All you have to know about mining

Ever since mining exists, it’s been relied with extraction of precious metals. Actually, people have always been intentionally pickaxing rocks, hoping to discover a new field of ores. Known for its exchange functionality, gold has been used for centuries to yield goods. Now, if you abstain from diggers and helmets, we would like to talk to you about cryptocurrencies. The particular gold-extracting analogy is closely relied with the process of mining crypto coins.

Have you heard about Bitcoin? Well, this is the golden top of the crypto mountain. It’s been mined just like the metal itself, to receive an award for contributing to the process. Becoming a miner is bound with matching certain requirements to experience a successful mining process.

This article is going to show you all the key aspect needed to be kept in mind when joining a crypto project. Anyway, if your aim is to stay tuned all the time, follow the social media accounts of the chosen cryptocurrency. This way, you’ll be aware of all the updates and news around it. Check for Telegram, Discord and Twitter announcements.

What is mining?

For the purview of completely understanding the mining conception, we should start with its core values. People got sick and tired from banks, holding all the power on the financial market. Ever since bank institutions exist, they manipulate the currency rate, which influences the world’s economy, causing financial crisis. Here comes the idea to simply split this centralized puissance by giving a piece of the pie to every user. Willing to manage your own money? Bored from the growing transfer fees? Searching for a financial revolution? We’re on the same page. At 2008, a person, named Satoshi Nakamoto invented Bitcoin – the first peer-to-peer network, where users don’t depend on a third-party. This is called decentralization.

Keeping it transparent, developers created a blockchain, which records each transaction in a public ledger. Want to know the best part? It’s irreversible – if a person places a transaction, it’s directly broadcasted to the blockchain and there’s no way to take it back. In consequence, we observe inability to hack or lie the blockchain. There are some crypto projects, defending different values such as privacy, anonymity or higher security. But most of them aim to be decentralized. Won the battle? Not yet – banks answered the crypto innovation by creating their own coin – Ripple, which is used to pay transaction fees. Since all this is in a very early stage of development, we still continue examining all the news form the crypto sphere.

In order to perform a mining process, the coin itself should use the Proof-of-Work mechanism. This is a consensus method, which check whether a certain data satisfies some particular requirements. It’s a difficult mathematical equation, which stand in the need of lots of computational power to randomly check until the machine finds the matching answer. Once solved, the information goes directly to the block found, so all the miners continue with searching the proper result in the next one. All this happens with the help of mining hardware.

Anyway, mining is relied to many variables. Let’s say lots of miners start joining the same project, combining their computational power in pools (groups), so they finally mine the block earlier than expected. This reduces both the block time and the difficulty of the network. The last-mentioned is adjusted on a fixed time frame. For example, Bitcoin’s difficulty adjusts on every 2016 blocks (or 2 weeks). The explained conditions suppose increasing of the difficulty in order to get it back to normal. Respectively, if miners start quitting – it will become lower, same for the block time, as well.

When miners discover a block, they receive a reward for it, which is a number of bitcoins. How many coins? It depends on what’s implemented in the coin’s code. At the beginning Bitcoin’s reward was 50BTC, later on it became 25 and at the current moment it’s 12.5. It’s halving every four years.

f all this sounds a bit exhausting and you’re simply not the tech type of a guy, we have also an alternative for you. We’re talking for the so-called cloud mining. There’s no need of mining hardware to setup and take care for. Actually, all you need to do is find a provider, who’s going to manage it all in return of a monthly tax. Not bad, ah?

What do you need to start mining?

If you’re interested and can’t wait to start mining, here we come with a must-have list. First, there are some minimum aspects to check, then we can explain you how to take care of your hardware, so it can last longer and work better.

Minimum requirements

Let’s start with all the necessary equipment to become a successful miner:

