Back in 1849, people traveled from all over to San Francisco and the surrounding area to mine for gold in what was dubbed “The Gold Rush.” They became known as the ‘49ers (not the football team, although now it’s clear where they got their name).
Nowadays, there’s a new kind of mining sweeping the world, and it’s not location-specific. We’re talking about cryptocurrency mining, but it’s not as clear-cut as searching for golden nuggets in the soot.
So, if you’re looking to become a miner in your own right (of crypto, of course), then you’re in the right place because we’re going to dig up whether or not it’s worth it.
Here’s what you need to know.
Cryptocurrency mining is the process that adds more crypto into circulation on blockchain networks by validating a transaction.
So basically, your computer solves equations, and in return you receive crypto (if you’re the first to get the right answer). You can mine any cryptocurrency that is on a distributed public ledger. The most famous one of these is Bitcoin.
Transactions are grouped together to form a “block” of data, and each block is linked to the one before it and the one that will happen next. Like a “chain.” Hence the word “blockchain,” which is literally a chain of blocks.
Nobody owns the blockchain, which works through a network of computers called nodes, or miners. Before a new block gets added to the chain, every mining node needs to agree. Because of this consensus, blockchain transactions are extremely secure and almost impossible to tamper with or change. That means next to zero fraud.
This is also where mining comes into play. Every computer receives a Proof-of-Work (PoW) mathematical problem that it attempts to figure out the fastest. It takes a lot of processing power to solve the problem. But, the first computer (miner) to do so is rewarded with crypto.
Cryptocurrency miners need to have either a GPU (graphics processing unit) or application-specific integrated circuit (ASIC) to set up a mining rig. Yes, a GPU is the same type of graphics card that your brother uses in his gaming computer. And just like with online gaming, the faster the better (and more costly). A GPU is made for parallel processing, which allows your computer to render videos and graphics. So, a high-end GPU also has the power to mine quickly.
The probability of being the first person to solve a transaction depends on the portion of mining power that’s on the network. So, you may put in a lot of work and get nothing in the end (or even lose because you’re paying for electricity and spending your time), which is why mining crypto isn’t a sure bet (just like finding gold wasn’t a sure thing for the ‘49ers).
Let’s take a look at some of the best cryptocurrency to mine. And, don’t worry, if you want to hang up your mining hat, then we’ll share how you can buy crypto using cash instead (ah, that sounds easier).
Out of all the digital currencies, Bitcoin has the highest market capitalization, which is why a lot of people want to have some Bitcoin to call their own. When Bitcoin entered the scene, it was possible to mine it using a regular computer with a standard multi-core central processing unit (CPU). That meant that you could mine Bitcoin using pretty much whatever computer you already had sitting on your desk.
But, over time, Bitcoin mining has demanded more resources as it has become more competitive. So now, Bitcoin miners need a solid power supply and a top-tier GPU. An ASIC GPU (which is basically a dedicated GPU for mining) is the optimal choice. But you’re competing against giant Bitcoin mining farms with thousands of computers stacked from floor to ceiling, sometimes three stories high.
It takes a lot of electricity to mine Bitcoin, so you have to weigh the cost against the potential reward. And chances are pretty low that you’ll be the person to solve the PoW puzzle. It’s kinda like winning the lottery. If you do solve it, you get 6.25 bitcoin (until 2024, when it’s halved and you’ll get 3.125). Bitcoin’s difficulty is listed at 19.93 trillion (yep, with a “T”), according to BTC.com.
Mining Bitcoin Cash requires ASIC mining machines. And like Bitcoin, Bitcoin Cash also uses up a lot of energy to mine. So, to figure out whether or not it’s profitable for you, you need to consider the costs of the hardware (an ASIC GPU is typically at least $1,000 but can reach tens of thousands of dollars, depending on its processing power). And then add in the cost of electricity where you live.
At the same time, you will need to keep an eye on the market value of Bitcoin Cash, because you want to make sure that if you’re the lucky winner of solving the puzzle, the benefit outweighs the cost. The reward for Bitcoin Cash is 6.25 BCH for each successfully mined block, same as Bitcoin. And it’s halved every four years, like Bitcoin is. But the value of Bitcoin is 100x that of Bitcoin Cash, with BCH close to $600 and BTC almost $60,000. The difficulty is 188.59 billion.
Litecoin is referred to as the “silver to Bitcoin’s gold.” It takes less time to confirm Litecoin transactions than Bitcoin (2.5 minutes as compared to 10 minutes), which is one favorable upside. But, Litecoin is not worth as much as Bitcoin, so there’s that.
