Crypto mining was a term coined in 2009 when Bitcoin was first introduced. Since then, investors have set up rigs and started mining farms around the world to cash in on the digital gold rush without having to actually trade coins. This article explains what crypto mining is and how it works. We also discuss the best software available and provide a guide for beginners to get started from home.
Best Crypto Mining Platforms
Remitano is a competitive peer-to-peer crypto exchange with margin trading, investing, swapping and news services.
Balancer is a decentralised crypto exchange with a focus on liquidity provision and smart contract pools.
Awesome Miner is a sophisticated crypto mining platform with a range of advanced features, compatibility with many different pools and a huge list of mineable tokens.
Crypto Mining Explained
Crypto mining is the process by which new cryptocurrency coins are entered into circulation. This is not mining in the traditional sense, where equipment and tools are used to remove materials from the Earth.
Instead, individuals or companies from New York to Japan use high-powered machines, such as computers and PCs, to solve complex mathematical equations and validate transactions to earn a monetary reward.
Crypto mining does not only validate the transactions of others on the blockchain network, it also yields coins in the crypto they mined. For example, a Bitcoin miner would earn BTC every time they successfully mined the coin.
How Crypto Mining Works
When someone sends a coin to a business or person, it is called a transaction, and that must be verified. With traditional transfers of money, banks and receipts verify the transaction. With cryptocurrency, miners verify any transactions to ensure individuals cannot make copies of their Bitcoins and spend them more than once.
Miners clump transactions into blocks and add them to a public record called the blockchain. One block is 1MB of transactions, and nodes (connected computers) maintain a record of these blocks.
Before a verified block can be added to the blockchain, crypto miners must solve a complex computational maths problem known as “proof of work”.
Crypto miners will attempt to produce a 64-digit hexadecimal number, known as a hash, that is equal or near enough to the target hash for that block.
A computer guesses solutions at a rate of hash per second (h/s) until it arrives at the correct solution. The individual, business or company that verifies the 1MB block and arrives at the solution first wins the block and is rewarded with tokens.
The process of crypto mining requires a very large number of kilowatt-hours (kWh) worth of power consumption and will therefore incur high electricity costs.
Moreover, there is a large impact on global warming, so some companies in the UK and abroad are looking to use green, renewable energy sources to power their mining systems in a bid to reduce their environmental impact.
Not all cryptocurrencies require mining as part of their verification system. Mining stands as a proof of work of the node, ensuring that it has a monetary investment in the system and stands to gain from its proper operation, thus verifying honestly.
Proof of stake systems, on the other hand, simply require that verifiers stake some of their coins into the network to ensure they are invested.
How To Make Money Crypto Mining
Crypto mining is not a cheap enterprise to get into and will require a powerful and effective rig. That being said, the investment can get paid back in the long run, as the efficiency and performance of the hardware can make a big difference to your profits.
There are many rigs for sale in the UK and around the world; the simplest comparison point is the hash power, in h/s. This represents the number of 256-bit numbers the rig can compute every second. Some rigs on the market can achieve rates of up to 110.0 TH/s.
To make money with crypto mining, two conditions need to be met. The first is a matter of effort and the second is a matter of luck. The effort relates to verifying 1MB worth of transactions, the relatively easy part. The difficulty lies in being the first person or company to arrive at the correct hash number. Only the first person wins the block and only the winner is rewarded with tokens.
If you are lucky enough to win a block, you might be wondering how much you will make. The profitability of mining crypto depends on the value of the token being mined. Popular tokens such as Bitcoin are worth more but are difficult to mine and require a lot more computing power. Some altcoins are easier but less rewarding, although these are probably the better way to go for beginners.
Pros Of Crypto Mining In 2022
- Users with less computing power can join mining pools
- High-performance equipment is available
- Lots of cryptocurrencies can be mined
- Make money without buying coins
- Help crypto to grow
Cons Of Crypto Mining in 2021
- Environmental impact
- Component of luck
- Electricity costs
- Hardware costs
How To Start Crypto Mining
This step-by-step guide is designed to help newcomers get started, much like a crypto mining for dummies tutorial. The guide explains what hardware you will need, the best software providers and where to find other helpful pointers.
Buy Appropriate Computer Hardware
Technically, any computing device can mine crypto, there are even apps for Android and iPhone devices, but computing power is an important factor for profitability. Due to low processing power, average computers are unable to efficiently mine blocks for major cryptocurrencies such as Bitcoin and Ethereum. It is worthwhile investing in a mining rig with more power. Graphical Processing Units (GPUs) and Application-Specific Integrated Circuits (ASICs) are the front runners in crypto mining.
- GPUs – Cryptocurrencies such as Zcash and Ethereum can be mined relatively easily with GPUs. Some of the best around include Nvidia GeForce GTX 1070, AMD Radeon RX580, and Nvidia GeForce GTX 1060.
