The term cryptocurrency is getting a lot of spotlight since the last few years or maybe an entire decade. The world eyes its ups and downs, and it has become the ultimate obsession. With the ever-growing interest in the subject, people have started exploring multiple avenues to become a part of this digital revolution.
Mining allows people to get a grip over cryptocurrencies like Bitcoin withouactually buying them. However, mining is one of the most volatile aspects of the crypto-world; and it comes with its own unique set of hardships.
Remember, it’s not you it’s the system doing the hard work. Your job is to take care of the hardware, and you are the Watson to this Sherlock.
It’s OK not to understand it; most of us don’t understand paper money, although it has been around since eternity, yet we use it despite the lack of knowledge.
What is a Bitcoin?
Bitcoin is a decentralized network of digital currency where the transactions are made to and from a 16 character encrypted address is (it’s like a social security number of the crypto world). These addresses are mathematically secured so that nobody but the address owner can transfer the funds that belong to it ( the two-factor verification).
In simple words, bitcoin is a network of independent computers that generate, propagate and verify monitory transactions.
How Do you buy bitcoin?
- Before you can buy bitcoin, you have to install wallet software onto your computer. The wallet will allow you to send and receive and transfer bitcoin.
- To purchase bitcoin, you have to deposit money into an online exchange that connects bitcoin buyers and sellers.
- Once the exchange has accepted your currency, you can place an order for bitcoin, similar to how you would buy a stock.
How does bitcoin works?
It is a worldwide, decentralized peer-to-peer network
- Mines develop bitcoin by using computers to solve mathematical functions, and further, the same process verifies the transactions.
- Then the Bitcoin exchange trade is made using conventional currencies (dollars and pounds ). It offers a gateway into all the action happening in the world of cryptocurrency for non-miners. (it’s almost like buying stocks via a trading application)
- Individuals and businesses create wallets that allow them to send and receive bitcoins. ( it is similar to having a PayPal account or even stripe ). In contrast, Cryptography secures the network and ensure that all balances and transactions are safe.
Want to mine Bitcoins at home?
Here’s a step-by-step guide
First up, what happens in cryptocurrency mining?
Cryptocurrency mining is the method of corroborating crypto transactions and adding them into a blockchain ledger.
In order to successfully mine or authorize a cryptocurrency transaction, one has to compete with other miners and perform complex calculations on blocks containing transaction data — which requires enormous processing power.
However, once the work is done, you get rewarded with a certain quantity of Bitcoin or whatever currency you are mining.
Can I mine bitcoins from my laptop?
The one-word answer is yes, but are you going to make any decent money? No. Mining bitcoin is definitely is an option, but you will end up making pennies.
Basically, a computer’s processing power and speed defines hash rate or mining speed that directly impacts your profits.
Mining Bitcoins at home:
Things to remember —
If you want to earn a substantial amount of money mining bitcoin, you need heavy processes. If it could have been done at your home PC, why would people build bitcoin mining farms? Although most bitcoin farms are set up in colder areas to delay the overheating of machinery, which is inevitable. Hence, if your computer is not well-equipped with a powerful processor and GPU, the mining would be very slow, and you will not generate ample Bitcoins to justify this charade.
The crux is that the process will take a toll on your machinery, and hence the quality of machinery will directly determine the money you make.
The mining checklist
In today’s time, the best way to start mining is by building up an ASIC, i.e. application-specific integrated circuits, as these days, mining by laptops is not profitable.
Now you must be having a million questions in your head that “where can I buy the hardware?”, “what about the energy consumption?” and “how do I get started?”
Here are some answers:
- Most of the Bitcoin miners don’t consider the location for setting up the mining rig as an efficient setup can take a garage space. Hence check out the options before taking a plunge.
- Look into your areas electricity supply, voltage And enquiry about the power rates per kilowatts. Most of the big mining farms are located in places like China, Russia, and the countryside of Europe, where electricity is both cheap and readily available.
- Each Bitcoin ASIC miner requires its own 220v outlet, conduct a survey at the place of installation, and pre solve these issues according to however many mining rigs you want to build. Remember not to overload the circuit.
- Another significant issue with setting up a massive mining rig is the immense amount of heat produced. In winters, it’s going to act like a prepaid heater, but you’ll be boiling through the summers, although heat is not a problem with small setups.
