Our article on different ways of making money in crypto mentions cryptocurrency mining, staking as an equivalent of mining, masternode staking, trading of cryptocurrencies, airdrops, buying into ICOs/IEOs/STOs and holding, as well as investing through crypto investment products and derivatives, as some of the best ways you can earn money in cryptocurrencies. Now mining!
You might have already heard about cryptocurrency mining, but at the same time, you might not have the faintest idea where to start. I know we have lots of resources that mentions crypto mining. But this guide explains the very basics of cryptocurrency mining for a person who has never done it or tried before.
It provides the you the best of the best practical steps and best practice about what is mining, what to mine, how to determine the cryptocurrency to mine, why to mine, when to best mine, whether to mine or stake, with what equipment to use to mine cryptocurrencies, which pools to join and many other issues related to cryptocurrency mining.
1. What exactly is mining of cryptocurrencies
Cryptocurrencies can be created either through token generation at Initial Coin Offering (equivalent of IPO) and through mining. During an ICO, the project issues a given amount of tokens to its investors to support development and these tokens are therefore released to market for trading. For mineable coins, mining is an important process in supporting the network, securing the network and ensuring decentralization of the network, and is not a mere way of creating new coins.
Mining is a process by which new cryptocurrency is created and given as an incentive to people who are supporting a cryptocurrency network. Already you might have known that decentralization is an important part of a crypto network and these people need a way to agree on which transactions will be permitted when and how when different transactions get posted by users on the network.
Cryptocurrencies achieve decentralization by having people from different parts of the world run nodes or copies of their blockchain. These nodes in the network are assisting to secure network and/or confirm network transactions and helping the network to decentralize, and people do so by hosting and running a network node on their machines and the role of the machine is to host software and to continually run the software that will confirm those transactions once they are posted to the network.
So these nodes are continually competing to confirm transactions on the network or to find a value combination needed to have a transaction confirmed and added to a current block and that block added to the existing chain. For instance, users in a given blockchain may post 1000 transactions, but all of these cannot be confirmed at once for technical and ideological reasons of crypto. So a given set (pre-determined number) of transactions are being added to a block and the single block is being added to previous blocks and together the blocks make a chain hence the word blockchain. The block is said to be mined when it is found and added to the pre-existing chain. Different blockchains have different number of transactions in a block and different pre-defined time within which a block is to be found. So for Bitcoin, it takes around 10 minutes to mine a block and nodes are competing to find the right hash for the block to be added, and that's what is referred to as mining, technically.
Again, Proof of Work mining is differentiated from proof of Stake and other methods of minting coins where instead of transactions being confirmed by computer performing cryptographic hashing, transactions and blocks are verified differently. Users who are staking their coins in the network are chosen randomly depending on a certain blockchains consensus mechanism, to validate blocks and are rewarded for doing so, instead of having users running mining machines to perform cryptographic hashing work.
2. Recommended minimums: equipment and software
First, a desktop or laptop preferably running Windows 7/8.x/10 or higher, Mac OS X or Linux and instead of ordinary Intel and AMD CPU graphic cards, invest in GPU cards. You can read that article linked about the top GPU cards for mining crypto. More keeps coming though.
Also, a reliable electricity connection is essential. You also need reliable internet connection such that the download can sustain up to 500 MB or 500 megabytes per day and therefore the data provider should allow over 15 GB in a month.
The upload should sustain 5 GB in a day, meaning the data provider should allow over 150 GB worth of upload in a month. It is also recommended to have as much as 200 GB or 200 gigabytes of additional space. Other things to expect is to invest in include an efficient cooling system as the computer will run continually and produce a lot of heat that can affect the system altogether. Fans and air conditioning units might be helpful in that regard.
Mining with an ordinary CPU is possible when you connect to a pool but the returns will be very low and it works for cryptos that are ASIC resistant such as Monero with Crypto Note, BCN, ETN, ZEN, and ETH using Ethminer program and Geth. With a decent i5 or i7 CPU, you can be able to make some profit mining these coins especially if you can connect the rig to a pool as we shall discuss later. But GPUs and ASICs are much better with the latter costing more than the former. So if you are considering buying GPU cards, then you might consider AMD over Nvidia when mining Ethereum or other coins that use Ethash and the CryptoNight algorithms such as Monero. The cards perform better in these cases.
At least 1 GB of RAM is recommended for RAM memory.
