How to mine cryptocurrency and what is needed for this

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Lifehacker tells how to mine digital currency and whether it is realistic to make money on it.

What is cryptocurrency mining

The essence of mining (from the word mining - production) is the creation of crypto coins according to a special algorithm. A unique set of data (or block) is generated on the computer, which confirms the reliability of payment transactions. A block consists of a hash of the previous block's header, a hash of transactions, and a random number. The chain containing all transactions is called a blockchain.

For each block found, a reward is due. It is different for different currencies. For example, the oldest and most expensive cryptocurrency, bitcoins (Bitcoin, BTC), has it halving every four years. Since 2016, the reward is 12.5 BTC (about 32 thousand dollars), in 2020 it will be further reduced.

The reward for a block of Ethereum (Ethereum, ETH) is 5 ETH (approximately $ 1,540).

The success of mining depends on the computing power of the computer that the miner has. The more, the higher the likelihood of getting a reward.

What you need for mining

1. We collect equipment

• Video card (GPU) - modern, not budget. And it is better not one, but several.
• Computer (farm) with an efficient cooling system, a motherboard with the maximum possible number of slots for installing video cards. Any processor can be stable. Recommended RAM - 4 GB or more.
• The most commonly used operating system is Microsoft Windows 10 Pro 64-bit. There are also operating systems specially designed for the extraction of certain currencies. For example ethOS for Ethereum.
• Internet with good ping.

2. Determining the cryptocurrency

The choice depends on the graphics card available. The most popular cryptocurrencies among miners are Ethereum, Zcash, Monero. Bitcoin and Litecoin are no longer mined with video cards: there are specialized devices for this, for example, ASIC (Application-specific Integrated Circuit).

Examples of video cards used for mining:

• Nvidia GeForce GTX 1050 Ti / 1050, as well as 1060, 1070, 1080 Ti / 1080;
• AMD Radeon RX 470/480 and 570/580.

Here you can see the main characteristics of video cards, find out their hashing speed (an important indicator for mining) and how quickly they pay off.

The average cost of a mining kit with five or six video cards (taking into account their sharp rise in price due to increased demand) today is about 200 thousand rubles. To this amount, you need to add the cost of electricity (it will be consumed continuously), including air conditioning, as well as the Internet.

3. Choosing a pool (server) for mining

There are quite a few pools. The main characteristics that affect the choice: ping, power, protection, ease of setting up the miner program, the presence of a server in Russia, the ability to monitor, the size of the pool commission (usually 1%) and the commission from the transfer of crypto coins to your wallet.

Pools recommended on miner forums: dwarfpool.com, www2.coinmine.pl, nanopool.org, 2miners.com.

4. Choose an exchange or wallet where the mined cryptocurrency will be accumulated

There is only one advice: use only proven services, for which you need to study the reviews.

What is cloud mining

This is an investment in the purchase or rental of equipment necessary for the extraction of cryptocurrency. Physically, it will not be in your home. The customization, connection and maintenance are undertaken by a specially created service.

Cloud mining income is proportional to the equipment purchased or leased.

Pros:

1. Installing not one, but several farms at home, most likely, will not work, since the mining equipment gets very hot. Any number of farms can be used remotely. Or, you can get by with very small investments (the minimum contracts for some services cost a little more than a dollar).
2. This method is recommended for those who are not technically savvy: it will be difficult for them to assemble and configure the equipment on their own. Or those who do not want to waste time on this and be tied to the house or premises where the farm is located.
3. Higher power than a home device.
4. The ability to mine bitcoins, as well as mine several cryptocurrencies at once.

Minuses:

1. The risk of running into scammers.
2. A commission that is taken from the mining reward (it usually includes all costs, including possible equipment breakdown, etc.).
3. The risk of hacker attacks on the server, as a result of which you can be left with nothing.
4. Strong resemblance to a pyramid scheme. Logically, it is more profitable for services with their capacities to extract cryptocurrency themselves, and not give it to the side, albeit with a commission. Referral programs speak in favor of this statement: many cloud mining services promise rewards for attracting new customers.

Is it worth mining

The attitude towards cryptocurrencies is still ambiguous, although their liquidity (ease of circulation in "real" money - rubles, dollars, and so on) is now very high.

The other day, the head of VTB, Andrey Kostin, said that bitcoin is a "speculative currency." Although representatives of the Central Bank have already voiced their desire to create a national cryptocurrency.

It is very difficult to find out how much the cost of creating your own farm will pay off.

It depends on the rate of cryptocurrencies, the growing complexity of their mining, the number of miners, which is constantly changing.

In general, the calculations made to date show that equipment costing about a thousand dollars can pay off in six months or a year. If you invest $ 3,000 to $ 5,000 in the creation of farms, the profit may be $ 50 or more per day. But this data can change dramatically (especially considering the growing number of fraudsters).

To calculate the profitability of mining, you can use an online calculator.

Some experts believe that mining can be viewed as an opportunity to generate a small additional income, but not as a way to get rich quickly and surely. Think of it as collecting gold dust, not gold nuggets.

Thus, whether to take risks or not, everyone decides for himself.