20 Jan, 2019 at 21:42pm
Within the cryptocurrency world, mining is one of the best-known terms and one of the most participated in activities. For those that are just stepping into cryptocurrency mining, it is a process in which miners race to verify a transaction, be responsible for ensuring the authenticity of information and updating the blockchain with transaction data. The mining process involves competing with other miners to solve complicated mathematical problems which contain cryptographic hashes, in return for completing this process, miners are granted a reward which is typically a small amount of said cryptocurrency. In order to battle with the other miners and try to be the first to receive a reward, people invest thousands of dollars into mining equipment such as graphics cards (GPUs), ASIC miners, mining rigs and cloud servers for cloud mining.
Back in the days when Bitcoin came out, people used to mine this revolutionary coin with their computers, however, mining difficulty has risen drastically, over time, rising through the roof, and miners require more hashing power (computing power) for the best results. ASIC (application-specific integrated circuit) miners joined the mining game back in 2013 and have, since then, been popular among miners. A downside to ASIC miners is that they can only do one job and mine one specific algorithm, whereas graphics cards (GPUs) can be adjusted to mine different algorithms. In order to get up to the speed that an ASIC can provide when mining, people have had to make mining rigs containing up to 10 GPUs.
Mining certain coins can bring in substantial amounts of profit on a daily basis, however, certain coins can only be mined with a CPU, GPU or ASIC.
If you have purchased a few graphics cards and want to start mining but don’t know which cryptocurrency to mine, we’ve picked a few based on their development and potential growth value in the future.
Webchain uses a modified version of the CryptoNight PoW (Proof of Work) algorithm, called CryptoNight v7. When mining WEB, CPU processing power is utilized to secure ERC223 and ERC20 smarts contracts, as well as decentralized apps (DApps). To get rid of all ASIC hype, the coin cannot be mined with an ASIC miner but it can be mined through smartphones, desktop computers or devices that can connect to the internet and run their app, which is a high-performance CPU miner, originally based on XMRig, with changes that allow mining this specific coin. Their blockchain is transparent, public and traceable, meaning transactions can be traced back to their source. Transactions are confirmed at high speed. WEB’s current market cap is roughly $110,000 and has lots of room to grow.
Vertcoin is using an alternative version of SHA256 (the algorithm that Bitcoin uses), known as Lyra2Rev2. N-Factor Scrypt has been introduced and controls how much memory is needed for the hashing functions. In addition, it is also being implemented to promote ASIC resistance. You can mine the coin using a graphics card (GPU) or a central processing unit (CPU). The team has developed a miner with a simple user interface that is very easy to use and navigate. The current market cap is around $11,300,000.
This incredibly popular coin, Monero, uses the CryptoNight algorithm, similar to Webchain, which makes it ASIC resistant, along with being CPU & GPU friendly. Monero is well known and is one of the most advanced anonymous cryptocurrencies. Even though it is CPU friendly, for the best results, it is recommended to use graphics cards (GPUs) for mining. It is important to bear in mind that AMD graphics cards are more suited for mining Monero than NVIDIA cards. The current market cap is approximately $750,000,000. Monero is also rather popular with people who want to mine in unethical ways, due to the anonymity it provides.
Dogecoin, a cryptocurrency that was inspired by the doge meme, a meme about a dog, uses the Scrypt algorithm. It can be mined using a graphics card (GPU) or a CPU. When it comes to mining with graphics cards, it is recommended to mine using AMD cards as they work the best, however, if you already own some NVIDIA cards then feel free to use them. The current market cap is about $250,000,000.
Using a CryptoNight algorithm, that is ASIC resistant, this coin can be mined not only using a CPU or graphics card (GPU) but also by people that have smartphones. Electroneum’s team was inspired by the idea of targeting the world’s smartphone population that can trigger the mass adoption of the cryptocurrencies. The current market cap is around $52,000,000.
This coin uses the CryptoNote algorithm which means it’s ASIC resistant and promotes the idea of anonymous P2P (Peer-to-Peer) transactions. 2017 was the year of Bytecoin, seeing its price skyrocket by 5,500% with an all-time high of 100 satoshis. The current market cap is around $120,000,000.
With each coin mentioned, it’s important to not forget to download the official wallet that can be found on each coin’s official website, to safely store your mined coins. It’s not recommended to keep any coin’s on a currency exchange or one of the mining pools that you will be using because of potential hacks and the possibility of losing your mined coins. For better earnings, it is suggested to join a mining pool where people combine their hashing power and try to solve these blocks together, where the reward is split between all the miners. Never share your private keys and keep a backup somewhere safe!
Most miners, before investing or if they decide to invest, want to do the math to see how much they can earn on a monthly basis, and to see how much the hardware will cost. There are a lot of websites with useful information as well online calculators where it will show the profitability of a particular piece of hardware, along with the potential ROI (return on investment) based on the price of the hardware, mining pool fees and electricity costs.
By typing the price of your hardware and electricity cost, along with your mining pool’s fee and your hardware’s power consumption, these calculators will show the average profitability based on the network difficulty on a daily, weekly or monthly basis, as well the ROI (return on investment) that you may get.
One of the key parameters in mining is the network difficulty. This difficulty determines how hard it is to solve blocks and it varies according to the network hash rate, or in other words, how many people are going to mine that particular cryptocurrency - the more people mining or the more popular it is, the higher the hash rate will be and with that being said, the difficulty will rise which means fewer rewards and, usually, rewards only for the ones with the most computing power.
If you decide to go one step above and invest in an ASIC miner then feel free to take a look at AsicMinerValue - this is a website that shows the current profitability of an ASIC based on the mining algorithm, as well as the manufacturers that make those ASICs and how much they cost.
Before you rush into mining there are still some guidelines you have to follow:
1. It’s not worth burning your laptop to mine coins.
2. Get a proper ASIC for Bitcoin mining or if you plan to invest in a GPU mining rig, get the right graphics card.
3. Make sure you buy extra fans so that your GPUs can stay nice and cool and not overheat or burn out.
4. Before buying or investing, do the math; how much will the hardware cost, how much power will the hardware use, what is your electricity rate?
5. Research about the cryptocurrency that you want to mine - is it worth mining? Does it have potential?
1. People whose main source of income is from mining.
2. People whose main source of income is from a job, not related to mining.
The first type, people that do not have any source of income besides mining, are constantly selling their freshly mined coins to pay their bills and make some profit. However, later down the line, when the market explodes (just like in 2017 and the beginning of 2018) they realize how much money they lost by selling their coins at a very cheap rate.
The second type, people that have faith in the project, usually from doing research and analysis based on the project’s potential, development, and technology behind it, decide to mine that specific cryptocurrency and just store it in their wallet, with the intention for the value of their coins growing in the future.
If you're looking to invest in cryptocurrencies, check out our article on the best coins to invest in.
Photo Credits - Avesta, Internet of Business, Business Insider, CryptoCompare