The popularity of cryptocurrencies is primarily due to the variety of ways to obtain financial benefits with their help. On the first place, of course, trading and investing. But mining is also one of the most popular areas of earnings on cryptocurrency. 

What it is, how beneficial it is and how to get started are described in detail below.

What is Mining

What is mining
What is mining

Usually, the term “mining” refers to the process of extraction of cryptocurrency using the computing power of computer equipment. But this description is too simplified.

In fact, mining is the activity of creating new structures (blocks) in the blockchain in order to support its functioning.

Technically, this is the process of performing complex mathematical calculations to find the only valid hash of a new block. For this task, a reward is provided in the form of a fixed amount of coins. Therefore, it is considered that the result, the purpose of mining is the extraction of cryptocurrency.

The described model is valid only for networks with PoW-algorithms (Proof-of-Work), and is the most popular today. Moreover, for Bitcoin and a number of other cryptocurrencies, this is the only way to increase the emission of coins.

How to Start Mining

Getting started with cryptocurrency mining
Getting started with cryptocurrency mining

First thing is, at least, understand a bit of mining theory, in particular in existing hashing algorithms. Then you will need to purchase suitable equipment and choose a cryptocurrency for mining, paying attention to the complexity of its network, the course and other factors that may affect profitability. Besides, you need to install, set up and run software suitable for the selected coin or algorithm.

How to Mine Bitcoin

Currently, the reward for mining a new block in the Bitcoin network is 12.5 BTC. In addition, miners receive a commission for confirming transactions. However, at the current level of network complexity, it simply makes no sense to mine bitcoin alone at home, since even on the most powerful devices the probability of finding the desired hash will confidently seek to zero.

It may be economically feasible now to mine bitcoin only using ASIC devices, designed to work with the SHA-256 algorithm, moreover, in the framework of collective mining, that is, through pools. More or less cost-effective are Bitmain ASIC models from the Antminer line, starting with S15, with a processing power of 28 TH / s. Canalan AvalonMiner 1047 and Ebang Ebit E11 from Ebang with slightly better hash rates (30 and 37 TH / s) are also suitable. 

How to Mine Ethereum

Ethereum mining also now brings not very big income to home miners. It will take several months to get relying on the mining of block 2 ETH in solo mode when using even 10 powerful video cards. At this rate, it is unlikely to recoup the cost of buying equipment.

Therefore, profitable Ethereum mining is possible only by working with pools and using several video cards with good productivity (for example, Nvidia GeForce GTX 1070 Ti and AMD Radeon RX Vega 56 give out about 30 MH / s). Ideal is the A10 ASIC from Innosilicon, designed to work with the Ethash algorithm and has a hash of 485 MH / s. At the last resort Bitmain Antminer E3 is suitable with a productivity of 180 MH / s. 

How to Mine Another Cryptocurrency

Mining altcoins working on SHA-256 algorithms (Bitcoin Cash, NameCoin, Bitcoin SV) is not so different from mining bitcoin. In fact, similar equipment will be needed, that is, suitable powerful ASICs are needed. 

If we are talking about mining cryptocurrency on other algorithms, in many cases, it will be quite cost-effective to use not only ASICs, but also modern video cards. 

For example, this statement is rightly for:

  1. Metaverse (MTP), Ethereum Classic (ETC), Expanse (EXP) — Ethash;
  2. Komodo (KMD), Bitcoin Gold (BTG), Zcash (ZEC) — Equihash;
  3. Monero (XMR), Karbo (KRB), ByteCoin (BCN) — CryptoNight;
  4. Beam (BEAM), Grin (GRIN) — Cuckoo Cycle;
  5. Ravencoin (RVN) — X16r.

And profitable mining of such altcoins as Dash (DASH), Litecoin (LTC), Decred (DCR) and SiaCoin (SC) today it is possible only with the help of ASIC miners suitable for their algorithms from Bitmain, Innosilicon and Baikal.

