Category: MINING TECH
Your Guide to Mining Cryptocurrency
By now, you’ve probably heard quite a lot about cryptocurrency mining. But you probably still have some questions before jumping in. This guide is for you.
Let’s start with the why before the how - why would you want to mine a cryptocurrency?
Well, that would be because it can make you money. Mining isn't easy per se, but nor is it particularly difficult when done right. And it can still be done very profitably depending on how committed you are.
What is Cryptocurrency Mining?
Cryptocurrencies tend to give you a 'block reward' of a certain number of coins for each block correctly hashed. A 'hash' is a string of characters that is generated from another string of characters in a difficult to decipher way. Tweaking the input just a tiny bit completely changes the hash. It is very hard to find the specific input that leads to a given hash.
In general, crypto mining is using the computational power of your computer (or someone else's) to do just that. The network is looking for a hash and the first person to solve the hash (find the original input) gets the block reward. The block reward is a certain amount of the coin that is given to the miner as a, well, reward for solving the block.
To mine cryptocurrency you need a wallet. A wallet is a secure digital tool that allows you to send, receive, and store cryptocurrencies like Bitcoin, Ethereum, etc. To use ANY cryptocurrency you'll need to have one of these for the specific coin. Without it you won't be able to receive any rewards or part rewards (from a pool) and you wouldn't be able to use or sell the coins anyway.
Getting a wallet is going to be the first step to becoming a cryptominer.
Note! Unlike real wallets, crypto wallets DO NOT HOLD THE MONEY! They hold the private key (that really does need to stay private) and the public key that tells the world what belongs to you. I.e. the public key is like a sign claiming a house is yours, but the private key is what actually lets you in.
Crypto mining hardware has gotten more specialized as the field has developed, but has seen frantic development in recent years. Time was that you could just use your computer to mine profitably. This is still true for some coins but it tends not to be true for the very established high value currencies like Bitcoin and Ether.
These require either the purchase and setup of specialized hardware and a very good internet connection and very low power cost per watt. This specialized hardware is called an ASIC. ASICs are chips that are specifically designed to perform a single task extremely well. In the case of cryptomining that task tends to be the solving of hashes.
There are many online reviews about ASICs you can use at home, but these are more and more the domain of specialists.
If you want to do this you'll have to build a rig with high cost ASICs, make sure you have a very good internet connection that can sustain uninterrupted traffic, and do a lot of math regarding your power bill.
After that you need to download a client for your currency of choice so you can connect to its network, then you'll need to install a miner (this can only be done after the client is installed and you have become a node) and the you're good to go.
Unfortunately you'll probably have to join a pool unless you have a HUGE mining rig (like warehouse size).
Pooling is a simple concept that allows you to 'pool' your resources together with other small time miners to build what is in effect an enormously powerful distributed computer dedicated to the solution of hashes. Any blocks solved are going to be distributed to all parties by the amount of work that their rig put into the mining itself.
So even if your computer isn't the one to solve the hash, but your pool solves a hash, you'll receive a percentage of the reward based on the percentage of hashes that you tried for the pool.
Sound complicated? Well... it is. There's no such thing as free money after all! But there is an easier solution.
If you are just going to be part of an online pool to improve your chance of getting a coin, then you are already distributing the work. One thing that you can think about doing now is outsourcing the actual hardware.
Chances are you don't live in an area with the cheapest electricity, the best internet connection, and you certainly don't have the scale to get the best components for as cheaply as possible. This is why an increasing number of pool miners are actually renting hardware to mine. Renting from a datacenter that uses specialized cooling and has a low fixed electricity price (this is ALWAYS a factor when building a datacenter) allows you to mine with the best hardware and the best connection without the initial upfront cost of building a mining rig.
Go for it!
Now that you have an idea of how this all works, it's really just a matter of putting it into practice! If you have an old computer lying around, perhaps you should it to practice setting up and running a mining rig. Once you have some experience and are ready to play in the big leagues you can move into building a real rig if it makes financial sense or you can start renting hardware today!