Like the other cryptocurrencies on this list, you’ll need specialized hardware to mine. If you are the winning miner, you can earn 12.5 LTC per block. The block reward is halved after every 840,000 blocks are mined, which takes about four years like Bitcoin and Bitcoin Cash. The Litecoin halving will continue until the cap of 84 million Litecoins have been mined). Litecoin’s difficulty is ranked at 9.76 million.
You can choose to spend your time walking your dog or mining Dogecoin. Dogecoin doesn’t have a maximum supply cap, like the other cryptocurrencies already discussed above. So, its circulation will continue infinitely as new coins are mined. On the Dogecoin network, new blocks are added roughly every minute, and the reward per block is 10,000.
That seems huge, but you have to keep in mind that the value of Dogecoin is pretty small, like around 25 cents. So, the reward is currently about $2,500.
Dogecoin’s hashing algorithm (Scrypt) is slightly less complex than Bitcoin’s SHA-256. For Dogecoin, you can use a GPU. To offset the costs of electricity and the best hardware, you can join a mining pool (which is where a group of cryptocurrency miners “pool” their resources over a network to boost their probability of finding a block) to mine. Dogecoin can also be mined using cloud mining, which means that you’d rent computer power from a data center (paying a monthly or annual fee based on the contract).
Dash is also mined using PoW mining, but it is defined by the X11 hashing algorithm. This is based on a sequence of 11 scientific hashing algorithms for proof-of-work. Sequential hashing increases security, uses less computing power, and is easier to program because it uses secure functions that already exist. Evan Duffield, the developer of Dash, created this algorithm to reduce the computer power needed. Dash can be mined using your computer’s CPU, a GPU, or specialized ASIC computers.
While the CPU option is the cheapest, it’s also the slowest, so you may not get anything from using it. You can also join a mining pool to up the chances of being rewarded. It’s like asking friends to help you move rather than doing it yourself — many hands make light work. Or, in this case, many computers make less costly and potentially more rewarding work.
With other altcoins, the miner gets the whole reward for solving the algorithm. With Dash, 45% of the reward goes to the miner, 45% goes to the Masternode, and 10% falls into the treasury. Masternodes own at least 1,000 Dash and have a say in what happens on the blockchain network with their voting power (making Dash a decentralized autonomous organization, or DAO).
Both the hashrate and difficulty levels of mining Dash are decreasing, which is good for people looking to pick a crypto worth mining.
A programmable blockchain rather than just a cryptocurrency, Ethereum has gone through quite the evolution since its launch in 2015. There’s the standard Ether coin (ETH) which was forked to a new blockchain, Ethereum Classic (ETC) which remains how it originally was at the first hard fork, and Ethereum 2.0 (Eth2) which will revolutionize the whole system.
ETH and ETC operate under the PoW model, so you can mine them. A good GPU will work for mining Ethereum, but an ASIC miner is usually more profitable since it has much more processing power. Of course, it also costs more, so you’ll need to do some math here.
The ETH reward is 2 ETH per block while the ETC block reward is 3.2 ETC, and both versions take about 15 seconds to mine a block. Oh, and the miner gets all the network “gas fees” as well, which can be pretty high when the network is congested. These fees are paid by the person buying Ethereum-based assets.
Eth2 is going to a Proof of Stake (PoS) model rather than PoW. So you can stake it, but you can’t mine it. This is intended to be a more efficient and scalable system for the future.
Many miners consider ETH mining to be the most profitable option of all crypto mining. It’s in high demand because Ethereum forms the backbone of many decentralized finance (DeFi) projects, decentralized apps (DApps), stablecoins, non-fungible tokens (NFTs) and more. But the difficulty rating of mining ETH is 12.44 quadrillion (that’s really hard!).
Most of these cryptocurrencies can also be mined through mining pools, where you basically share your computing power with other miners, and then share the rewards. You can get into these using just a GPU, and while the profit is less than mining yourself, you’re also getting more consistent wins. It’s like having a small slice of pie instead of no pie at all.
When looking into mining pool software, you’ll want to calculate your potential Return on Investment (ROI). Make sure you take into account how much you can expect to make (Return), how much electricity and computing power you have to put into it (Investment), and how long you have to wait to withdraw your earnings. Most pools have a minimum dollar limit for withdrawal, which could take several months or longer to reach.
The good news is that you don’t have to feel like you’re playing the lottery (and paying out more than you make on resources) to be able to get your own crypto. Instead of spending all the time and power mining, you can use your cash to buy over 40 different cryptocurrencies at a Coin Cloud DCM, which is like a next-gen Bitcoin ATM.
Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.
Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.
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