Want to know how to mine cryptocurrency? Learn what cryptocurrency mining is & know the cryptocurrency mining options with this how-to mine cryptocurrency guide.
With cryptocurrencies entering the mainstream at a rapid pace, more and more people every day are developing an interest in this new and strange world of blockchain.
Many of these people come to cryptos because they have heard that it is possible to make money from them. If you are one of those people, you are in luck, because today I want to tell you how to mine cryptocurrency.
We’ll start by going over the term itself – we’ll talk about what cryptocurrency mining is and why people bother mining cryptocurrencies. Then I’ll tell you about the different ways of mining cryptocurrencies – pros, cons, and so on.
Understanding Mining
To put it simply, cryptocurrency mining is a process in which a machine performs certain tasks to get a bit of cryptocurrency. This is TL; The biggest DR, so let’s branch out a bit, shall we?
Imagine you have a machine that mines crypto coins. We’ll cover specific types of machines later in the tutorial, but as an example, let’s say it’s your own personal computer and you’re trying to figure out how to mine cryptocurrency.
Your PC will perform the special tasks required to be able to acquire even the smallest cryptocurrency. These tasks are called “Proof of Work”, and are designed to create a fair playing field for all the different miners out there.
The task itself is a mathematical equation. The more miners want to mine one, particular mining pool – the harder the equation is. This brings balance to the pool but also motivates the use of bigger and more powerful engines.
Many more subtle factors come into play when the mining process takes place, but the general idea is that if your device contributes to “mining”, you’ll get your share of the loot.
That is a very short and simple way to define what cryptocurrency mining is. Now let’s move on to what you want to see here – how to mine cryptocurrencies.
Cryptocurrency Mining
There are several ways you can go about mining cryptocurrency. I’ll cover the main ones here, and start with the easiest – cloud mining.
Method 1: Cloud Mining
If you are looking for a cloud mining way, cloud mining is probably the most popular way to mine cryptocurrency without any hassle. But, what is Cloud Mining?
Cloud mining is a process where you pay someone (most often it is a large company) a certain amount of money and “rent” their mining machines called “rigs”, and the mining process itself.
This lease lasts for an agreed period, during which all the revenue the rig generates (less electricity and maintenance costs) is transferred to your cryptocurrency wallet.
The people (companies) that offer these cloud mining services usually have large mining facilities with many farms (tens or hundreds of rigs stacked and operating together) at their disposal and know very well how to mine cryptocurrencies.
Cloud mining has become very popular mainly because it offers the possibility to participate in the cryptocurrency world for people who may not have enough money to buy their rig or who may not be interested in owning a rig.
There are two cloud mining options – free and paid. Naturally, many people looking for a way to mine cryptocurrencies will be attracted to the “free” option, but there are drawbacks (very slow mining speed, extra conditions, etc.). Paid cloud mining usually works like this:
You find cloud mining hosts online. You check the packages that the host offers – there are usually four or five of these, ranging from cheapest to most expensive; some hosts even offer you the ability to create and customize your cloud mining package.
Once you know what you want, you can simply make a transaction (meaning you pay the host), register your cryptocurrency wallet code and that’s how you make your first steps on how to mine cryptocurrency!
Different packages require different amounts of money and last for different periods. Standard plans can range from $500 to $5000, and last from two years to a lifetime.
It is usually expected that you will break even in about half a year – the one-year mark, and then make a profit from then onwards. No one knows for sure, because the price of cryptocurrencies is very volatile and they tend to sway a bit.
Method 2: CPU Mining
CPU mining uses processors to mine cryptocurrencies. But, what is CPU Mining? Well, CPU Mining was a viable option in the past, but nowadays, fewer and fewer people are choosing this method to mine cryptocurrencies on a daily basis.
There are several reasons why this is so. First of all, CPU mining is VERY slow. You can last for months without noticing the smallest amount of income.
It’s also usually not worth it – you make very little money, but you may spend ten times that amount on electricity and cooling. The problem subsides on its own if you can find a place that has good cooling and a cheap electric bill, but that’s rarely the case.
