We are sure that you have undoubtedly heard the word "mining" once or twice before, but we are more than sure that you will hear it many times more. Recently, this term has become popular among those interested in cryptocurrency.
Let's figure out where the majority of the noise is coming from, and whether it's possible to make money from mining now.
Cryptocurrency mining is a process that ensures network efficiency. The primary role of the miner is to facilitate cryptocurrency transactions. For this to be accomplished, miners are paid in the form of cryptocurrency.
Different types of mining
Currently, there is only one type of excavation. Everything is dependent on the equipment utilized.
Mining on a video card
This is one of the most significant and popular approaches. This mining is powered by a powerful GPU video card (such as the Nvidia video card).
To begin mining, you will need to purchase several video cards. A complex of video cards that can facilitate mining is called a farm. On average, one farm has 6-8 video cards. The expense of one video card is between $1,000 and $2,000. If you want a more powerful farm, then you should utilize at least 8 video cards.
ASIC mining
It's a method of calculating a specific sequence of numbers that will result in the mining of the associated cryptocurrency. This style of mining necessitates the use of an ASIC miner. This device is a powerful substitute for video cards, and it allows you to generate larger amounts of cryptocurrency.
Cloud mining
In general, it's the online rental of mining supplies. This will prevent you from having to purchase everything yourself and establishing a farm. It's sufficient to choose a cloud company and make a renting agreement for equipment used in mining.
Browser mining
Interestingly, this is the process of mining in the browser. What is necessary of you in this instance? Create an account on a special website and specify the address of your own crypto wallet. Next, you need to start mining. To accomplish this, just open the given page, which will help the website utilize your computer in the process of mining via the browser.
CPU mining
A CPU is a component of a computer (or other hardware) that can also be utilized to mine. If you contrast the video card and the processor, you'll see that the latter is less powerful. Mining on the processor is effective for either programming-based cryptocurrencies or for recently-emerging cryptocurrencies.
What currencies can be mined?
The most common currency used for cryptocurrency mining is Bitcoin (BTC). However, not all devices are capable of mining BTC, this is necessitated by powerful equipment. Regardless, you can locate alternative digital currency options that will complement the configurations of your equipment (video card, processor, PC, etc.).
Until September 2022, Ethereum (ETH) was primarily utilized by miners. However, on September 15th, 2022, the Merge occurred - ETH was transferred from the mining algorithm (PoW, Proof-of-Work) to the staking algorithm (PoS, Proof-of-Stake). Ethereum is now maintained by holders of cryptocurrency (e.g. owners or validators), whose coins are held in reserve (for additional information see Staking).
The payoff of investment in mining
If we take the example of mining via a video card, it's important to understand how much equipment you'll need to purchase. Small-scale mining (2-3 farms with 6-9 video cards each) will cost $12,000- $24,000 (or more). For larger-scale mining (starting with 5 farms with 8-10 video cards each), the cost will be from $40,000.
Eventually, the investment will have the capacity to pay back, and the mining process will begin to yield a profit. However, it's impossible to know ahead of time when this will occur exactly. On the average, this event occurs after approximately 10–12 months. Occasionally, the equipment will pay back after a couple of months, or after several years. Many things are dependent on the type of mining, the cryptocurrency and its current status on the market.
Other than spending money on equipment, be ready to spend money on the cost of electricity (as mining is an energy-consuming process), and for large-scale mining, a separate room must be prepared.
Rooms for mining
Small-scale mining is possible to arrange in a flat. Pantries, balconies or any non-residential rooms are appropriate for this.
Large-scale mining need either rental housing (or rooms rented for mining) or a garage.
Requirements for rooms:
- Soundproofing. Even 1 farm will produce noise. Now imagine having multiple of them, or even more. The sound of the engine should not intrude on you or your neighbours, so you need to take care of sound isolation.
- Good ventilation that will not overheat the equipment. In reality, ventilation is responsible for removing the heat from the air and providing it with a cool air.
- Dry rooms. The place need to remain dry regardless of the circumstances. When in contact with water, the equipment will degrade and will even catch fire. Additionally, fuses can be installed. If the room is flooded, they will deny the electricity a chance.
- Good wire management. The wiring must be able to withstand the farm's workload (a small farm will need to consume approximately 2–2.5 kW). In the flat the power of the wiring should be sufficient for the activation of appliances like the oven as well.
- Constant electricity supply. In case you need an extra generator, you can purchase it to avoid a power outage during an emergency. Also, solar panels are employed as a substitute for energy. Some miners utilize hydroelectric power stations (for large-scale mining).
- Absence of direct sunlight, because the sun can increase the temperature of the room. If the farm is located in a room or flat with a high temperature, it can overheat. Overheated equipment is unable to function. As such, you'll need to purchase it again.
- A territory that is safeguarded by video monitoring (for large-scale mining in a garage or rental space).
- Access to the high-speed Internet.
Pros of mining:
+ The profit is much greater than the cost of equipment (in the future).
+ Mining is simple to learn.
+ Passive income. It's not necessary to be present alongside the equipment every single day, as it carries out all actions on its own.
Cons of mining:
- It's essential to first devote funds to good equipment and make sure it is equipped with all necessary conditions for a productive workday.
- It's vital to have a dedicated space for mining or have a separate space to equip.
- Video cards must be frequently cooled in order to avoid overheating and failure.
- There is a possibility that the profit gained from mining some cryptocurrencies may decrease.
- Mining requires a lot of electricity, this is why the majority of miners seek out alternative sources that are less power-consuming (e.g. solar-powered panels).
Conclusion
In short, here's how to begin mining:
1. Purchase the equipment and set it up.
2. Create a wallet that you can use to receive income and then withdraw the profit.
3. Register the pool (in the network) of tokens you want to trade.
4. Process cryptocurrency transfers and create blocks.
5. Get a cryptocurrency reward.