There is a lot of information on the internet regarding how to mine cryptocurrency. Most of the information out there is essentially too complex for most people to understand. After reading loads of articles, many people are left wondering if they can mine cryptocurrency. Most people just forget about the idea and look for other ways to make money through crypto.
If you’re reading this article, you may have read countless others on this topic. One thing you must know is that this is different. Here, you’ll explore the world of cryptocurrency mining in a clear and simple language you can understand. Get answers to the multiple questions that have boggled your mind on this topic for so long. In the end, you will have done yourself a whole lot of good by taking the time to read this.
What is Cryptocurrency Mining and How Does it Work?
Today, more people in the world are becoming interested in cryptocurrency. Companies are beginning to embrace cryptocurrencies, and there is even talk that Bitcoin, the world’s most popular crypto coin, can replace gold as a hedge.
People are beginning to see how rewarding crypto assets can be despite their volatility. Hence, those who were not convinced about crypto’s fortunes are now seeking ways to join the train.
If you’re looking for a low-cost way to invest in cryptocurrency, mining is one such method. There is now a higher demand for cryptocurrency. The increased demand for crypto assets has caused a renewed and increased interest in cryptocurrency mining.
If you’re wondering what cryptocurrency mining is, here is a simple definition. It’s the procedure that allows for the recording and verification of transactions on a blockchain. A blockchain is a digital ledger that contains every transaction on a cryptocurrency. Crypto mining is the process of building a blockchain by adding data to it gradually. Crypto mining allows new crypto coins to enter into circulation.
Like the traditional mining of raw minerals from the earth’s surface, cryptocurrency mining consumes energy. It requires sophisticated computers and involves miners solving difficult mathematical equations. Hence, mining cryptocurrency is a costly process with sporadic rewards.
Despite the costs and requirements, many people want to mine cryptocurrency. This interest is because of the reward they’ll gain for their work. If a cryptocurrency miner can solve the complex equations involved in crypto mining, they’ll get cryptocurrencies to reward their endeavour. Mining cryptocurrencies is a lucrative way of earning crypto assets.
The Cryptocurrency Mining Process
Here is a simple guide to mining cryptocurrency. As a cryptocurrency miner, you’re a node in the network. Your job is to collect transactions and organise them into blocks. Whenever any crypto transaction is made, you and other nodes in the network receive the transaction and verify its validity. Miner nodes compile all these transactions from the memory pool and sort them into a block called the candidate block.
Mining a block means hashing each transaction you take from the memory pool. However, before beginning the process, you should add a transaction that involves sending yourself the block or mining reward. The transaction you add is the coinbase transaction and involves creating coins from thin air. Most times, the coinbase transaction is the first one you’ll record in a new block.
The Merkle Tree
When you hash each transaction, you organise them into a hash tree or Merkle Tree. Organising various hashed transactions into pairs and the subsequent hashing of these pairs will form the Merkle Tree. You continue to pair transaction pairs and hash them repeatedly until you reach the tree top, known as the Merkle Root or root hash. The Merkle Root is one hash representing all hashes used in generating it.
The next step is to place the Merkle Root, a previous block’s hash, and a nonce (a random number) into the block’s header. Proceed to hash the block header. Hashing the block header produces an output containing the Merkle Root, the hash of a previous block, and the nonce. The output also includes some other parameters and serves as the newly formed block’s identifier.
For the output you generate to be valid, it must be lower than a specific target value. The protocol determines the specified target value. The block hash (your generated output) has to begin with a particular quantity of zeros.
The protocol regularly adjusts this target value, known as hashing difficulty. These regular adjustments ensure constancy in the rate at which miners can create new blocks. It also ensures newly created blocks remain proportional to the network’s hashing power.
The protocol’s regular adjustments have their effects. Whenever a new miner joins a network to mine cryptocurrency, it means:
- Increased competition
- The hashing difficulty becomes higher
- The block time average does not reduce
On the other hand, when miners leave a network, it causes the following effects:
- A reduction in hashing difficulty
- The average block time remains constant despite a reduction of computational power for the network.
- Less competition
If you want to learn how to mine cryptocurrency, start with learning patience. The mining process requires you to hash the block header repeatedly. This action also involves repeatedly iterating through the nonce. You have to keep doing this until it produces a viable block hash.
Once you produce a valid block hash, you’ll broadcast it to the cryptocurrency network. Other miners on the network will check to confirm the block hash’s validity. They’ll add it to their blockchain copy if it’s a valid hash and proceed with mining a new block.
How to Mine Cryptocurrency: The Possible Methods
Though it’s possible to mine cryptocurrency, many factors contribute to your success at the operation. One of these factors is the method you use. There are different methods open to potential miners in the UK. These include:
Cloud Mining
This crypto-mining method involves paying someone or a company a specified amount of money to rent out their rig. A rig is a mining machine used to ease the mining process. You and the renting company or person can agree on the rent duration. During that period, you’ll be able to transfer the earnings the rig makes to your crypto wallet. Cloud mining companies possess massive mining facilities and multiple stacked rigs functioning simultaneously.
CPU Mining
This crypto-mining method involves using processors to mine cryptocurrencies. It was a common method before but has declined in adoption with technological advancement. Although, CPU mining is still the go-to option for people who are new to cryptocurrency mining.