So why do people still use CPU mining?
Well, basically because anyone with a desktop computer can do it.
All you need to be able to mine using the CPU method is a computer and a few programs. It is possible to do it with a laptop, but it is STRONGLY NOT RECOMMENDED. Your laptop will probably fry and heat within a few hours.
The fact that starting cryptocurrency mining is so easy attracts new CPU miners every day. Some people looking for a way to mine cryptocurrency don’t care about the details – they just want to get the process started as quickly as possible, and in any way possible.
Method 3: GPU Mining
GPU Mining is the most popular and well-known way of mining cryptocurrency. If you use Google “cryptocurrency mining”, GPU rigs will be some of the first things you’ll see.
Cloud miners, for example, use GPU rigs for their services. And these guys are professionals who sometimes own hundreds if not thousands of rigs, so they probably know what they’re doing, right?
GPU mining is very popular because it is efficient and relatively inexpensive. Don’t get me wrong, the rig construction itself tends to be expensive – but in terms of hash speed and labor in general, GPU mining rigs are great.
GPU rigs use graphics cards to mine cryptocurrencies. A standard rig is made up of a processor, motherboard, cooler, rig frame, and – of course – several (2 – 8) graphics cards.
Typical prices for a well-built, well-performing GPU mining rig aim around the $3000 price range. It’s a big investment but will pay off faster than, say, CPU miners. People looking for a way to mine cryptocurrency should check it out.
Method 4: ASIC Mining
ASICs (Application-Specific Integrated Circuits) are specialized devices that are explicitly designed to perform a single task, which in this case is crypto mining.
The way ASIC Mining works is well known and appreciated for generating an unreasonable amount of cryptocurrency when compared to its rival GPUs and CPUs.
But if they are so good, why didn’t I mention them earlier?
Well, mostly because they are the subject of great controversy.
You see, when the ASIC company announced a new version of the machine, the announcement caused a commotion in the cryptocurrency community. Many people have called for an outright ban on this machine. Why?
Because ASICS is so powerful, they rob other miners using GPU or CPU rigs of the possibility to keep up with hash speed and revenue.
Additionally, ASICs have turned the economy of certain cryptocurrencies upside down – imagine if most of the revenue would go to a single miner with an ASIC farm, what kind of chaos would it be.
How to Mine the Best Cryptocurrencies
Now that you have an understanding of how to mine cryptocurrencies and about all the different ways to do it, which is the best way?
The method that works best for you depends lot on a few key details: are you willing to shell out some initial money? If yes, how much does it cost? Would you like to HAVE a rig? Do you want to do it with a rig?
These and many more similar questions will determine your best method for mining cryptocurrency.
In general, GPU and cloud mining seem to be the two big options that many people prefer. CPU mining is slow and tedious, while ASIC mining can be quite unpredictable, especially these days.
If you want to build your rig then GPU is the way to go. If you don’t want to spend a dime and get started right away, you can try CPU mining.
However, if you are willing to take the risk and are not afraid of controversy – ASIC is the right choice. And lastly, if you don’t want to deal with rigs or other types of machines – cloud mining is your best bet on how to mine cryptocurrency!
Which Cryptocurrencies to Mine?
Your choice of equipment should also depend on the type of cryptocurrency mining you decide to do.
Some obvious favorites are Bitcoin, Ethereum, or Dash. Keep in mind, however, that Bitcoin mining is probably the most difficult of all – because the coin is so popular, there are many miners around the world who follow some of the existing pools and try to snatch at least a little bit of Bitcoin.
This might make you wait hours for the first drops of Bitcoin to start coming in.
With that in mind, your best bet would probably be to stick with Ethereum or another less popular cryptocurrency. Depending on your preferred method, check prices, calculate when your return on investment will occur, do some calculations and you’ll find out in no time!
As you probably know, there are many different ways on how to mine cryptocurrencies. All of these are just the main methods – if you want, you can even forget about mining cryptocurrencies and switch to Bitcoin faucets – but that is a very different story for a completely different day. But, still, it can be used as an option!