With cryptocurrencies entering the mainstream with a bang, more and more people every single day develop an interest in this new and strange world of blockchain. A lot of these people come to cryptos because they had heard that it’s possible to make money from them. If you’re one of those people, you’re in luck, because today I want to tell you how to mine cryptocurrency.
We’ll start by covering the term itself - we’ll talk about what is cryptocurrency mining and why people bother mining cryptocurrency in the first place. Then I’ll tell you about the different ways you can mine cryptocurrency - their pros, their cons and so on.
Lastly, we’ll talk about some of the more popular coins when it comes to crypto mining as well as the most secure wallets (such as Ledger Nano S, Coinbase and Trezor Model T) where you can keep your coins, and include the most reliable crypto exchange platforms (Coinbase and Binance) where you can trade the coins you mine to other cryptocurrencies.
Table of Contents
To put it into very simple terms, crypto mining is a process in which a machine performs certain tasks to obtain a little bit of cryptocurrency. This is the biggest TL;DR possible, so let’s branch out a bit, shall we?
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Imagine that you have a machine that mines crypto coins. We’ll talk about the specific types of machines later on in the tutorial, but for example’s sake, let’s just say that it’s your own, personal computer and you’re trying to figure out how to mine cryptocurrency.
Your PC would perform specific tasks that are required to be able to obtain even the slightest amounts of cryptocurrency. These tasks are called “Proof of Work”, and they are designed to create a fair playing field for all the different miners out there.
The tasks themselves are math equations. The more miners want to mine one, a specific mining pool - the tougher the equations become. This brings balance to the pool, but it also motivates bigger and stronger machinery usage.
Many more subtle factors come into play while the mining process is happening, but the general idea is that if your device contributes to the “mining”, you’ll get a share of the spoils.
That is a very short and simple way of defining what is cryptocurrency mining. Now let’s move on to what you came here to see - how to mine cryptocurrency.
There are a few ways you could go about cryptocurrency mining. I’ll cover the main ones here, and start from the easiest one - cloud mining.
Method #1 - Cloud Mining
If you’re looking for crypto mining ways, cloud mining is probably the most popular way to mine cryptocurrencies without having to lift a finger.
Cloud mining is a process where you pay someone (most often it’s a big corporation) a specific amount of money and “rent out” their mining machine called a “rig”, and the process of mining itself.
This rent lasts for an agreed-upon period, through which all of the earnings that the rig makes (minus the electricity and maintenance costs) are transferred to your cryptocurrency wallet.
The people (companies) that offer these cloud mining services usually have huge mining facilities with multiple farms (tens or hundreds of rigs stacked and operating together) at their disposal and know perfectly well how to mine cryptocurrency.
Cloud mining has become so popular mainly because it offers the possibility to participate in the world of cryptocurrencies for people who might not have enough money to buy their rigs or who perhaps simply aren’t interested in owning a rig.
There are two options of cloud mining - free and paid. Naturally, a lot of people that are looking for ways to mine cryptocurrency would gravitate towards the “free” options, but it does have its drawbacks (very slow mining speeds, extra conditions, etc.). Paid cloud mining usually works like this:
You find a cloud mining host online. You check out the plans that the host offers - there are usually four or five of these plans, ranging from the cheapest to the most expensive one; some hosts even offer you the ability to create and customize your cloud mining plan.
Once you know what you want, you simply perform the transaction (meaning that you pay the host), register your cryptocurrency wallet code and that is how you make the first steps on how to mine cryptocurrency!
Different plans cost different amounts of money and last for a variety of periods. The standard plans can go anywhere from $500 up to $5000, and last from two years to a lifetime.
It is usually expected that you’ll break even at around the half-a-year - one year mark, and then profit from that point onwards. No one can know for sure, though, because the prices of cryptocurrencies are very volatile and their prices tend to sway by quite a bit.
Method #2 - CPU Mining
CPU mining utilizes processors to mine cryptocurrencies. It used to be a viable option back in the day, but currently, fewer and fewer people choose this method how to mine cryptocurrency daily.
There are a couple of reasons why that is. First of all, CPU mining is EXTREMELY slow. You could go on for months without noticing the smallest amount of revenue.
It’s also usually not worth it - you make very little amounts of money, but you probably spend ten times that amount on electricity and cooling. The problem mitigates itself by a bit if you can find a place that has nice cooling and cheap electricity bills, but that’s rarely the case.
So why do people still even use CPU mining, then?
Well, basically because anyone with a desktop computer could do it.
All you need to be able to mine using the CPU method is just a computer and a couple of programs. It is possible to do it with a laptop, but it is VERY STRONGLY NOT ADVISED. Your laptop will probably fry and overheat in a matter of a couple of hours.
The fact that it’s so easy to start cryptocurrency mining attracts new CPU miners every day. Some people that are looking for how to mine cryptocurrency don’t care about the details - they just want to start the process as soon as possible, and in any way possible.