One of the drawbacks of CPU mining is its speed. The slow speed also contributes to the trickle-like accumulation of crypto awards. However, it’s the quickest and easiest way to start cryptocurrency mining. Hence, many people still do it.
GPU Mining
GPU mining is one of the most popular crypto-mining methods. It’s a relatively cheap and efficient method of mining cryptocurrency. GPU rigs are expensive to construct but have great hash speed. Therefore, you’ll save money in the long run.
These GPU rigs utilise graphic cards in mining cryptocurrencies. A standard GPU rig consists of a processor, cooling, motherboard, rig frame, and 2-8 graphic cards. A high-performing GPU mining rig costs about $3,000.
ASIC Mining
ASIC means Application-Specified Integrated Circuit. ASICs are specialised devices designed to perform one function. In this case, the task they perform is cryptocurrency mining.
ASIC devices are popular and treasured in the crypto-mining community. This popularity is because of the huge amounts of cryptocurrency they produce compared to other mining methods.
However, these devices are controversial. Following the ASIC company’s announcement of the machine’s new version, there was an uproar in the crypto community. People called for the machine’s ban.
The call for ASIC’s ban is because of opinions that robs other miners using CPU or GPU the chance of keeping up to the device’s hash speeds and earning power. ASICs are also controversial because they can twist certain cryptocurrencies’ economies to favour some miners over others.
How to Mine Cryptocurrency on PC: Best Methods
If you’re new to cryptocurrency mining, the chances are that you’ll start with CPU mining. Hence, you are likely to mine cryptocurrency on your PC.
CPU mining is the slowest method slowest compared to others. But, there are ways you can utilise it efficiently. Here’s a step-by-step to mining crypto on your PC effectively.
Set Up Your Crypto Wallet
Firstly, you’ll need a crypto wallet. So, if you don’t have one, you must set it up at once. You’ll receive crypto rewards for mining in your wallet. From there, you can either keep, sell, or trade with it.
Ensure You Own a Standard PC for Crypto Mining
After setting up your crypto wallet, you need a PC with the right specifications for cryptocurrency mining. A good PC for crypto mining should have the following specifications:
- Graphics Card: RTX 3090, RTX 3080, RTX 3070, RTX 3060TI, RTX 2080, RTX 2070 SUPER, RTX 2060
- 1000watts+ power supply unit
- A Multicore Central Processing Unit
- DDR4 RAM
- A capable motherboard
Use Cryptocurrency Mining Software
You can also use a cryptocurrency mining software on your PC. Crypto mining software uses your laptop’s power to mine cryptocurrency. Most of these software applications are automated and require no technical skills to use. Some of the best crypto-mining software you can use on your PC include:
- Kryptex
- BeMine
- ECOS
- Hashing24
- Cudo Miner
- Computta
- BetterHash
- Awesome Miner
- Minergate
- NiceHash
Join a Mining Pool
With more people owning crypto assets and more miners joining blockchain networks, it gets increasingly difficult to mine cryptocurrency. On your own, it’ll be hard for you to keep up with the world’s mining farms. However, you can solve this problem by cooperating with other PC crypto miners and joining a mining pool.
Mining pools comprise miners who offer their computing power to the group. Hence, when a pool mines cryptocurrency successfully, they share the profit they get among themselves based on the computing power each member provides. Though mining pools mean lower income for you, they guarantee a regular income.
How Long Does it Take to Mine One Bitcoin?
Bitcoin is the first and most popular cryptocurrency. Hence, many people want to know how to mine Bitcoin. However, Bitcoin’s popularity means the reward for mining it has reduced over time. The rewards for mining the crypto coin reduces by half every four years.
The reward value was 50 BTC when the coin was first mined in 2009. It dropped to 25 BTC in 2012 and 12.5 in 2016. In 2020, the reward value dropped again to 6.25 BTC, which is its current value.
Currently, one Bitcoin is equivalent to about $35,000. This value means you’ll earn $218,750 for mining Bitcoin. That is quite a lot of money and a major incentive to keep going at it.
One question on the lips of many people who are new to cryptocurrency mining in the UK is, “How long does it take to mine one Bitcoin?” With access to the right computing software and power, it only takes about ten minutes to mine one Bitcoin.
Best Crypto Assets to Mine in 2021
With the complexity of operations that go into Bitcoin mining, newbies in the cryptocurrency mining scene in the UK gravitate to mining altcoins. To choose the best coin to mine, you should do the following:
- Check to see that many crypto exchanges support the crypto asset
- Check that the asset is legal to mine in the UK
- Check to see that the mining equipment you will use has a long-term use
- Check that you can convert the mined cryptocurrency for money
Some of the best crypto assets to mine in 2021 include:
- RavenCoin (RVN)
- Monero (XMR)
- LiteCoin (LTC)
- Ethereum Classic (ETC)
- Zcash (ZEC)
- Grin (GRIN)
- Metaverse (ETP)
- Bitcoin Gold (BTG)
- Dogecoin (DOGE)
- Dash (DASH)
Conclusion
With all you’ve learned in this guide to mining cryptocurrency, you all have the information to begin your crypto-mining journey. Now, you know just how crypto mining works. Since you’re likely to start your crypto-mining journey on a PC, we have been able to discuss the best way to go about it.
If you are taking your first sojourns into cryptocurrency, ensure you check out our website for cryptocurrency-related news, signals, and trading help. We’ll help to make your journey easier and give you all you need for success.
