How does one get into cryptocurrency mining? What the heck is it? Well, it’s a process of validating transactions and adding them to the blockchain ledger. In doing so, these “miners” are rewarded with newly minted cryptocurrency for their efforts and hard work. The process of mining varies depending on the type of cryptocurrency being mined, as well as the hardware and software used.
CPU Mining
When Bitcoin was first introduced in 2009, mining was simply done using a computer’s central processing unit (CPU). It was simple. Low-cost. Accessible. Things, though, changed. As more people started mining, the difficulty of the mathematical equations required to validate transactions increased, making it less profitable for individuals to mine using just their standard processor. It may not be the most efficient method, but it’s a great way to dip your toe into the water of crypto mining.
Today, CPU mining is mostly used for mining altcoins or less popular cryptocurrencies that do not require as much computational power. However, CPU mining is generally not profitable due to the high electricity costs and low hash rates and overhead expenditures.
GPU Mining
Graphics processing units (GPUs) are much more powerful than CPUs and are more efficient at performing the calculations required for mining. As a result, GPU mining has become the preferred method for mining cryptocurrencies like Ethereum and some others.
GPU mining requires a specialized hardware called a mining rig. What’s that? A mining rig is a computer with multiple GPUs that are connected together to increase hashing power. Mining rigs are expensive to build, but they provide a higher return on investment than CPU mining. But the cost prevents adoption from the average miner. So it’s well worth doing your homework before making any investments.
ASIC Mining
Application-specific integrated circuit (ASIC) miners are specialized hardware devices designed specifically for cryptocurrency mining. These specialized chips are designed specifically for mining cryptocurrencies, and they’re the most powerful and efficient way to mine. However, they’re also the most pricey, so you’ll want to think carefully before shelling out for one of these bad boys.
ASIC miners are more efficient than GPU or CPU mining rigs and have a much higher hash rate. However, they are expensive to purchase and require significant upfront costs. Additionally, they can quickly become outdated as new, more efficient ASICs are released.
Cloud Mining
Cloud mining is a form of mining where a miner rents computing power from a third-party provider. The provider hosts the mining hardware and manages the mining process, allowing users to participate in mining without having to purchase and maintain their own hardware. It’s a hands-off approach, but it can be risky, as you’re essentially entrusting your investment to a third party.
Cloud mining is a convenient way to participate in mining without the high upfront costs of purchasing hardware. However, it is important to research the provider and their reputation before investing in cloud mining, as there have been scams and fraudulent cloud mining services in the past.
Mobile Mining
Mobile mining is a relatively new concept that allows users to mine cryptocurrency using their mobile devices. Mobile mining apps use a smartphone’s processing power to mine cryptocurrency in the background while the user is using their phone.
Mobile mining is generally not profitable due to the low computational power of mobile devices. However, it can be a fun way for users to learn about cryptocurrency and participate in the mining process.
PoW vs PoS Mining
Proof of work (PoW) and proof of stake (PoS) are two different mining algorithms used by different cryptocurrencies. PoW mining requires miners to solve complex mathematical equations using computational power, while PoS mining requires users to hold a certain amount of the cryptocurrency and validate transactions based on their holdings.
PoW mining is the most commonly used mining algorithm and is used by cryptocurrencies like Bitcoin and Ethereum. PoS mining is used by cryptocurrencies like Cardano and Polkadot.