Mining Calculator

Mining calculator
Mining calculator

Before you start mining any cryptocurrency, you need to calculate how profitable this activity will be. The easiest way to do this is with mining calculators – web services that automatically calculate the profitability of devices based on the ratio of parameters such as cryptocurrency exchange rate, network complexity, electricity costs, etc.

An important nuance to consider when using them – you can find out only the current profitability, that is, the future cannot be predicted. For example, buying an Asos Innosilicon A10 for Ethereum mining might look like an attractive investment right now. But if the course dips several times, this will lead to losses or, at least, to an increase in the payback time.

To see the potential profitability of the equipment, in some services of this type  it is enough just to choose the proposed model. For example, this is how NiceHash mining service calculator works. But in most others, you need to manually configure the calculation parameters (cost of electricity, hashrate, power consumption, etc.). The most popular of them are What to mine, CryptoCompare, 2CryptoCalc, CoinWarz.

Mining Equipment

Mining equipment
Mining equipment

In the early years of cryptocurrencies, processors were used for mining, moreover, anyone who had the simplest home computer could do this. However, over time, due to the fact that in such networks, to protect against inflation a mechanism for increasing production complexity is provided, requirements for the equipment used began to significantly increase. This led to the transition to new, more productive mining devices, differing in price, size, energy consumption, configuration and complexity of settings. 

Video Cards for Mining

The next step in the evolution of mining equipment was video cards, which due to technological features cope with the processing of large volumes of similar operations much better than processors. But, actually they are not suitable for mining all cryptocurrencies but only for those based on the Ethash, Equihash, Zhash, CryptoNight, Cuckoo Cycle, X16 and X17 algorithms (examples of coins are given above). 

The leaders in the production of video cards that can be used for mining are Nvidia (GeForce line) and AMD (Radeon).

The following video card models are the minimum required for cost-effective cryptocurrency mining: 

  1. Nvidia GeForce GTX 1060 - hashrate of 22.5 MH / s on Ethash and 32.5 h / s on Zhash (price about $ 150);
  2. AMD Radeon RX 470 - 26 MH / s on Ethash and 18 h / s on Zhash ($ 120)

The average in terms of price and productivity will be:

  1. Nvidia GeForce GTX 1070 Ti - 30.5 MH / s on Ethash and 59 h / s on Zhash ($ 450);
  2. AMD Radeon RX 580 - 30 MH / s on Ethash and 21 h / s on Zhash ($ 250).

One of the most productive models are:

  1. Nvidia GeForce GTX 2080 Ti - 52.5 MH / s on Ethash and 96 h / s on Zhash ($ 1200);
  2. AMD Radeon RX Vega 7 - 90 MH / s on Ethash and 49 h / s on Zhash ($ 700).

ASIC Miners

ASIC Miners
ASIC Miners

Especially for cryptocurrencies, whose network complexity has grown rapidly, causing a drop in mining profitability, ASIC devices invented – Application Specific Integrated Circuit. Its basis is microchips made for the execution of the same type of computing processes. Due to this, a significant increase in productivity is achieved and minimizing energy costs compared to multitasking equipment. Aa a rule, ASICs work only with one hashing algorithm, which are cede  to video cards that can be reconfigure to different options. 

Today, the leadership in ASIC mining belongs to Bitmain, which not only produces equipment, but also controls a significant part of the hashrate in the Bitcoin network. As part of the Antminer line, it produces miners for all popular algorithms:

  1. Scrypt – Antminer L3 + (500 MH / s) for Litecoin (LTC);
  2. Ethash – Antminer E3 (180 MH / s) for Ethereum (ETH);
  3. X11 – Antminer D3 (17 GH / s) for Dash (DASH);
  4. Equihash – Antminer Z11 (135 Ksol / s) for Zcash (ZEC);
  5. Blake256 – Antminer DR5 (35 TH / s) for Decred (DCR).

But the broadest and frequently updated lineup of Bitmain ASIC miners, of course, designed for bitcoin mining (about 10 major generations, several modifications each). Among the new ASICs for the average budget, Antminer T17 (40 TH / s) and T17e (53 TH / s), which will cost $ 1000–1300, are suitable. And the most productive today are the Antminer S17e (64 TH / s) and S17 + (73 TH / s) with a price of $ 2100 and $ 2800 respectively.

