This article explains how to start cryptocurrency mining and how profitable it is…
Cryptocurrencies are becoming more and more popular in our society, and fewer and fewer people have never heard of them.
We can define them as digital money (that is, they do not have physical coins or bills) and they are used to make quick payments and thus avoid transaction fees.
They are also acquired as an investment in the hope that they will increase in value.
Such coins can be bought or they can be mined, but how can we mine cryptocurrencies? Is it a profitable activity?
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We are going to try to answer these questions, especially considering that Bitcoin and Ethereum are the best known cryptocurrencies.
Despite being an increasingly common asset, it must be remembered that cryptocurrencies are not backed by any government or central bank, unlike bank deposits, which are insured.
Therefore, in case of having cryptocurrencies in a digital wallet provided by a company and this company ceases its activity, it is likely that no government can act to recover the lost money.
Furthermore, the value of a cryptocurrency is constantly fluctuating and, in fact, can vary hourly.
As they do not have support from any central bank or government, it is not the case that we do see with most strong currencies (such as the US dollar or the euro), where central banks set a target value for inflation of about 2%, so that the currency does not suffer large fluctuations in value.
How can you mine Cryptocurrencies?
The term “mining cryptocurrencies” refers to the necessary process to decentralize the obtaining of said digital currencies by verifying the transactions that are made with these currencies in order to add them to the digital ledger that is kept in the one known as Blockchain,
noting only those transactions confirmed as valid and discarding those that are a double expense.
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This digital accounting is encrypted and can only be modified by calculations that encrypt each block, as well as being incorruptible (no user can change the database) and being decentralized.
How to Start Cryptocurrency Mining
When starting cryptocurrency mining, it is important to have the necessary hardware , which can be generic or specialized for mining.
In addition, software is needed that allows us to mine with currencies such as Bitcoin , this makes the hardware we have interact with the cryptocurrency network and thus be able to mine it.
The best known software programs are CGMiner and Claymore, the former being the most popular for Bitcoin and the latter for Ethereum.
Another necessary thing is the wallet or the digital purse, since it is where all the payments for having mined will be saved.
The wallets can be of the hardware or cold type , which can be purchased in physical stores or online.
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Online wallets are not highly recommended, as they can be attacked, just like those offered by exchange houses.
The cooling system and conditioning are also essential, as the level of processing that is required can cause the temperature of the equipment to rise a lot and deteriorate if cooling measures are not taken.
It is important to find cryptocurrencies that fit the available equipment to maximize performance.
Another very important factor is the price per kilowatt of electrical energy, since the equipment will be on 24 hours a day, 7 days a week. In addition, they need refrigeration.
All the necessary information on the particularities of the mining of each cryptocurrency is available in the Blockchain Explorer or also in the Coin Market Cap .
What Cryptocurrency do I choose to mine?
To choose which cryptocurrency we want to mine we can take into account various aspects, such as their value in the market (currently a Bitcoin has a value of more than 45,000 dollars and an Ethereum has a value of more than 1,300 dollars).
Another thing to take into account is the cost of electricity in the region where we plan to carry out mining, as a high electricity cost will reduce our profitability.
In addition, the power of our mining system is key to knowing in which cryptocurrency to dedicate our efforts. There are pages like WhatToMine that can help us in our election process.
Is it profitable to mine cryptocurrencies?
The profitability of mining cryptocurrencies depends on several factors, such as the difficulty of the network , the value of the cryptocurrency itself, the cost of electricity or the number of coins left to be mined.
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It is important to note that for Bitcoin, as well as for the rest of cryptocurrencies, there is a fixed number of currencies in existence, therefore this differs from common currencies, since banks can print as much currency as they want (although this generates inflation).
For Bitcoin there are a total of 21 million and 85% of this figure has already been mined, more than 18 million, being increasingly complicated.
Therefore, the more difficult it is, the more powerful the equipment we use must be and the more expensive it will be to acquire it, so it can be said that as we approach the total mining of available Bitcoins, the less profitable it may be to mine them (although another story different is to buy them as an investment).
Perhaps other lesser-known cryptocurrencies offer more profitability to miners.
Therefore, the world of cryptocurrencies is booming recently and more people are signing up to carry out their mining, especially thanks to the large number of different cryptocurrency options that exist, with different returns each.
We hope you enjoyed this article on how to start cryptocurrency mining
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