Other requirements are membership with a mining pool that allows you to combine hash-rates with other miners in order to increase profitability; and also mining software most of which is available for download free of charge on the internet. You only need to know what your GPU or CPU works best with and which software is easy to use for a beginner -- some use graphical interface and are good for beginners, others are targeted at advanced users with their command input interfaces.
Together with RAM, the more powerful your machine is the better, hence many people consider bundling many GPUs. That said, the cost of electricity will also determine profitability to a large extent.
3. Which crypto should I mine? How to select a crypto to mine
The best cryptocurrency to mine will not necessarily be the most expensive in the market or one that is gaining the most in market price. It won't be the oldest or the newest either.
Besides profit, you might want to mine a crypto for many reasons: current profit, because you are involved in the project and want to support its operations and believe in its future potential, or because of other motivations as well say research etc.
If you are motivated by "now" profits, we assume you are looking for a cryptocurrency that when you mine, you generate the most returns in terms of profits. Well, mining is always sort of a process by which you are going to engage some money buying a mining equipment, software, and paying for bills such as electricity, it being an energy-intensive process; investing in cooling devices; renting or buying hashrates etc.
Therefore, the best way of determining which crypto to mine is by considering the project returns against these aspects. What will you get in return by engaging the hashrate you have rented or have, to mine a crypto of a certain current difficulty and price, with a given algorithm, and paying the energy bills at the current rates, is the kind of question. When you consider different mineable coins in this respect, different coins will return different values.
Different cryptocurrencies are mined with different algorithms depending on how they are created or the blockchain they exist on. You might already have known that your miners delivers a certain hashrate when mining. Alongside the cost of electricity per kilowatt in your area, this can be used to determine what best crypto to mine to get the highest return or how profitable will it be to mine a specific target crypto. You can calculate expected profitability when mining a single crypto or when dual mining two cryptocurrencies on a single miner. Well, for starters, you might want to mine a single currency but some miners will allow you to mine two cryptocurrencies of the same algorithms: say Bitcoin and zcash because they both use SHA256.
To know which crypto to mine for best returns now, at least by estimates, head over to WhatToMine mining calculator. There are a host of other calculators that can assist you in this regard by calculating mining profitability but let us start with this one. On the website, beside the logo are the menus "GPU," "ASIC," "Coins," Eth+," "ETC+," and "EXP+" with the first three being employed to calculate profitability of mining a single coin with ASIC, GPU or CPU and the other three with a plus sign being used to calculate profitability when dual mining (mining two coins at a go). If you are using an ASIC, click ASIC, if using GPU select GPU, etc.
The website is a calculator that will work out what profits to expect when mining a given cryptocurrency at a given GPU or ASIC hashrate and when paying power at a defined amount per KWh. You enter those values and it will calculate profitability.
On WhatToMine.com, you can also calculate profitability of mining a given cryptocurrency or determine what cryptocurrencies to mine by entering the number of GPUs of a certain model, that you have already bought or plan to buy and use to mine the cryptocurrency. Immediately you visit the website, the default values are adapted for profitability when mining using three GTX 480 GPU cards but if you for instance you have a rig having ten 1070 cards, you click on the "1070" button and type 10 besides it and all the rest of the categories should be zero unless you have GPUs in those categories that you intend to use to mine. You notice you might be intending to run several GPUs of different models and capability and you can simultaneously calculate profitability with this calculator. Ok.
Once you input the number of GPU cards of the model you intend to use in mining, it will automatically refill the hashrates expected and the expected power consumption of the machine as expected. These are just estimates mind you.
Just below the hashrate values, insert your electricity cost. Then from the "sort by" section select profitability in 24 hours, or three days or 7 days. You can also sort by estimated rewards etc. Selection of exchanges can be left out at what it is currently.
Click "calculate" and it will tell how much profit you can get from mining the listed crypto coins in comparison to Ethereum. So below shows most profitable coins to mine for 24 hr profitability when using ten GTX 1070 GPU mining cards on your machine at a power cost of $0.1 per kilowatt hour).
Of course a given GPU will mine multiple coins using multiple algorithms, so it will automatically list all the coins of different algorithms that can be mined with your selected GPU card type. If you want you can deselect the algorithms you want to exclude in the list once you input the number of GPU cards you have for mining, but its not important since you are looking for most profitable coin. For now you can ignore the algorithm jargon and concentrate on coins you can mine.
So based on this list, the best coins to mine with my ten GTX 1070 GPU cards would be Veil which uses X16RT algorithm; followed by Nicehash-Beam, then the Beam(BEAM) cryptocurrency itself, SnowGem(XSG), and BitcoinGold(BTG).
