Traditionally, the global monetary system empowers banks and states to print coins and notes. This is different in the cryptocurrency world, where mining is the means of “producing” cryptocurrencies. Digital currency mining allows individuals to own the crypto, without having to buy it. Are you interested in having answers to recurrent questions like:
- How to mine cryptocurrency?
- What equipment is used to mine cryptocurrency?
- Is cryptocurrency mining profitable?
This article discusses key things you need to know about cryptocurrency mining.
What Is Cryptocurrency Mining?
Before we go ahead explaining what cryptocurrency mining means, it is important to state that mining cryptocurrencies differ from holding cryptocurrencies.
When we talk about cryptocurrency mining, we mean the use of a computer to solve complex arithmetic problems and then generate a cryptocurrency. The basis for cryptocurrency is a technology called the blockchain. It stores entries (in this case crypto transactions) in a long list that comprises blocks. To ensure that this process continues to work, further blocks must be generated by mining the cryptocurrency. New coins are subsequently distributed each time and are credited to successful miners.
Mining is the “calculation” of cryptocurrencies such as Bitcoin, Ethereum, or Dogecoin: Instead of buying such currencies by exchanging euros, you use your computer to “mine” new coins.
Anyone who wants to mine cryptocurrency inevitably needs a computer that is equipped with hardware that can quickly perform arithmetic operations.
What Hardware Is Required In Cryptocurrency Mining?
The high cost of hardware is one of the major arguments against making money through cryptocurrency mining. To make money from mining cryptocurrency, you need different hardware specially designed for digital currency mining. Mining as an individual is not a child’s play, because there are multimillion-dollar companies that specialize in large-scale cryptocurrency mining.
The manufacturers of graphics cards, desktop PC mainboards, hardware accessories, and housings are eager to serve the mining trend. Essentially, the special components aim to integrate as many graphics cards as possible. The NVIDIA GeForce RTX 3060 TI, which performs around 60 mega hashes per second (MH/s), is an example of high-power hardware for cryptocurrency mining.
The major component for mining the cryptocurrency is the miner, which is a powerful graphics card or an ASIC. Initially, CPUs were also used, but they did not offer the hash power that mining hardware should have.
- Basically, the hash rate shows how quickly new blocks are created. The more blocks are created, the better it is. You should always monitor electricity costs. The high hash rate is not an advantage if it only offsets itself against the electricity costs and thus consumes all profits.
- The most efficient miners are ASICs in terms of power and cost of electricity, but they are usually very expensive to buy
- The life expectancy of GPUs is lower, but they can also mine cryptos.
- The investment in ASICs is significantly more expensive than in GPUs, but it also pays off faster.
- However, the prices can also fluctuate, so it is sometimes possible to start with GPUs, because of the fluctuation.
ASICs are special computers modeled to mine cryptocurrencies. A good example of ASIC hardware for mining is the Antminer from Bitmain, a powerful device from the series is the S9 or the Avalon ASICs from Canaan
GPU mining entails using the graphics processing unit of a computer to solve complex math problems and verify electronic transactions on a blockchain. Nvidia graphics cards are an excellent investment ideal for mining. The graphics card is expensive, but the performance and power consumption are in good proportion.
AMD is another alternative. Radeon RX580: is one of the most popular models from AMD and is often out of print. You can check out Topiacoin.io to read more on the best GPU out there for mining.
Important Cryptocurrency Mining Facts
Cryptocurrency mining depends on a few factors you must consider, such as your electricity bills, the cost of the associated hardware, and other variables:
- There are many miners today, and this makes the generation of cryptocurrencies difficult.
- Cryptocurrency mining consumes huge electricity.
- Countries with fluctuating power supplies may not do so well mining cryptocurrency.
- Crypto mining may not be so lucrative in countries where the cost of electricity is high.
- Cryptocurrency mining requires the use of unique hardware. Your desktop PC is usually not sufficient for this, as the electricity costs would be far too high to operate the mining efficiently.
- Cryptocurrency hardware is expensive and can take up to a thousand dollars or more.
- When buying, pay attention to the hash rate of your chosen hardware. Hash rate shows how many hashes they can create per second.
- Of course, you should also pay attention to the efficiency of your ASIC miner: If the device consumes too much power, you could make a loss.
- You also need a cryptocurrency wallet where you can store your coins.
The cryptocurrency mining hardware has a lot of rules to pay attention to. It is an advantage if the miner stands free and does not have a case, because it needs a lot of ventilation. You may invest in a very good cooling system and power supply. The power supply unit in particular must be able to convert a large amount of current without being damaged.
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