In addition to Bitmain, a significant part of the ASIC market is occupied by Ebang (Ebit line), Canaan (AvalonMiner) and Bitfury (industrial models). Also recently the firm Innosilicon is “on the heels” of industry leaders, and the firm produces ASIC miners for 8 different algorithms. And if for bitcoin it doesn’t make the most productive ASICs on the market, then in mining altcoins, it confidently bypasses everyone. Take at least the models A10 (500 MH / s on Ethash), A6 + (2.2 GH / s on Scrypt) and A5 + (65 GH / s on X11), which are 3-4 times more powerful than the latest ASICs for similar algorithms from Bitmain. 

Mining Program

Mining program
Mining program

Today, there are many variants for cryptocurrency mining software, used to configure user equipment for computing operations in a specific blockchain network. The most popular programs in this area:

  1. CGminer is one of the oldest miners that works with both video cards and asics. Supports coin mining using SHA256, Cryptonight, Neoscrypt algorithms. By default it is controlled via the command line, but if desired, the graphical interface can be added via CGWatcher;
  2. Claymore's Dual Miner is a mining program, the specifics of which is parallel work with two of the supported algorithms at once (Ethash, Keccak, Blake2b, Equihash, LBRY, Blake256). Designed for video cards only;
  3. MultiMiner - software in which there is a search for the most profitable coins for mining and an auto-mining function. In fact, it is an improved version of the popular miner BFGMiner, which does not have a graphical interface. 
  4. Awesome Miner is a professional miner that supports more than 50 algorithms. It can be used with any type of equipment, has a mobile version, a news aggregator and many other useful features.

If you don't want tinker with the settings of the listed mining programs, you can install NiceHash Miner, which will do everything automatically, but take a small commission for its services. In this case, you will need only to start the miner and indicate the wallet for the withdrawal of earned funds. 

Mining farm

Mining farm
Mining farm

Farms (rigs) are called constructions, within the framework of which the processing power of several video adapters is combined in order to increase the efficiency of mining. In such systems, there is auxiliary equipment from an inexpensive motherboard, processor, hard drive, RAM and other details, making it possible to install the OS and the necessary software for mining. In addition, since such constructions emit a lot of heat during operation, its necessary element is a good cooling system. 

Cryptocurrency mining using mining farms can be performed both in solo mode and with connection to mining pools – it all depends on the complexity of the selected network and the level of productivity when working with different hashing algorithms.

Cloud mining

Cryptocurrency cloud mining
Cryptocurrency cloud mining

For users who want to mine cryptocurrency, but they don’t want to spend money on the purchase of equipment and deal with its configuration, cloud mining will do. In this case, the service provider takes care of everything, and the client pays only for the rental of computing power located in remote data centers.

To deal with cloud mining, there is no need to invest immediately thousands of dollars, as it happens when buying your own equipment. In theory, you can start with $ 1, but, of course, it is worth considering that income will depend on the amount originally invested.

The only nuance – you need to find a service that really offers a cloud mining service, and not a dubious financial scam like GAWMiners, MiningCloud or HashOcean. 

Cryptocurrency Cloud Mining

Most suppliers offer a fairly wide selection of cryptocurrencies as part of the cloud mining service. On industry leader sites such as Genesis Mining, HashFlare and IQ Mining, you can purchase coin mining contracts using SHA-256 (Bitcoin), Ethash (Ethereum), X11 (Dash), Equihash (Zcash), Scrypt (Litecoin) and CryptoNight (Monero). The validity of tariffs usually varies from 1 to 5 years, although there are also unlimited ones. 

Besides hash unit cost, some services charge extra for equipment service, what you must pay attention to, calculating potential profitability, especially when concluding long-term contracts.