Method #3 - GPU Mining
GPU mining is probably the most popular and well-known method of mining cryptocurrencies. If you google “cryptocurrency mining”, GPU rigs are going to be some of the first things that you’ll see.
Cloud miners, for example, use GPU rigs for their services. And these guys are professionals that sometimes have hundreds if not thousands of rigs, so they probably know what they’re doing, right?
GPU mining is very popular because it’s both efficient and relatively cheap. Don’t get me wrong, the construction of the rig itself tends to be costly - but when it comes to its hash speed and the general workforce, the GPU mining rig is great.
GPU rigs utilize graphics cards to mine cryptocurrencies. One standard rig is made out of a processor, a motherboard, cooling, rig frame and - of course - a few (2 - 8) graphics cards.
A typical price for a well-performing and nicely built GPU mining rig aims to be around the $3000 price range. It is a hefty investment but will pay off much faster than, let’s say, a CPU miner. People looking for ways how to mine cryptocurrency should check them out.
Method #4 - ASIC Mining
ASICs (Application-Specific Integrated Circuits) are special devices that are designed explicitly to perform a single task, which in this case is crypto mining.
ASICs are very well known and treasured because they produce insane amounts of cryptocurrency when compared to its competitors' GPU and CPU.
But if they are so good, why didn’t I mention them sooner?
Well, mostly because they're a big subject of controversy.
You see, when the ASIC company announced its new version of the machine, the announcement caused an uproar in the cryptocurrency community. Many people have called for an outright ban on these machines. Why?
Because ASICS are so powerful, they rob other miners who are using GPU or CPU rigs of the possibility to keep up both in hash speeds and in earnings. Also, ASICs have twisted the economy of certain specific cryptocurrencies - imagine if the majority of earnings would go to one miner with an ASIC farm, what kind of chaos that would ensue.
The Best Method to Mine Cryptocurrency
Now that you have an understanding of how to mine cryptocurrency and about all of the different ways to do it, which one is the best way?
The method that suits you the most depends solemnly on a few key details: are you willing to spend some initial money? If so, how much? Do you want to OWN a rig? Do you even want to do it with a rig?
These and many more similar questions will determine your best method for mining cryptocurrency.
Generally speaking, GPU and cloud mining seems to be the two big options that people love. CPU mining is slow and tedious, while ASIC mining could get very unpredictable, especially as of late.
If you want to build your rig, then GPU is the way to go. If you don’t want to spend a dime and just get going ASAP, you could give CPU mining a shot. However, if you’re willing to risk it and you’re not afraid of controversy - ASICs are a great bet. And finally, if you don’t want anything to do with neither rigs nor any other type of machinery - cloud mining is your best bet on how to mine cryptocurrency!
Which Cryptocurrency to Mine?
Your choice of gear should also depend on the type of cryptocurrency mining that you've decided to do.
Some of the obvious favorites would be Bitcoin, Ethereum or Dash. Keep in mind, though, that Bitcoin mining is probably the trickiest of them all - since the coin is so popular, there are many miners around the world tuning into the few pools that there are and trying to snatch at least a small bit of Bitcoin. This might result in you waiting for countless hours until the first drops of Bitcoin start coming in.
Keeping that in mind, your best bet would probably be to stick with Ethereum or some other less-popular cryptocurrency. Depending on your method of choice, check out the prices, calculate when your return on investment would happen, do some math and you’ll figure it out in no time!
As you’ve probably noticed, there are many different ways on how to mine cryptocurrency. These are simply the main methods - if you’d like, you could even forget about mining and jump into Bitcoin faucets - but that’s a whole different story for a whole different day. But it's an option!
One thing that you should not only remember, but also do right away is to create a cryptocurrency wallet. Decide on the type of cryptocurrency that you want to mine and simply look up the wallet options for that currency. I strongly recommended Ledger Nano S, Coinbase and Trezor, they're truly reliable.
You’ll have no problems finding one for coins like Bitcoin, Ethereum or Litecoin, but if you want to mine the less-known currencies, then you might need to search for a bit until you find a reputable wallet.
Getting a secure and reputable wallet is the most important task when you’re starting with cryptocurrency mining. Imagine if you’d be mining for a year and all of your savings would be stolen only because you didn’t pay enough attention while choosing the wallet and picked a fishy one that got hacked into.
If you’re serious and are looking for ways on how to mine cryptocurrency, I would suggest buying a hardware wallet - they are the safest and most trustworthy cryptocurrency wallets out there.
Well, this is the end of my tutorial on crypto mining. We’ve covered a few different topics and explored the different varieties of cryptocurrency mining methods.
Remember - the method that suits you the most will depend solemnly on what you want and what kind of resources you have, so choose carefully! If you do decide on giving mining a chance, I wish you the best of luck!