Blockchain is transforming the world we live in and there are numerous opportunities in the crypto market that people haven’t seen before. Cryptocurrencies are now entering the mainstream and more and more people are developing an interest in the blockchain. One of the activities that have drawn a lot of attention of late is that of cryptocurrency mining. In simple terms, cryptocurrency mining is defined as a process in which certain tasks are performed by a machine for obtaining a little bit of cryptocurrency.
The crypto mining process involves solving complex mathematical equations for validating cryptocurrency transactions. Miners are rewarded in the form of new coins. Thus, there are two purposes of cryptocurrency mining; releasing more cryptocurrencies in the market in the form of block rewards and validating transactions in order to eliminate the double-spending problem. However, it is important to note that the latter purpose is not applicable in the case of every cryptocurrency. Validating transactions via crypto mining is only necessary for cryptocurrencies that use a Proof-of-Work model and not for those that have a different consensus algorithm, such as Proof-of-Stake.
There are different methods that can be used for cryptocurrency mining. If you are interested in engaging in this activity, you can explore the options below:
Perhaps the most efficient and easiest method of mining cryptocurrencies is cloud mining. A mining rig can be rented for a specific time duration via cloud mining and you will receive the earnings of that rig in question, after the deduction of maintenance and electricity costs. This sounds like an excellent approach to cryptocurrency mining in theory. However, you have to bear in mind that it is also considered the riskiest option because Ponzi schemes and other scams are quite widespread when it comes to cloud mining services. Some of the prominent ones that have come to light include Bitcoin Savings & Trust and OneCoin.
These companies used the initial investment they received from new users to pay back the old ones. Eventually, the payments would stop and the companies would disappear. Most users don’t press charges against these companies because they don’t lose more than a few hundred dollars. Authentic cloud mining services, on the other hand, have massive mining facilities that have several farms at their disposal and are well-versed in the art of crypto mining. There are free and paid cloud mining services available.
This crypto-mining method involves using the process of your computer or smartphone for mining cryptocurrencies. There was a time when CPU mining was considered an efficient and viable solution, as cryptocurrencies were a relatively new concept. Today, only a handful of people even consider crypto mining and they usually do so because they haven’t done much research. First off, you should bear in mind that this form of mining is extremely slow, which means it can take months for people to even start earning a little bit of revenue.
Secondly, it will increase your electricity bill significantly and the earnings will not be enough to cover it. Lastly, CPU mining also requires serious cooling, which means more investment. You should also remember that your CPU can also get fried, particularly if you are trying to use your laptop for mining. This doesn’t mean that you cannot use CPU mining. There are a number of cryptocurrencies that you can mine through this method, such as Dogecoin and Monero. But, you should do your research first in order to ensure you don’t have to look for a new CPU too soon.
The most popular crypto mining method is known as GPU mining because it is reliable and also cheaper than other methods. While you will need a decent investment for buying the actual rig, but you will begin making a profit once you do. This form of mining uses graphic cards for mining cryptocurrencies and at least 2 to 8 graphic cards are needed for getting started. Furthermore, you will also require a motherboard, CPU, cooling system, and a rig frame.
This method of mining is very popular because it is relatively cheaper than other methods and also offers greater efficiency. Yes, the construction of the rig can be a tad costly, but when it comes to general workforce and hash speed, the GPU mining rig is a great one. In addition, you also have the option of skipping the process of building a GPU mining rig and can directly get a pre-built one.
Devices that are built for a specific purpose are known as Application-Specific Integrated Circuit (ASICs) and in this case, they are used for crypto mining. As opposed to any other method of mining, ASICs are considered beasts. They are extremely affordable and can mine a lot faster than CPUs and GPUs. But, these are also controversial. Entrepreneurs can use ASIC mining rigs for building massive mining farms at a lower cost, which can centralize their operations. This also enables them to generate huge profit margins and even control the development of the cryptocurrency to some degree.
A single individual can use a large mining farm for generating most of the profits from a particular cryptocurrency, which can make the entire mining process unfair. Therefore, developers are planning on altering the codes of different cryptocurrencies for reducing the effectiveness of ASIC miners, whereas others are planning on banning ASIC miners altogether.
Which is the Best Method?
If you are trying to decide which crypto mining method to use, it should be noted that this depends on a number of factors. First, you have to decide if you are ready to invest some money and then decide how much you wish to invest. Next, you need to ask if you are willing to own a rig, or not. Another important factor to take into account is the cryptocurrency you want to mine because this will also influence the method you use for crypto mining because it will also affect your profitability in the long run.