What is Cryptocurrency Mining?
If you are reading this then you must be starting down the road to potentially building your own cryptocurrency mining rig. First, if you are new let’s break down what cryptocurrency mining is and the different ways you can go about getting involved.
What does cryptocurrency mining mean?
Before we get started let’s answer the question that most people ask, what exactly is mining cryptocurrency and how does it work? It can be rather complicated and technical when you dig into the ones and zeros but in laymen’s terms, you are basically using your hardware GPUs, CPUs, or ASIC machine to solve cryptographic puzzles and once completed adding those solutions (transactions) to the blockchain. You are then rewarded with a payout in that currency for helping validate the transactions on the network. Having this system in place is what makes cryptocurrency decentralized as the miners are ensuring every transaction is valid and keeping the blockchains alive.
How can you mine cryptocurrency?
There are basically 3 different types of crypto mining that you can get into. Below is a brief description of what each one is and how they work.
ASIC (Application Specific Integrated Circuit)
These are created to mine a particular algorithm(s) and do nothing else but be a pure cryptocurrency mining machine. They are usually loud and produce a ton of heat, not ideal for someone who wants to mine at home or put in a high traffic area of the house. They can be very profitable and are currently the only way to mine Bitcoin effectively. The wait time for these is usually extremely long and you must buy from Chinese suppliers such as Bitmain or Baikal. Be very careful when dealing with these suppliers as there are numerous complaints that they use your units before they are shipped, have poor customer service. The other downside is you will usually not receive your unit on time, or with a PSU. If you need advice here please feel free to reach out to me at [email protected] and I can discuss the best options for you. If you are lucky enough to get your hands on one, the ROI can be anywhere from 2-5 months. After that, you could make quite a bit of money per day compared to GPU mining. Just know that if the algorithm the ASIC machine you are using becomes worthless or the difficulty becomes high, then its nothing more than a paperweight (this recently happened with DASH ASIC machines where they are basically useless).
This is not worth spending much time on as it is no longer profitable for most people. This method uses your CPU on your computer to mine coins like Monero. However, they are usually not very efficient and will not generate more than a few cents to a dollar a day after electricity costs. Therefore I recommend in our rig building guide to go cheap here as the CPU is not really needed.
This is currently the best way to mine most Altcoins that are using ASIC resistant algorithms. This method uses your computer graphics card to mine. The newest graphics cards from NVIDIA and AMD have evolved and proven extremely capable of solving these complex mathematical problems and can generate a decent profit when combined. This is the method that I currently use in my rigs and recommend looking at our intro to GPU mining and rig building guide to give you an idea of what you need to start mining. The added benefit here is if cryptocurrency crashes and all coins become worthless you can still sell your GPUs to gamers to recover 40-60% of your expense.
What method are you currently using and where do you have your rig set up? I always love seeing pictures of mining rigs send yours in [email protected]
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