- ASICs – ASICs can mine almost all types of cryptocurrencies, including Bitcoin. Some of the best around include Antminer S9 and AvalonMiner 921.
Set Up A Cooling System
Crypto mining rigs release a lot of heat as they work, so it is important to cool the system down efficiently. Placing electric cooling fans and air fans next to the hardware can help solve this problem. Additionally, opening windows or turning on air-conditioning can help mitigate the issue.
Find A Crypto Wallet
You will need to open an account with a cryptocurrency exchange such as Coinbase. This is where you will receive and store the rewards you earn from mining. From there you can trade, HODL or sell your cryptocurrency, as desired.
Download Mining Software
Choosing the right software is vital to your mining experience. Here, three of the more popular crypto mining programs are explored and reviewed.
CGMiner has been around for over six years and is coded in C, which ensures it is compatible with almost any operating system. This crypto-mining software supports multiple mining pools and devices, functioning via a simple command-line interface. Although it is designed for use with dedicated mining hardware, i.e. ASICs, GPUs can also be used. The software is simple to use, with easy keyboard commands to change settings and a streamlined layout placing mining devices clearly at the top. CGMiner is also highly customisable.
One of the drawbacks of this software is that it is difficult to install on Windows 10 compared to Linux, due to it being flagged by antivirus software. It is possible to configure your system to make an exception for CGMiner, or you can simply install Linux for free and use that version.
MultiMiner is perfect for beginners with a helpful ‘getting started’ wizard that takes you through the process of entering your pool information, giving helpful tips and clarifying new terms. The software automatically scans for crypto mining devices and lists details such as the pool used, profitability and average hash power in a simple table. The program also displays your projected daily profit with your mining rig.
MultiMiner’s graphical interface is intuitive. The ‘Pools’ tab allows you to connect to multiple pools and the ‘Strategies’ section lets you choose how you want to mine; for example, you can mine based on which coin is most profitable or mine coins with low difficulty.
The crypto mining program is free, the developer simply asks that you send 1% of your profits to his wallet as a ‘Thank You’, although this is optional.
Easyminer is another free program that is designed with an easy-to-use interface to make mining a lot simpler. The dashboard allows you to configure mining pools, amend network settings and view your wallet. The settings feature can be used to enable ASIC hardware, such as Antminer.
This program can mine using CPUs, ASICs and GPUs simultaneously, making it particularly efficient. Bitcoin and Litecoin are both mined by default, though there is no easy way to stop either of these from being mined if you are only interested in one. One drawback is that antivirus tends to try and block it, as with CGminer, though this can be avoided in the same ways.
There you go, you are now ready to start crypto mining. Make sure to check the rewards you gain, and ensure you are making more than you are paying for electricity!
If you are still looking for some extra guidance, there are plenty of helpful YouTube channels that post tips to help you mine crypto. There are also forums on Reddit as well as Discord servers where other miners post well-explained information about their experiences mining crypto.
Final Word On Crypto Mining
Crypto mining allows users to earn rewards and profit without risky investments in different coins. Not only this, but it also gives back to the crypto community and helps it to grow. Mining crypto can cost a lot of electricity but, if done successfully, it can provide a sustainable source of income. If you think you have what it takes, buy a rig, download the software and start earning.
Is Crypto Mining Legal In The UK?
Crypto mining is legal in the UK. You are free to mine as long as you are not stealing electricity or computing power from other people.
Is Crypto Mining Profitable In The UK?
This depends on the computing power you have available, the software you use and the coin you choose to mine. While Bitcoin is unlikely to be profitable for the average user, other coins such as Ethereum, Zcash, and Dogecoin are still accessible, as they require less computing power.
Is Crypto Mining Safe?
Is Crypto Mining Bad For The Environment?
The high rate of energy consumption can be bad for the environment, due to the sources of electricity. Today, renewable energies can be used to reduce the environmental impact of mining crypto.
Does Crypto Mining Damage Your GPU?
There is no simple answer. If your setup is being run 24/7, it can be bad for the GPU and its lifespan, due to excess heat from other components. However, it does not necessarily put any more stress on your GPU than playing demanding video games, for example.
Can I Start Crypto Mining With My Laptop Or Mobile Phone?
The short answer – yes. Your laptop will be able to run the software required for crypto mining and there are iPhone and Android apps to do the same. However, the computing power on both laptops and mobiles tends to be so low that the money you make will be small, if you make anything at all.
Will I Pay Tax On The Money I Make Mining Crypto?
Yes, you may be required to pay income tax on any profit made mining crypto in the UK or abroad, if you are earning over the limit set by your government. How much you pay will depend on the amount of profit earned and your income from jobs or other sources. There are calculators available to tell you how much you need to pay.
What Is A Crypto Mining Farm?
A farm is a large-scale crypto mining operation with very high computing power and a significant number of GPUs and ASICs. These farms are capable of incredibly high hash-per-second outputs.