Mining, as well as trading, is one of the ways to earn cryptocurrencies. Years go by, difficulties increase (difficulty is referring to the amount of hash power required to solve a block), mining profitability changes. So what should a novice miner take into account to become successful?
Mainly, there are 2 general approaches for a newcomer to begin cryptocurrency mining in 2019:
To choose a desirable coin and get suitable hardware. The hardware depends on the algorithm used by a coin. For example, if you want to mine cryptocurrency with the SHA256 algorithm (Bitcoin, Bitcoin Cash, Litecoin Cash) you can buy ASIC. If you find out that the coin is resistant to ASIC (Monero, Grin-С29), you should buy GPU.
To use the hardware that you already have, e.g. graphics processor (GPU) used for gaming, just choose a coin to mine respectively. Video cards can be adapted to mine any coin.
Coins that are mined using the Proof-of-Work protocol can be prone to centralization since large mining pools appear and concentrate mining power in places where electricity is cheap: Georgia, China, Russia, India.
GPU-mined coins strive to preserve decentralization by trying to be ASIC resistant, and the community supports this idea. Coins that try to be resistant to ASIC mining have to fork constantly. If they don’t fork, they become non-ASIC resistant soon as new ASICs are developed for their algorithms and they can become more centralized.
It is suitable for newcomers who just want to try mining cryptocurrencies and don’t want to make large investments in hardware.
CPU is a Central Processing Unit. CPU mining is available for anyone who has a PC. This method is not as popular now as it used to be since it can’t compete with GPU or ASIC mining. Though there is still a number of low difficulty coins you can mine this way, for example, Monero, Dogecoin, Bytecoin.
The more powerful the processing unit you have, the higher the hashrate will be, which means that the performance of your mining equipment will be higher.
Best coins to mine on CPU: Dash, Litecoin, Bytecoin, Steem.
Bottomline: CPU mining is suitable for those who have access to a large number of computers and cheap or free electricity.
It is the process of cryptocurrency mining using graphics processors (GPUs).
To begin GPU mining you need at least 1 graphics card, a computer and GPU mining software. First, you have to choose the graphics processor. Not all graphics processors are appropriate for mining. For example, it’s useless to calculate mining algorithms on integrated graphics or a laptop. The popular GPUs for mining are Nvidia GTX 1080 Ti or AMD RX 580. Second, you should choose a cryptocurrency to mine, a mining pool, and mining software.
GPU miners focus on newer coins (BitTube, Beam, Ravencoin) because the difficulty is relatively low there, and they don’t have to compete with ASIC miners.
Best coins to mine on GPU: Monero, Ethereum, Dogecoin.
Bottomline: GPU mining provides a wide range of coins to mine. Moreover, if it is no longer your ambition to become a miner, you can use your graphics processors in plenty of other ways.
ASIC stands for Application Specific Integrated Circuit. Each digital currency operates on the basis of a particular algorithm. This means that ASIC is developed specifically for a particular algorithm. For miners, it means that they have to choose a cryptocurrency to mine before buying hardware; sometimes this isn’t easy, especially for a newcomer.
Best coins to mine on ASIC: Bitcoin, Bitcoin Cash, ZCash.
Bottomline: ASIC mining hardware is expensive, the prices usually start from $1,000 and can reach tens of thousands of USD; there are no ASICs for some algorithms (Cuckaroo C-29, Yescrypt, etc.).
For those who are interested in mining, there are three possible options:
There are a lot of algorithms and cryptocurrencies, so you need to think carefully before choosing a coin to mine.
Cryptocurrency mining is based on algorithms which mining rigs need to decrypt in order to get rewarded. The most popular are SHA256 (Bitcoin), Scrypt (Litecoin), and DaggerHashimoto (Ethereum). The profitability of these algorithms is dynamic, so you should learn more about them and monitor the situation to get as much as possible.
The algorithm choice depends on your rig (difficulty), block time/reward, price of a coin and other variables. You can try to count mining profitability by yourself or use a mining calculator.
Here are some examples of profitable algorithms for a default GPU miner (GTX1070, Vega 56): MTP (ZCoin), Equilhash (BEAM), cuckARoo29 (Grin), X16RT (Veil).
Here are some examples of profitable algorithms for ASIC miners: Equihash (Bitcoin Private), SHA-256 (Bitcoin Cash SV), Lyra2REv2 (Absolute).
While calculating profitability of cryptocurrency mining, do not forget to take into account electricity costs, hardware maintenance, and current cryptocurrency prices.
Mining profitability is heavily dependant on electricity costs. The most expensive electricity is usually found on islands. For example, the electricity prices on the Solomon Islands are $0.88-0.99 per kWh. There are many countries with cheap electricity, but prices and payment regulations vary greatly. As a reference, electricity in Mozambique costs only $0.011 per kWh.
Here are some electricity rates in other countries:
United Kingdom $0.21
Although, electricity costs should not be a determining factor because in some countries where electricity is cheap, cryptocurrency mining is illegal and even dangerous.
Thank you for reading,
The Minergate Team