Introduction to Cryptocurrency Mining
Mining cryptocurrency is, to put it shortly, being rewarded for keeping the network secure. This is achieved by verifying transactions. The blockchain contains information of all the transactions, continuously verified by all the miners over the world. Creating, verifying, publishing and propagating over the blocks of the chain (blockchain) is what mining essentially is. Each time a transaction is made, the miners update the blockchain, ensuring the authenticity of the information. Miners are paid physically minted cryptocurrency as fees. As an alternative to applying for Airdrops to get free crypto, mining a cryptocurrency is a great method to gain cryptocurrencies. Those who desire larger Airdrops, by doing daily tasks would be interested to do crypto bounties, check out bountiesalert.
Three forms of cryptocurrency mining will be covered in this blog:
- Mining with a computer graphics card (GPU Mining)
- Mining with an Application-specific Integrated Circuit
- Using a cloud mining service
Mining with GPU
Computer graphics card have high clockrate in their processors which make them suitable for solcing cryptographic hashes. To make a mining operation based on GPUs feasible, you have to make sure that the token/coin you will be mining is ASIC resistant. More about ASICs is covered in the next section.
Furthermore, the balance between mining power and revenue performance must be found. If electricity is expensive, you ought to consider energy efficient GPUs, for example Nvidia’s GTX 1070 ti. If electricity costs is not of any concern, AMD’s RX graphics cards are prestigious as well.
To use graphics cards to mine, you need a standard computer setup with as many graphics cards connected the Motherboard as is supported. PCIe-X4 connection may be used as well by means of a riser.
Most motherboards offer only a couple connections for GPU’s, which is why some specialized companies offer motherbords which support up to 12 GPUs, for example Biostar’s products
To determine which cryptocurrency to mine, whattomine.com offers a good overview of common cryptocurrencies’s mining reward based on the information you provide.
Pool mining is recommended to those who dont run a large mining operation. Ethermine.org is an example of such a pool and also provides guides how to set up your mining program. Miners in a pool basically work together to find solutions while mining, mining in a pool provides a better continuous. To mine Ethereum however, you will first need an Ethereum wallet, read our MyEtherWallet Guide on how to make an Ethereum wallet.
Mining with ASIC
Application-Specific Integrated Circuit is an IC chip designed to specifically work for a particular operation, such as a mining operation. It is similar to that of a CPU, except a CPU is designed for more general purposes.
Bitfury and Bitmain are the main manufacturers of the ASIC miners. Bitcoin can be mined with such a device, the hashrate of ASICs are far greater than that of GPU miners.
An Antminer S9 is a well known Bitcoin ASIC miner, which can easily cost more than a thousand dollars. Usually ASICs are able to mine different coins, aside from Bitcoin alone, for exampel DASH.
ASIC vs GPU mining
A good way to choose whether to go for GPU mining or for ASIC mining, is to see whether there is a coin that you are convinced that will undergo future mass adoption. This coin will have a specific algorithm in how the coins are mined, which has a built in code whether or not an ASIC may be designed for it. There are PoW algorithms designed to only work with GPU’s, for example Ethereum. The PoS protocol implementation for Ethereum is delayed to late 2018, possibly 2019. The PoS (Proof of Stake) is an energy efficient alternative to achieving consensus over the blockchain. Now with the bear market surpressing the ETH value, there is a surplus of graphic cards sold as second hand. Bitocin’s PoW algorithm on the other hand does permit an ASIC to be utilized.
Individuals who do not have the technological knowledge in building a mining rig, but are interested in mining, are poised to use a cloud mining service. In this scenario a company that operates large mining farms, essentially lends you their equipment for you to mine. This way, the technicalities are basically outsourced to the company.
Hashflare, GIF to the right, is such a company that allows you to customize your own desired mining plan, where the mining budget is entirely up to you. Hashflare is a company that writes software for cloud mining. They manage the maintenance of their equipment in the datacenters.
Generating cryptocurrency is certainly not limited to mining options, Hardforks (for example Litecoin hardfork) & GSMG Trading bot are two other methods to get your hands on cryptocurrency. Airdrops can become substantially valuable, as explained in our earlier blog Top 8 Airdrops of 2018. But why would you limit yourself to only Airdrops? Mining cryptocurrencies is an excellent way to get more cryptocurrencies, especially if you are a technology & innovation enthusiast.
Majored in Applied Physics & Materials Science and Engineering.
Favourite Blockchain ideas: Medicine authentication (BlockVerify) & Voting platform (Agora)
Favourite Cryptocurrencies: Bitcoin, Stratis