  • Mining hardware: this is basically the most important decision you’re going to make. There are several types of hardware, which we would like to shortly discuss.
    • CPU: this is your computer’s processing unit, which was a nice way to mine ten years ago. Now, it’s still possible in some cases, but it’s far from profitable.
    • GPU: these are the well-known video graphics cards. They can perform faster and more profitable mining, compared to CPUs. If you combine several cards in a mining rig, you’ll observe amazing results.
    • ASIC: this is the latest trend in the mining sphere. A dedicated to device, which is more efficient than GPU cards, but a bit more expensive too. It is designed to mine only one algorithm and all the coins, based on it.
    • FPGA: here we’re on an advances level. This is a revolution of the ASIC machine, which is able to mine more than one algorithm, respectively multiple coins.
  • Mining software: this one is applicable only when speaking of GPUs, because ASIC devices have their own software implemented. Ultimately, this is a program which helps you control and monitor the mining process.
  • Internet connection: it’s very important to have a reliable and reputable internet connection. Keep in mind, that a single ASIC needs about 500MB of traffic per day, so calculate your connection’s limit before you start this journey. We would also mention the lower the latency is – the more efficient and faster the mining performs.
  • Mining pool: everybody knows how hard it could be to perform individually in a certain activity. It’s same for mining. That is why, it’s preferable to join a pool. This is a group of miners, combining their power to mine a block faster. They distribute the reward proportionally, depending on their contribution.
  • Wallet: just like the one in your pocket, this one helps you handle and manage your coins. When you mine some, they will store in the blockchain and you’ll be able to access it by your wallet, using a public and private key. Let’s mark some tips to consider when choosing one:
    • What are those keys? Pretend your public key is your email address – everybody need to send you a message. Imagine now the private key – it’s your account’s password. It’s just you the person in charge of sending messages from your personal ID. Got it how it works?
    • If you’re in a long-term commitment, choose a cold wallet. They are hardware devices or paper sheets, keeping both the keys.
    • Respectively, if you’re in for a daily usage, pick the hot option. These are all the desktop, mobile and web software, which aren’t that secure, but they are simpler to use in your routine.

Additional consequences to consider

Occasionally, there are some key aspects to consider, relied to your mining hardware. We would like to talk today about the three basic issues you might experience and how to handle it. Check our list:

  • Power consumption: what we’re trying to say is you can’t plug 3 ASICs to a single power strip (usually around 2,2 kW, because each of them uses between 1 and 2 kW). This will lead to overheating the devices and the strip by potentially causing a fire. So, calculate your power grid capacity, before you start buying and configuring your hardware.
  • Heat: these machines produce lots of heat to handle with. There are some modern water-cooling solutions, which are expensive, if you’re planning a home configuration. You can simply use a location, which will organically cool your devices using wind or any other nature force. Here we should mention also to calculate the number of ventilators you will need to keep a normal working temperature for your gear.
  • Noise: mining devices make some noise. Some of them are quieter, others – not. You should think of it when choosing where situate your rig. Otherwise, it might become annoying to suffer a constant headache.

How to calculate your mining profits?

Ultimately, as any other process, mining is also subordinate to a logical order. There are some crucial points to consider when thinking of your profits. Before you choose a coin to mine, keep in mind all the following as an important factor:

  • Price: always check if the coin’s price is stable or suffers lots of ups and downs. Since the crypto thematic is pretty much new in the financial sector, there are some speculations about particular coins, which influences their price.
  • Hash rate: this is a message, encrypted to its value by a cryptographic function. What we observe in crypto mining is a certain data, which can’t be revert. Hash rate secure the transfer of this data by simply ciphering it. At the end of the day, the power of your mining hardware represents your hash rate or simply put, how fast you’re able to mine the next block. Pay attention here, because it uses denominations.
  • Difficulty: as already mentioned, this is the level of difficulty to find a hash, periodically adjusted according to the number of miners contributing in the network. The vise-versa rule we explained earlier is the most important to think when checking a coin’s difficulty rate.
  • Costs: what we mean here is on first place, the price you pay for electricity. Since there are countries with very low prices per kW/hour, they are more likely to attract miners. If you’re focusing on cloud mining, carefully check the monthly tax’s changing conditions to avoid any surprises.
  • Initial investment: you should keep an eye on all the mining equipment’s prices and what you need to additionally buy or do to keep it working properly.

Mining calculator

Presently, all of us would like to see a number, showing how much they’re able to profit. Here it comes the useful mining calculator tool, which can provide this information on a daily basis. You can check the results for an hour, day, week, month or even a year to imagine the long-term incomes. When it comes to data, you should fulfil the fields with the required information by answering the following questions:

  • How much is your current hash rate?
  • What is the power consumption of your mining hardware?
  • How much do you pay at the moment for electricity costs?
  • What’s the fee of the mining pool you have joined?

There are some other details, which are automatically fulfilled, depending on the coin you choose – price, block reward and mining difficulty. What you need to do? Just hit the ‘calculate’ button and get all the estimated profits you would like to check.

Please note that all the results you see are strictly related to the current moment of the calculation. As most of the criteria is constantly varying, so it’s rough to engage with a particular number.

Conclusion

Once again, crypto is experiencing an early stage of the adoption process. This is why there are many different questions popping up, such as: Is it going to last? Is it legal? Can I really profit? Keep calm, because even if some regulations exist in several countries, it’s perfectly legal to mine cryptocurrencies. This is the ultimate concept to conquer the financial market during the past decade. Mining brings you a small income every day. If you’re ready to get started, we strongly recommend you checking our page HowToMine.com, which aims to become your crypto advisor and provide you the successful miner’s guide on how to mine cryptocurrencies.