New to Cryptocurrency Mining? Here is how to get started
Updated: Apr 30, 2021
Cryptocurrencies are digital, and their mining varies from that of other ores. Their creation and distribution are an electronic process using mining software and complicated algorithms. Most importantly, they are traded in a new financial system known as decentralized finance.
Different types of Cryptocurrency Mining
Proof of Work (PoW) and Proof of Stake (PoS) are the two different types of mining. They each use different consensus algorithms. Lots of computational power is needed for PoW mining because it requires miners to solve problems. PoS requires less energy, so it’s cost-effective since it distributes shares to miners based on their existing wealth.
Mining is the process that awards the miner with cryptocurrencies once each transaction is verified on the network and sent to the blockchain.
Cryptocurrency mining becomes more difficult as more miners join the network. Miners are constantly on the lookout for more effective mining hardware, software, and cheaper electricity rates.
Process of getting started
Understanding the process makes it easier for you to get started:
Get the right equipment
If you want to mine blocks of cryptocurrencies like Bitcoin or Altcoin, you will need a computer capable of GPU mining, CPU mining, or ASIC mining.
GPU mining – GPU stands for graphical processing units, and these are used to mine Zcash, Ethereum, and Monero. This is a flexible system of mining. Nvidia GeForce GTX 1070, AMD Radeon RX580, and Nvidia GeForce GTX 1060 are examples of GPU mining units.
CPU mining – The central processing unit (CPU) is the part that powers the computer as it executes the mining operations. It performs the calculations and allows the computer to rapidly switch between tasks. Cryptocurrencies that can be minded with CPU mining include Monero, Electroneum, and Bytecoin. CPU mining is not used for Bitcoin anymore.
ASIC mining – An application integrated circuit or ASIC miner is designed for the sole purpose of cryptocurrency mining. Each circuit is constructed for a specific digital currency, like Bitcoin, Ethereum, or Litecoin. Antminer S9 and AvalonMiner 921 are some of the best ASIC miners. These units are big and not always suitable for mining at home. They require more power, emit more heat, and make a louder noise.
Turn down the heat
Cooling a mining system is important because mining releases lots of heat. Generally, a good cooling system with electric cooling fans and air conditioning is needed.
Receiving your cryptocurrency
Before getting started, you need a wallet where you can receive your cryptocurrencies after mining them. Coinbase is well-known.
Mining software is important
The next step is choosing the mining software. Choose legitimate software before connecting it to your hardware.
Consider joining a mining pool
Newer cryptocurrencies are more profitable to mine, something that becomes more difficult with time. Mining pools are used to help make the mining of currencies more profitable. This means you pool with others to take advantage of the larger processing power and speed to generate higher returns.
Once the cryptocurrencies are mined, rewards are shared according to the rules of the mining pool. Slush Pool, AntPool, and BTC.com are some of the best-known mining pools.
Decentralized finance has changed the way people are offered financial services. It runs on the blockchain, and all transactions of cryptocurrencies are recorded on a private ledger in computer code. Whether you prefer Bitcoins or any of the Altcoins you need to make sure you are gaining more than spending as you mine.