Bitcoin Cloud Mining

Despite the support by cloud mining services of many cryptocurrencies, the most popular is the mining of bitcoin. This is evidenced by the frequent lack of available contracts for the SHA-256 algorithm on suppliers' websites. This situation is explained by the dominant position of Bitcoin in the cryptocurrency market and in the field of mining in general. 

When buying contracts for cloud mining of bitcoin, 1 TH / s will cost from $ 20 per year (an average of $ 40–45).

Moreover, they can be like tariffs with an arbitrary choice of the number of hashrate units and the validity period, and pre-formed by the supplier. Pre-paid long-term contracts are not recommended, since at the time of a significant drawdown in the Bitcoin exchange rate, services may offer more favorable cloud mining tariffs.

What Else Could Mine

Mining features
Mining features

Today, for profitable mining, FPGA boards with programmable logic can also be used, which are significantly superior in productivity to video adapters (10–20 times or more), and due to low power consumption and flexibility in tuning for different algorithms can even compete with ASICs. However, due to the excessively high cost (average of $ 6,000) these devices did not receive distribution among miners.

If we talk about mining which purpose is not to obtain high profits (training, experiments, etc.), you can pay attention to the following unproductive options. 

CPU mining

CPU mining
CPU mining

Now CPU mining most often applied only to new, yet completely unknown coins, hopefully that their possible rise in price in the future will pay off energy costs. Of the long-existing ones, you can try to mine Monero (XMR), Bytecoin (BCN), DigitalNote (XDN) and other cryptocurrencies based on variations of the CryptoNight algorithm. 

However, it is worth doing except for informational purposes, because even with the most powerful equipment, yield will be no more than a few tens of cents per day. 

For example, when using AMD Ryzen 1500X – 1800X processors (0.42–0.47 KH / s) for mining Monero, the payback will take from 400 to 800 days.

And in the case of models similar in productivity from Intel, the terms will be even longer due to their initially high cost.

Mining on a Smartphone

Cryptocurrency mining on smartphones has not yet received such a distribution as on other types of equipment. Despite the fact that the cases of modern mobile phones often contain quite powerful hardware, its productivity is still not enough for profitable mining. 

In addition, smartphones do not have good cooling systems for processors and video chips, due to which prolonged operation at maximum loads can lead to the failure of devices. Another important point – for mining, mobile applications are used, in which there may be viruses and trojans, for example, theft keys from crypto wallets. Therefore, you should use only proven miner programs for smartphones from GooglePlay and the AppStore like Minergate, Electoneum or ARM Miner, which support the extraction of a fairly wide range of coins. 

Mining on a Home Computer or Laptop

Mining cryptocurrencies on a home computer or laptop now also makes almost no profit.

If you use a processor, the computer is likely to be run at a loss. If a video card, a sufficiently powerful model and installation of additional elements of the cooling system are required, but profit also will be minimal. 

Most often, beginners are engaged in mining on a home computer, who want to understand this industry and learn how to configure the necessary software, including working with pools. 

Pool for mining

Pools for mining
Pools for mining

Mining pools have emerged as a solution to the problem of increasing complexity of cryptocurrency networks. With their help, the computing power of the equipment of miners from different parts of the world is combined, thereby increasing the possibility of collective generation of a new block. The resulting reward is distributed among the participants in the pool in proportion to the amount of hash they supply minus service charges. 

This way, miners regularly make a profit, although in a much smaller size than it would be if you had the sole hash of the new block. However, given that the probability of the last event, for example, in the case of bitcoin, it would tend to zero, it is still more profitable to participate in collective mining. The largest pools that together control more than 60% of the Bitcoin network hash are F2Pool, Poolin, AntPool, and ViaBTC. 

To summarize, we can say that today mining is very important for cryptocurrency ecosystems, which, with the right approach, can also make a profit. It’s most profitable to mine cryptocurrencies using ASIC miners and farms, connected to leading pools. However, to start considerable starting investments will be required. An alternative is cloud mining, at which you can start mining cryptocurrency even with little capital.

As for home mining on processors and video cards, now it makes almost no profit and can only be used by beginners to get acquainted with this activity.