The priority of what best crypto to mine will change if I had different GPU cards: The same happens for algorithms I could mine with a different card. For instance if I have five AMD Vega56 miners, I could mine Ethash coins such as Ethereum, EthereumClassic, CryptoNight, ZHash coins such as SnowGem, NeoScrypt coins such as RyoCurrency and Orbitcoin, CryptoNight coins such as Monero, EquiHash and many other algorithms.
So with a rig having five AMD Vega64 GPU cards, I could mine the listed below cryptocurrencies using the different algorithms and their 24-hour profitability shown in comparison to Ethereum. So based on the profitability table generated from the website (24 hr profitability at a power cost of $0.1 per kilowatt hour), the five most profitable coins to mine are Lethean, HavenProtocol, Sumokoin, Nicehash-Ethash, Nicehash-CryptoNightR, Monero, and Masari, instead of Ethereum. Again, it provides an estimate and not the exact values. You can deselect a given algorithm to exclude it from the list of coins you can mine with your GPU and for which you want to determine profitability.
You can also calculate 24-hr or 3-day profitability based on the hash rate of your miner or rig.
Again, the website allows you to calculate profitability based on your exact known value of hashrates for your GPUs or ASICs etc. So if you have already determined the hashrate say measured them on machine with software, you can ignore the entries for the number of GPUs and model to use, and input your machine's exact hashrate instead and hit "calculate."
Say I have Radeon RX Vega that manages measured (you can measure these with software) power draw of 250 W and a measured (you can aslo measure specific values as the miner is running) hash rate is 45Mh/s. If I have two of these, I would multiply those values by two and then input 90 Mh/s and 500 W below Ethash button.
Bear in mind the hash rate conversions:
1 MH/s = 1000 kH/s
1 GH/s = 1000 MH/s
1 TH/s = 1000 GH/s
With ASIC mining option, the default calculates profitability for one Antminer S17 (a type of an ASIC mining machine) and for $0.1 per kilowatt hour. To calculate for different values, you input the Gh/s hashrate for your ASIC miner and then the cost of power and the duration for which you want to calculate profitability, and the power draw or consumption, and then hit "calculate" to see which best coins to mine and earn more.
Still on the WhatToMine website, from the "coins" tab, you can select a specific coin that you want to mine and calculate its mining profitability over the same range. Clicking the "Coins" tab will simply list coins that you can select to determine profitability. For each of the coin in the list, you get to find the best pools you can mine it on, the pool fees, location of the pool servers, and miners that are online for that given pool, as well as the list of most profitable hardware you can use to mine that specific coin.
As an example, if I selected Ethergem coin from the "Coins" list, I can see that the best miner to use would be an Innosilicon A9++ ZMaster which at Mh/s hash rate of 84 and power consumption of 405 W, would be expected to give me rewards of $10.96 per week. The best mining pools to mine EtherGem would be UPool.in, Coming.io and the Official Egen Pool in that order.
For dual mining, you can click on Eth+ to calculate profitability of mining ETH in combination with other crypto such as with Decreed, SiaCoin, LBC, PASL, MAX, SMART, and XVG. They are also beta testing the ASIC Miner profitability ranking feature that will let users know how profitable it will be to use a given miner ranked for different algorithms.
Moving away from WhatToMine online calculator, there are hundreds of other mining profitability calculators online, which you can use to estimate your crypto earnings when mining a given crypto or to determine which crypto you can mine.
Crypt0 also looks a good mining profitability estimation calculator for all kinds of GPU devices (AMD and Nividia as well) including Radeon AMD devices Radeon 470, 480, 570, 580, Vegas56 and Vegas64; and Nvidia devices 1080Ti, 1050Ti, 780, 1080, 1050, 750Ti, 1070Ti, 1070, 980, Titan V, 1060, 970 and 960 as well as profitability when using ASICs (Antminer L3+, Innosilicon A5+ etc) and CPUs (ThreadRipper 1950X, Ryzen 1600, Intel i5 6600K and others).
Mining Optimizer also tries to estimate the coin that you can best mine with a given GPU or ASIC.
That's it for tools you can employ to know what crypto to mine, how and with what device or pools.
4. What exactly to start with
It doesn't have to be you starting with buying a GPU or software or anything. Actually, you can juggle your options and start by researching which coin and equipment combinations could provide highest returns. But mind you, all of these aren't permanent. Today, it might be best to mine a certain coin with your GPUs but difficulties would change when more people join that network.
