What is Cryptomining-
Cryptocurrencies are not backed up by anything tangible, like gold backs up the dollar. Because they only exist digitally, every part of the process from creation to distribution is electronically executed. The backbone of the entire cryptocurrency system is a system and process called mining.
Miners solve complex mathematical problems using mining software in order to verify a transaction on a network. Once authenticated, it is sent to the blockchain. Miners are paid for their work in cryptocurrency. Each block can hold thousands of transactions, but the number is dynamic since every block has a different size and every transaction happens at its own speed.
As a new block in the chain is completed, a coin is mined. Most cryptocurrencies have a specified, finite amount of currency to be mined, and the process becomes harder and takes much longer as the number of coins in existence becomes closer to being fully mined. This is similar to the process of mining natural resources. There is a finite amount, and once the plentiful stores close the surface are mined, the process gets harder, more costly to pursue, and less profitable over time as we have to begin looking in alternate and harder to reach places to get smaller amounts. Cryptocurrency mining is the same way. As the supply nears its end, the process to mine one coin takes longer, uses more resources and may result in less overall profit if not managed correctly.
What do you need-
First, miners must obtain the appropriate hardware for mining.
The average computer does not have enough processing power to mine blocks for cryptocurrencies such as Bitcoin and Ethereum. Graphical Processing Units (GPUs) and Application-Specific Integrated Circuits (ASICs) are the leading hardware options in making a cryptocurrency mining rig.
GPUs
Ethereum and other cryptocurrencies such as Monero and Zcash can be mined with GPUs. AMD Radeon RX580, Nvidia GeForce GTX1070, and Nvidia GeForce GTX 1060 are popular and reliable choices.
ASICs
Bitcoin, Ethereum and Litecoin and most other cryptocurrencies can be mined using ASICs. Currently, AvalonMiner 921 and Antminer S9 are the go-to ASICs.
Next, miners need a good cooling system.
Such intense processing really heats up mining hardware. This is actually relatively simple to solve. Cooling and air fans placed next to the hardware typically dissipate the heat well enough, but in enclosed spaces or if heat continues to build, hardware can be damaged if not kept cool enough. In these cases, opening a window, turning on an exhaust fan, or using climate control and air conditioning will typically keep the system cool enough to run optimally.
Don’t forget to get a cryptocurrency wallet.
As mentioned in cryptocurrency, wallets allow you to receive, store and spend your cryptocurrency. So if you want to receive the reward for your hard work, set up a cryptocurrency wallet through Coinbase or similar application.
You’ve got the hardware. You’ve got the wallet. Now you need the software.
CG Miner, Multiminer, EasyMiner, Awesome Miner, BFGMiner, Miner-Server, and BitMinter have been lauded as the best software choices by many experts.
Look into joining a mining pool.
Cryptocurrency mining is the most profitable when the currency is in its infancy. As the difficulty of mining increases, profits decrease because it takes more time and resources to successfully mine the cryptocurrency on your own. A mining pool is a group of miners who share computational power in order to decrease the amount of time it takes to mine cryptocurrencies. Along with sharing the computational power, they also share rewards as laid out in specific rules for the pool. If you join a mining pool, carefully read the instructions and begin mining immediately. There are many well-known mining pools, including AntPool, BTC.com, and Slush Pool and many others to check out.
Tips for first time miners-
DO YOUR RESEARCH
Understand the different algorithms.
There are two types of mining using differing consensus algorithms. The first is known as Proof of Work, or PoW. The second is Proof of Stake, or PoS. PoW miners solve problems that require large amounts of computational power. PoS is a process that distributes “shares” to the miners based on their existing cryptocurrency worth. This is more cost effective, as it requires less energy and power. Getting started in mining, Some beginning miners use PoS as a way to “get their feet wet,” so to speak. Others dive right into PoW. Do your research and decide what will work best for you.
Be aware of scam artists.
When looking for software, beware of scam software on the internet. Do your research and use reputable software. Multiminer has been hailed as the easiest to use software, with a plethora of features and OS compatibility. This software lets you switch between devices and cryptocurrencies easily, and may be a good place to start exploring the universe of cryptocurrency mining.
Not everyone gets rich from cryptocurrency mining!
An investment in cryptocurrency is risky, whether you are investing by purchasing it or mining it. The investment itself is costly and risky. Make sure that you use good common sense in your cryptocurrency mining endeavors. Look at your income from mining and the cost of the increase in your electric bill and cost of hardware purchase and maintenance. If you don’t see a profit or a pattern that looks like it will lead to profit in a reasonable amount of time, consider whether this is the right investment for you.