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Cryptocurrency mining involves two particular functions: adding transactions to the blockchain and also releasing new currency. Mining needs a powerful computer and a usually complex program. That helps miners compete with their peers in solving complicated mathematical problems. Cryptocurrency mining requires a lot of computer resources and power.
Cryptocurrency mining will celebrate its 10th year of existence in 2019. The very concept of mining with high-end computer hardware is starting to become mainstream. Mining is the way a certain kind of blockchain pays for participants to maintain it, its integrity and records, by paying ‘miners’ in the blockchains own coins.
How cryptocurrency mining works
The main point of mining is to fulfill three things:
- Provide bookkeeping services to the coin network. Mining is just about 24/7 computer * accounting called “verifying transactions.”
- Get paid a small reward for your accounting services by receiving fractions of coins every couple of days.
- Keep your personal costs down, including electricity and hardware.
Since Bitcoin is the first cryptocurrency that dictates the destiny of all others, we will use it as an example
Cryptocurrency mining is simply just converting a sha2 hash into an integer and seeing if it is less than some value. Finding that number is difficult.
How do miners find this number? By guessing at random. The hash function makes it impossible to predict what the output will be. Miners guess the mystery number and apply the hash function to the combination of that guessed number and the data in the block. The resulting hash has to start with a pre-established number of zeroes. There’s no way of knowing which number will work because two consecutive integers will give wildly varying results. What’s more, there may be several nonces that produce the desired result. But there may be none and the miners keep trying, but with a different block configuration.
The first miner to get a resulting hash within the desired range announces its victory to the rest of the network. All the other miners immediately stop work on that block and start trying to figure out the mystery number for the next one. As a reward for its work, the victorious miner gets some new bitcoin.
What you will need to mine cryptocurrency
You will need several, well more than several things to mine.
You will need a wallet. This is a password-protected container that stores your earnings and keeps a network-wide ledger of transactions. Also, a free mining software package typically made up of cgminer and stratum. You’ll have to be a member of an online mining pool. It is a community of miners who combine their computers to increase profitability and income stability. You’ll have to be a member of an online mining pool. It is a community of miners who combine their computers to increase profitability and income stability.
Your hardware has to be set up in a cool and air-conditioned space.
And your desktop or custom-built computer has to be designed for mining, separate dedicated computer is ideal. You may use your current computer to start, but you won’t be able to use the computer while the miner is running. It isn’t recommended to use a laptop, gaming console or handheld device to mine because these devices are not effective enough to generate income.
An ATI graphics processing unit (GPU) or a specialized processing device called a mining ASIC chip is the must. The cost will be anywhere from $90 used to $3000 new for each GPU or ASIC chip. The GPU or ASIC will be the workhorse of providing the accounting services and mining work.
And you have to provide cooling the hardware.
Mining generates substantial heat and cooling the hardware could be critical for your success. You can use a house fan to blow air across your computer. But many currencies require specialized, high powered machines that use large amounts of electricity, and create excess heat.
There are ongoing technology changes for optimizing crypto mining results. Why we are pointing this? Because if you want to be cryptocurrency miner, you have to constantly learn. You have to follow new techniques and perhaps, spend hours studying the best ways to adjust and improve your cryptocurrency mining performance every week. We hope you’ll stick around for each new guide and explained.
Is it worth it to mine?
If you want a hobby venture, the answer is yes. Cryptocurrency mining can generate a small income of a dollar or two per day. You can recoup $1000 in hardware costs in about 18-24 months.
On the other hand, cryptocurrency mining is not a reliable way to make basic money. The profit from mining cryptos only becomes significant when someone invests $3000-$5000 in hardware costs. On that way time, you could potentially earn $50 per day or more. Miners have to keep electricity costs to under $0.11 per kWh. Mining with 4 GPU graphic cards can bring you around $8.00 to $10.00 per day or around $250-$300 per month.
Have reasonable expectation
There are two things you have to be informed about:
The investment in 4 ASIC processors or 4 AMD Vega graphic processing units
The market value of cryptocurrencies
There is a small chance your chosen digital currency could jump in value alongside Bitcoin at some moment. And you could find yourself sitting on thousands of dollars in cryptos. The accent here is on “small chance”. This means slightly better than winning the lottery.
If you want to try cryptocurrency mining, you should. But start with a very small income return. You will not collect gold nuggets but you will not lose your money. And do your research to avoid a scam currency.