call him a crypto-enthusiast with over 10-years’ experience in content creation, blog writing, and SEO. He is a philosophical figurehead who believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.