You might also get yourself interested in GPU overclocking to boost further the performance of your GPUs after buying the rig. Overclocking is a little bit more advanced and for advanced miners but its not hard to do. You can read further details here.
That said, regardless of your starting point, it is a good decision to buy a rig that will offer great flexibility in regard to algorithms it can mine, etc.
5. Buying a configured mining rig?
Many vendors now sell GPUs and ASICs with software installed and ready to mine. All you need is to input your address via their custom display and do necessary network and power connections and mining kicks off.
Plus there are many vendors and mining pool that sell ready to mine rigs that are configured to mine in their pools. Whichever the case, whether you have to join a pool yourself after buying a rig separately or get a device configured to mine on a certain pool, what's most important is was it the most viable option to you financially or otherwise?
Many configured rigs also allow you to change which pool you can mine on later on.
6. Mining pools and selecting a mining pool
A mining pool is a group of people who combine their mining hashrate in order to increase the chances of gaining profits when mining cryptocurrencies. What happens is that as time goes, every Proof of Work mineable cryptocurrency becomes harder to mine because more people are joining the network and yet the time for finding a block must remain constant. We say the difficulty keeps increasing although it drops sometimes if people leave.
Solo mining, or mining on your own has therefore become increasingly hard to get any profits or sizeable profits because of the increased difficulty to mine Bitcoin, Ethereum and other crypto that have been around for some time (it might still be profitable to mine some crypto on solo especially for the new coins but it works better with a pool). When your rig is mining alone without a pool, you commit your hashrate alone to find the block that must be added to the chain and therefore, since there are many more powerful machines in the network for any given coin, it may not be profitable.
Contributing hashrate to a pool and splitting the reward as per your contributed share of hashrate is more profitable because more people will have higher chances of finding the block. Again, when mining alone, you get rewards when you find a block but when with a pool, you may get rewarded continually based on the share of mining hashrate you contribute to the pool. That depends on the payment model of the pool (for instance those operating on a Pay Per Share). However mining alone can still be a learning ground or done for other motivations.
For that reason, it is recommended to be part of a pool when mining crypto. Pools charge fees and these differ from one pool to the other ranging from 0% to 4% and the standard fees being 1%.
Different crypto mining have different features and benefits; some mining pools allow you to merge mine crypto while others do not. The other important thing is to check the location of the mining pools and how distributed or liable to disruptions they are. CryptoCompare, via this link, has a list of crypto and altcoin mining pools tat allows you to compare their fees, supported coins that can be mined with the pools, their ratings by clients and server locations. Therefore, make sure to find a pool based on all these aspects.
When you join a mining pool you are allowed to set up a pool plan and configure, from the dashboard of the created account, a wallet address where the mined coins will be paid. Once that is done, you set up a sub-account account and a worker for each of the mining software instance you intend to run, then download and run your mining software compatible to your machine and which works for the coin you want to mine.
The next process is to configure the device to the pool.
7. Configuring a miner to a pool and to start mining
It depends on which Operating System you are on. Some GPUs have controllers that allow you to access mining software others have in-built mining software to make it easier to configure addresses and pools etc. Others do not have especially if you built your own. Nevertheless, every has a motherboard and can be connected to other devices as well.
Connect GPUs to Windows or Linux compatible PC using PCI slots and install the latest GPU drivers. For AMD, you can visit amd.com and choose "Drivers & Support" then enter your GPU information and submit. Choose, download and install the right software per your AMD. For NVIDIA, visit geforce.com and choose "Drivers", visit "download" and enter GPU information manually and click "Start Search" then download and install it according to driver's manual.
The best way to go for a beginner is to find MultiMiner, a Windows 10 software that features a more user-friendly front-end graphical interface which is more user friendly for novice users compared to other command prompt based software. It detects your networked hardware rigs and presents a an intuitive screen for choosing the coins you'd like to mine.
The software not only instructs you how to connect your rigs to a mining pool easily but also scans for hardware connected to your GPUs or ASIC and FPGAs devices to tell details such as the average hashing power for each and the pool the device is connected to. It also shows the projected profits to expect for the device. It can connect to multiple pools at a go and there is the option to have the device mine the most profitable coin at any given moment or to target those that offer the lowest difficulty. You can also monitor mining both from your PC and your smart-phone.
The software is free to use although there is option of voluntarily sending 1% of mining profits directly to the developer.
