The emergence of cryptocurrency gave mankind a new kind of earnings – mining. For many years now, he has been the most discussed topic. Since the advent of cryptocurrency, the mechanism of their extraction has changed a lot. If earlier it was possible to start “mining” from a personal PC, now it will take some effort to join the ranks of miners.
What You Need To Become A Miner
The task of the miner is to maintain the functioning of cryptocurrency networks and verify user transactions. To do this, with the help of computing equipment you need to solve mathematical hash functions. Therefore, in other words, mining can be described as the process of monetization of the computing power of technology.
Initially, cryptocurrency networks had much less complexity, therefore, it was possible to start mining on any PC. But with the increasing popularity of cryptocurrency, the complexity has also increased, so now for mining, it will be necessary to create our own high-power mining farm, which is associated with capital investments. If we talk about the extraction of such cryptocurrencies like Bitcoin, then we need huge capacities and, accordingly, investments, but there are more than 1000 digital assets on the market, so you can start mining with small amounts.
Choosing for yourself mining as the main activity, it will not be superfluous to familiarize yourself with the knowledge bases about blockchain technology and the subtleties of the cryptocurrency market. This will help you to articles from our section “Newbies” in the top menu.
The profitability and return on the farm is directly related to the ability of the miner to control the extraction process and provide optimal conditions for monetization of capacity.
Tips for a beginner miner
Cryptocurrency industry is only gaining momentum, so it is difficult to call it constant and with clear rules. Choosing to mine as earnings, an investor should understand that this type of activity is fraught with certain risks, so it is important to be able to maneuver correctly in the cryptocurrency market.
The main thing that a beginner miner should know and undertake before proceeding to mine:
- The complexity of mining is always increasing. With the increase in demand, the complexity of mining top cryptocurrencies is constantly increasing. Experienced miners recommend collecting a mining farm at once with a power reserve and allocating a portion of the income for upgrading and capacity building.
- It is necessary to monitor the situation on the market. The profitability of mining cryptocurrency depends on many factors, the main of which are the complexity of the network and the rate of cryptocurrency. Miner cannot affect these factors but can choose from a variety of coins only those that are beneficial for mining and have prospects for an increase in value. It is recommended to stop the choice on several digital assets included in the TOP-10 by capitalization.
- Production Optimization. For users, the process of mining itself comes down to connecting equipment to mining through special software, but the profitability of the process also depends on how well the miner can organize it. Here it is necessary to carry out detailed calculations based on the cost of equipment, electricity, take care of the optimal location of the farm and its protection from overheating and damage.
- Security. It is extremely important to take care of the safety of the funds that are linked. To do this, you need to prepare in advance reliable cryptocurrency wallets (we recommend the Ledger Nano hardware wallet, which we have been successfully using for more than one year), select mining programs and services that have a good reputation and high security.
What Type Of Mining To Choose
The choice of the type of mining primarily depends on the initial budget of the novice miner. There are several varieties that suggest different capital investments:
- Cloud Mining. This option is suitable first of all for those who want to understand the extraction process, but are not yet ready to invest materially. Production, in this case, does not require effort and in-depth knowledge of the industry, and initial investments are limited to a few hundred dollars.
- Mining farm from video cards. Unlike the previous method, where the entire mining organization is taken over by the cloud mining service, here you will need to delve into the subtleties of earnings, self-assemble the farm and organize the mining of coins, which requires additional study. The investment threshold, in this case, starts at $ 1,000.
- Mining on Asiki. ASIC devices are characterized by high performance and easy setup. These are complex devices ready for the extraction of a certain cryptocurrency, which only needs to be connected to the Internet and power. Special knowledge in the organization of the process in this case from the miner is not required, but mining on Asiki requires a large investment.
- Mining on the CPU. Currently, the use of processors for the production of top cryptocurrencies is not relevant, but if they are available, you can pay attention to the production of new cryptocurrencies with growth prospects.
Starting Set For The Start Of Mining
Modern mining requires high computing power, therefore one of the most optimal options is to create a mining farm from several video cards. In favor of this method, the demand for technology in the secondary market and the ability to extract cryptocurrencies working on different algorithms.
When the farm is ready for operation, you should choose a cryptocurrency for mining and, based on your choice, select the appropriate software for it. So, in addition to computing, the miner will also need:
- select a pool for production ;
- select the appropriate software ;
- to get a cryptocurrency wallet.
It should be noted that mining farms create a lot of noise and heat, so a novice miner should also take care of the location of his farm. Optimal options include accommodation in non-residential areas, for example, in a vacant room, garage or on a balcony.
How Much Can You Earn
In order to get the first coins, you need to spend a few hours, but the real earnings start from the moment when the equipment paid for itself. The payback period of the equipment depends on many factors:
- equipment cost;
- computing power of the equipment;
- farm daily yield;
- cryptocurrency costs;
- the cost of electricity and its costs;
- growth complexity cryptocurrency network.
In order to calculate the net profit of the miner, it is necessary to subtract from the earned coins the payment of electricity and the cost of equipment. The average payback period of a farm varies from 9 to 12 months, while trends to an increase/decrease in the value of coins and an increase in network complexity should be taken into account.
It often happens that with a significant jump in the rate of investment in equipment pays off much faster, and the miner goes to the net profit for several months. But it also happens that the complexity increases so much that the extraction becomes unprofitable, and in this case, the miner should either increase the power or switch to the extraction of another asset.
The easiest way to calculate the profitability of mining through our calculator mining cryptocurrency. A calculator based on the total hash capacity calculates the daily, monthly and annual yield of the farm, taking into account the current value of the cryptocurrency and the approximate increase in complexity.
Advantages and disadvantages of mining as a type of earnings
- passive income;
- does not require additional education and in-depth knowledge;
- The profit from mining can increase many times with the rapid growth of the value of the extracted cryptocurrency;
- perspective and popular type of activity;
- mining income is not subject to taxation.
- the initial investment required;
- Miner is recommended to learn the basics of mining before proceeding to mine;
- the level of income directly depends on the miner’s ability to organize mining;
- there is a risk to burn out if the rate drops
- over time, computer technology wears out, so mining requires a constant increase in power;
- The miner needs to keep abreast of the news all the time in order to be able to correctly determine the prospect of mining one or another crypto money.
Despite the apparent simplicity, mining still requires preparation and proper organization of production. Those who decide to make the extraction of digital assets the main type of their activities should be prepared for the fact that to start mining it will be necessary to have start-up capital and at least a little knowledge of the technology features.
Do not forget that the future of cryptocurrency is not yet fully defined, so the miner must always be alert to quickly respond to market changes.