As a crypto enthusiast, earning on the platform can be broadly categorized as investing and mining. And calculating your profits is just as important as pumping money into your investments.
Although a crypto calculator is ideal for traders, it’s still handy for miners. With a crypto profit calculator, it’s easy to keep track of just how much you’ve put in and how much you’re expecting to earn.
For most people, investing is the preferred choice. They stake their tokens into various decentralized apps or buy tokens at floor price and sell them high. The success of the investment depends on whether they adopt long-term or short-term strategies.
Mining cryptocurrency, however, is a different ball game. If trading is the “non-techie” way to earn on the blockchain, then mining is the opposite.
If you’re a cryptocurrency enthusiast looking to get into mining, you’ve come to the right place. Before we delve into the exact tools you need to start mining crypto, let’s start with the basics.
How does blockchain technology work?
Cryptocurrency mining is intrinsically linked with blockchain fundamentals. So, it’s impossible to talk about the former without dwelling a bit on the latter.
The blockchain is an interlinked, decentralized network that plays host to a self-updating digital ledger. As it is vast and designed to tackle scalability issues, it requires an enormous amount of computing power to generate the complex algorithms that its security protocols are based on.
In blockchain technology, the verification protocols are referred to as consensus mechanisms. The verification is done differently because the network is decentralized, and there’s no central system validating each transaction.
A category of users or nodes within the network can willingly take it upon themselves to provide the necessary computing power to validate the transactions. These users are known as miners.
How does mining work
Crypto mining is the process of validating individual blockchain transactions by providing energy and computational power to the network. In exchange, these miners get rewards in the form of tokens.
The consensus mechanism that enables cryptocurrency mining is called proof-of-work.
Crypto mining is only possible on blockchains that use the proof-of-work consensus mechanism. For each transaction to be verified, each miner must have a proof-of-work, as it were, by solving complex mathematical puzzles to generate hashes and validate each block.
Once the puzzle has been solved, it gets added to the ledger in a continuum. The proof-of-work mechanism has been criticized in many quarters because of just home much energy it takes to mine a single block.
Alternatively, other consensus protocols have since sprung up. The proof-of-stake protocol pioneered by Peercoin in 2012 does not require solving complex puzzles by miners. Instead, validators are expected to set aside several coins to be used for validating blocks.
They then earn amounts proportional to how much they have staked within the blockchain.
Today, Bitcoin uses the proof-of-work consensus mechanism, despite criticism from several quarters. As a cryptocurrency investor, you can only mine on a proof-of-work blockchain.
Having thoroughly discussed what mining is all about, let’s take a look at the required tools.
Seeing that most proof-of-work networks are already switching to proof-of-stake, it’s a given that you’ll want to mine Bitcoin. It’s the only network that won’t be switching to PoS anytime soon.
Even Ethereum, the second most popular network, plans to complete the switch to PoS by the end of 2022. So, your best bet is to mine Bitcoin. It’s quite profitable, too, given that the value of Bitcoin far outstrips several other altcoins.
Also, given its status as the pioneering cryptocurrency, it’s safe to say that it’ll be around for a while.
The first thing that you need to get is a wallet. On CoinStats, you can get one easily after signing up. A wallet is important as that’s where all your post-mining rewards will go.
It’s important to get a crypto calculator to monitor your profits and losses. For investors, the variables to be considered include deposited funds, trades, and additional fees and commissions.
Miners have to work with a different set of variables. For one, they can only earn one category of rewards- tokens for blocks mined. This variable is then set against other elements like costs for energy/power and mining rigs.
What are mining rigs?
Without mining rigs, mining crypto would be virtually impossible. Regular computers aren’t powerful enough to perform such power-intensive tasks. So, they have to be customized and tweaked for the purpose.
With regular PCs, the processors and CPU do all of the heavy computing work. On the other hand, a rig leverages the additional power that GPUs bring to generate the required computing power.
A mining rig comprises common storage space, motherboard, RAM, CPU, and GPU. The latter forms the core of the mining process. So, if you’re interested in mining crypto, you have to buy several GPUs and synchronize them into one motherboard.
In addition, power is going to be a big issue. If you want to earn enough money from mining, you’ll have to do it such that you can offset the deficits of the high maintenance costs of the rig.
Here are some things to consider when getting a rig:
A mining rig is far from cheap. Other than the computer components, power is a very important consideration. You’ll be spending thousands of dollars in energy bills as the rigs eat up much power. That’s no surprise, given the vastness of the blockchain and what it takes to mine a single block.
If you’re building the rig from scratch, you must be ready to tinker. It’s mostly trial and error, but you can get it done with the right expertise and sufficient patience.
Supply chain problems
You aren’t the only miner looking to purchase graphic cards. There are issues with the supply chain, so getting all the components you need may take some time. In addition, many cards have Lite Hash Rate, a feature that reduces mining speed. So, you can see that it’s not a simple task.
The other alternative is to buy pre-constructed rigs.
Types of rigs
Before Bitcoin went mainstream, it was possible to mine on laptops and mobile devices, given that the hash rate was low.
Today, the competition is much higher. So, mining technology has had to evolve.
ASIC stands for application-specific integrated circuit. These rigs aren’t multipurpose. They’re designed to mine crypto only. When they were first released, they were roughly 200 times stronger than basic GPUs at the time.
However, ASICs are expensive, with prices as high as $10,000.
FPGA stands for field-programmable gate array. They are faster than GPUs and are more versatile than ASICs, meaning they can be used to mine several on different blockchain networks.
However, they aren’t as easy to set up.
This is a relatively new innovation. Instead of owning the infrastructure, you pay a subscription fee to the company that runs the rigs, and you get your share of profits proportional to how much you’ve put in.
Mining is big business if done correctly. True, it’s very capital-intensive. But the rewards are there for the taking if one goes about it correctly.
Of all the tools needed to start mining, by far the most important one is a mining rig. However, there are growing concerns over the long-term viability of crypto-mining, given the environmental implications.
Given that PoW is fast losing its popularity, crypto mining, as we know it, might be dying a slow death.
Understanding And Navigating Decentralized Exchanges (Dex)
Understanding And Navigating Decentralized Exchanges (Dex) A DEX is based on the concept of “disintermediation,” it refers to omitting mediators and enabling everyday people to transact businesses freely with their counterparts. A DEX does not guarantee the maintenance of users’ crypto assets. On the other hand, users always precisely control their funds in their digital ...
Dealing With Stuck or Unconfirmed Cryptocurrency Transactions
Dealing With Stuck or Unconfirmed Cryptocurrency Transactions Was there ever a time you had to deal with stuck or unconfirmed crypto transactions, and you’re just being upset lately? Worry no more, as this article will give you several measures you can take to fix the problem and resume your crypto activities. What Is a Stuck ...
Is Bybit Legit for Buying Bitcoin and Altcoins?
How Legit is Bybit? Bybit is a Singapore-based trading platform founded in March 2018, with Ben Zhou as one of the co-founders. The crypto platform was specially designed for cryptocurrency derivatives, which refers to the contracts that give you the right to buy or sell crypto assets at certain prices in the future. Key Takeaways ...