The cryptocurrency world has become a sophisticated market full of products, ideas, currencies and trends that the miners need to understand before starting the process. The mining process incorporates technically complicated features and details, such as blockchains, mining rigs, ICOs, hash rates, digital wallets, decoding, and so on, that each miner should become familiar with to avoid any process-related confusion. Sometimes, the more you learn, the more puzzled you become with the terms and technicalities. Therefore, let’s limit this article to the bare essentials that each miner needs to learn about in order to succeed by asking the question of “how to start?”
Since the market is full of different trends and products, the first thing the miner needs to do is to start with the research. Numerous blogs and media provide sound advice to the miners and explain the most complicated terms related to the Bitcoin network. Research is the most vital thing the beginner needs to do to identify the most popular and trusted sources, wallets, pools, and exchanges.
The second most important thing the successful miner needs is the best Bitcoin mining hardware. Initially, Bitcoin and Ether mining were carried out through ordinary personal computers as the miners did not have a need for special hardware. However, the process has since evolved and the graphical processing units (GPUs) of PCs have become less effective by themselves. Since numerous hardware and ready-assembled rigs with different hash rates built specifically for mining purposes, computational power and energy consumption levels are available on the market today, the miner needs to be sure that they choose one which has a high hash rate but also a low energy consumption to maximise profits after utility bills are paid.
3. Bitcoin wallet
A reliable digital wallet is the third most important thing a successful miner needs to choose. Since the market is full of different bitcoin wallet options, the miner needs to select one that is secure and cannot be easily scammed. By doing that, the miner should also make sure that he or she has generated reliable private and public keys for the transactions. The best way of doing that is to leave the task to the wallet, as it automatically generates highly sophisticated strings (numbers and letters) for the keys that can never be scammed or hacked.
Usually, miners also need reliable exchanges to turn their digital currencies into fiat money. These exchanges are also not secure from fakes and scams, as they are also trying to sway the miners with fluctuating exchange rates, and so the miner needs to choose a trusted exchange with stable rates, which is not always a quick and easy task. The popular exchanges are a good option, although they are not 100% protected from hackers.
5. The power
Speaking about the efficiency of the process, the electricity prices and the speed of the internet should also be considered. So what if your software and hardware mine lots of digital coins, if all of them are wasted on paying the bills? The successful miners will always do the comparison on those prices before deciding on which unit to buy and where to install it. That’s where cloud mining comes to help. But first, let’s discuss various options how you can mine cryptocurrencies.
To begin with, you can mine cryptocurrencies from your regular PC, and if that’s your thing you can skip this guide. However, don’t expect to make any money coming from your PC-based mining adventure. You can set up a mining business with your smartphone for zero effect.
Bitcoin mining requires a specialized computer setup, called a rig, to do the hard work of powerful calculations. The basic components of a cryptocurrency mining rig are the following:
1. Graphics cards (GPU):
According to TechRadar, the most popular graphics cards used in rigs are Nvidia GeForce GTX 750 Ti, GTX 1060 6GB, GTX 1070, GTX 1080, GTX 1080 Ti, as well as AMD Radeon R9 280x, R9 390, R9 Fury, RX 470, RX 570.
This is the control center and communication hub of your rig as ensures all components can communicate with each other.
This is your rig’s short term memory that helps run programs.
4. Hard Drive
This is a long term memory where rig’s operation system and program files are stored.
5. Power Supply Unit
You need a bigger power supply to keep your powerful processors running as you mine Bitcoins.
This is where you mount your components on. Frames usually include cooling units which are far more convenient.
7. Monitor, Keyboard, Mouse
You do not plan to watch films or play games on your rig, so very basic models would suffice.
8. Operating System
Rigs run on Windows or Linux, or you can install specialized systems created for running your mining software and your Bitcoin wallet. You must keep your software up to date.
It connects your rig to the blockchain network and earns you revenue.
10. Power Supply
Rigs use a lot of electricity, and the cost of electricity will determine whether or not your installment would be profitable.
These are the basic components of a mining rig, although in many cases you may want to add other components or configure your rig differently. But if you don’t want to splurge on the most expensive graphic cards, there’s another option to profit.
Joining the Mining Pool
Despite the potential for profit, even the fastest and most expensive machines often cannot match the requirements of the blockchain which means that miners have to combine resources in order to stay competitive. The difficulty of puzzle solving increases over time because the number of bitcoins to be mined decreases, so with an average rig you can work for a year and never earn any coins. That’s why for the beginner in cryptocurrencies it’s more feasible to join a group of miners called a pool.
To increase profitability miners with different processing capabilities combine their processing powers to contribute to blockchain and split the Bitcoin fees. Pools are also popular to mine smaller cryptocurrencies. This way, small-scale miners remain competitive and still be on the market. With the increasing difficulty of digging for Bitcoin it’s very difficult for the solo miner to make money all by himself. Joining a pool would give them a quicker reward as well as easier access to the blockchain system. The equipment requirements for joining a pool are also less demanding.
The Cloud Mining Option
Cloud mining works by sharing processor power produced by remote servers that take care of actual verification of Bitcoin transactions. Instead of buying expensive hardware and installing complicated software you can enter the cryptocurrency world via the cloud. Cloud mining has the equipment installed in a distant facility and all services provided in the cloud for rent.
Cloud mining has several advantages to it. There is a very low entry point, so people can start participating in the blockchain with minimum investment. The costs of renting a miner equipment for Bitcoin in the cloud are significantly lower compared to purchasing the specialised equipment of Bitcoin miners, but the profit is also significantly lower at the cost of convenience. Currently, mining contracts are starting at $10.
Be careful and consider all pros and cons of buying your own hardware and working in the cloud. Read the contract carefully to make sure that you are signing with a legitimate company or if the arrangement is profitable to earn any Bitcoins. You may wish to start with cloud mining to gain better knowledge of the industry, while you educate yourself and stay on track with Bitcoin news, and once you feel confident then we recommend to build your own rig.