- Although high-speed internet is not a problem for most of us, yet consider looking into it beforehand.
You don’t have to be Charles baggage to do this. Just put on your miner hat and follow these five simple steps.
The five-step strategy:
Step 1
Build a bitcoin mining rig
What is a crypto mining rig?
The “rig” is nothing but a customized computer. A rig has all the common PC elements, such as a motherboard, CPU, storage, and RAM. Things diverge from the benchmark of personal computers when it comes to graphics cards.
While mining cryptocurrency, the graphics processing unit does all the hard work and not the Central processing unit.
You’re going to need reasonably a powerful GPU for mining, and you will likely be buying more than one — a lot more than one. A mining rig can consist of a relatively affordable PC with powerful GPUs.
You will need to connect multiple graphics cards to one system. You’ll also be required to add more than one PSU ( power supply unit )and a high performing motherboard if you’re planning to push things to the extremes.
You can also attach an ASIC to the computer and upgrade its processing power, further adding to the cost.
It’s a game of trial and error. Be patient; it will all work out fine.
Components of a mining rig:
Required hardware and costs:
Motherboard: $450
Monitor: $120
CPU: $125
RAM: $65
Storage: $95
PSU: $100
PCI-e Riser: $60
Graphics Card: $500 - $1500 ( this is where you go wild)
Total cost of set up = $1,515 ( minimum )
*Whereas you can take it as high as you want to.
Step 2
Pick a digital wallet
Once you’ve organized the acceptable hardware and created a rig. (either through ASIC or GPU ), you’d need to put up a digital wallet to store Bitcoin rewards. They allow you to manage your Bitcoin addresses, whereas each bitcoin address has two keys; one is private, and the other is public. Remember that if you lose the private key, there is no way to recoup those Bitcoins. To receive payments, you convey your public key, and it acts like your bank account number.
There are numerous Bitcoin walkers, and you can pick one like Coinbase, Ledger or SoFi.
Step 3
Pick a mining pool
It has become hard even for the best individual rigs to compete with these gigantic mining farms in today’s time, and hence you need to pick a mining pool. So think of this as a complex school project where you have created small groups to solve the case.
This will fortify your chances of making a profit, but remember that the rewards earned through pooling would be distributed among all the members who contributed to the joint endeavour.
Some common mining pools are slush pool, BATPOOL, 1Hash and the largest one being AntPool.
Step 4
Get a mining programme for your computer
Hardware ✅
Bitcoin wallet ✅
Mining pool ✅
Now it’d time to Install a legit Bitcoin mining software on your systems, such as EasyMine, GUIMiner or CGMiner.
The mining software connects you with the clients and actual Bitcoin and blockchain network. It’s the software’s job to receive Bitcoin orders, collect the completed results ( proof of work ), and add all this information to the blockchain network. The mining software also accesses the mining activities and shows statistics like hash rate, temperature, cooling, and average mining speed.
Step 5
Start mining
And once you have installed the software, you can start mining and earning Bitcoins. Once you start the cycle, the mining software will communicate with the pool servers to band your machine’s mining effort with others on the pool.
Let the machine do its magic.
Come on, kids, it’s time for revision
- Set up the rig ( hardware )
- Connect the power
- Create a wallet
- Join a mining pool
- Install the mining software
- Put in your information about your wallet and mining pool into the mining software, and start mining.
The cost and profit analysis:
Mining on laptop:
With today’s insane prices of bitcoins, you’ll be making 1/100,000th of BTC. Taking about tens or maybe a hundred years to mine one BTC.
Mining via rig:
A mining rig consisting of 1 GPU costing $1,500 would generate 0.00021888 BTC bringing a per day total at $10-$12 per day, i.e. $300-$360 per month.
In today’s time, the increase in demand for GPUs has made it challenging to meet the supply, and hence some people end up buying these high processing GPUs in pre-used or black markets.
But with an early investment of $15,000–$20,000, you can make (excluding the expenses of electricity) -
$135-$140 per day
You can pay off the initial $15,000 in 111 days, bringing your total monthly profits to $4,050.
Bonus:
For a profitable mining venture, you must keep your eyes and ear open. You need to be updated with current events of the cryptocurrency universe and have a vision of what you are doing. The crypto market changes rapidly, something at the rate of miles per second, so polish those reflexes and brain processing power.
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