If you want, you could have alternatives such as the Maximum Miner, a NiceHash alternative which is is a software that uses Advanced Heuristics engine to try and to maximize mining by determining automatically what crypto is most profitable to mine with your connected device hardware GPUs and basing on WhatToMine.com data. Then it starts mining. You can also configure to have it rotate best altcoins to mine at hourly intervals. Their Intelligent Crypto Profit-Miner Bot can also select what best mining pools there is to mine for each coin and one can also specify which pool they want to use per coin or leave it for the software to do. Users can define a mining schedule to mine Nicehash or own wallets and crypto and the miner will start that.
With it, a user can track data about their miners and pools: know when each crypto was mined, on what pool, how many shares, to what Wallet(s), with historical and real-time reports. These reports can be followed via Computer, Laptop, Phone, Tablet, or Any Device connected to the net. The software works on Windows 10, has a free limited version and the full version costs $35 USD per PC/Mining Rig for lifetime license. Users can also opt for only $5 USD per Month. The latter can be used to keep Track of your Mined Crypto Portfolio, Real-time Mining Stats, Number of Shares per Coin per Wallet per Pool, GPU Temperatures and more from your Phone, Tablet, or any web-connected device.
Otherwise, with MultiMiner, you will not need to edit the .bat or .conf files as is with other software or use command inputs as with others. This may be required for most other software to connect your rig to a pool.
Linux-based CGMiner is the best for advanced users. It also supports multiple mining pools and devices, is compatible with major operating systems, and can be used with GPUs and even CPUs with it too.
For some mining software such as the CGMiner, you will need to extract the folder, then find the CGMiner.conf file and then add the pool settings manually into the file inside the c:\cgminer directory where you extracted the files and replacing listed sub-account.worker with the name of your own sub-account and worker you created in the registered pool's dashboard. Each of the GPU will be detected and listed by CGMiner.
For ASIC operations, the best is the BFGMiner that can also do with GPUs and CPUs and best for non-ASIC-resistant crypto using SHA256 mining algorithm. It is also available for Windows, Mac, and Linux operating systems. You can use it to connect to multiple mining pools, and can be used to do overclocking, using a remote interface, and controlling fan speeds when needed.
EasyMiner is regarded as the best miner software for anyone who want to dual mine ZCash and Litecoin. It can be used to mine Bitcoin ,Litecoin,Dogecoin and other various altcoins. It has a user-friendly GUI and serves as a front-end for both the CGMiner and CPUMiner (can run both CGMiner and CPUMiner at the same time such that the ASIC can focus on mining Bitcoin while the CPU or GPU will focus on Litecoin). You are able to configure what mining pool you want to use, and although best suited for CPU and GPU mining, it can be used for ASIC mining as well.
BitMinter is categorized as the best for a quick set up and is set to configure to BiitMinter mining pool. It is easy to set up requiring one to only sign up with the pool and to install the mining software on either Windows, Mac OS, or Linux. It is free to use though the mining pool charges 1% to mine with them.
Here are some of other software to use to mine with GPUs. Each of these software has different instructions to configure that you can learn online and most of these software will let you track performance as well.
Otherwise, in addition to the above software, if you are on Linux, you can try other USB-bootable mining software such as Mining OS, Hive OS, smOS, BAOS, and ethOS Mining OS.
8. Monitoring performance of your mining rig
With appropriate software, you are able to monitor your mining rigs and performance. you are able to login with access key and worker's name and start mining with a single click, whether you are using AMD or NIVIDIA GPUs. Such software as Windows node allow you to access your GPU rigs and adjust configurations remotely, do and monitor overclocks, and manage other settings remotely.
With Windows node from Minerstat, you are able to monitor a list of crypto you are currently mining, their hash rates, number of workers, number of hardware, and a quick summary, expected earnings, on a weekly or monthly or other duration, carry diagnostics for workers with undetected hardware and offline workers and those workers with high temperature. You can also monitor top coins for selected algorithms.Such software works for many GPUs and pools as well.
ASICs such as Antminer, Innosilicon, Baikal, Obelisk, Dayun, Whatsminer, Blackminer FPGA, Spondoolies and HyperBit can be monitored and managed remotely from Windows or Linux as well with appropriate software such as ASIC Hub from Minerstat. You can do mining configuration remotely, set alerts, and manage other settings remotely as well as monitor and manage your ASICs with a help of unique features, such as profit switch, control room, alerts, and more.