How to Make Cryptocurrency By Mining

What Is Cryptocurrency? Cryptocurrency is a digital currency (NFT) secured by cryptography. It means counterfeiting or faking it is next to impossible. Unlike banks and financial institutions, it works on decentralized networks, and the technique is called a blockchain. Owning its decentralized nature, Government cannot intervene in it.

Just like traditional currency, cryptocurrencies have many types. According to the records, there are near to 8000 cryptocurrencies. Bitcoin is the most popular, followed by Dash and Monero. This virtual currency market surpasses more than $356 Billion in total worth—bitcoin worth the most among all.

What is Crypto Mining?

Cryptocurrency mining refers to collecting cryptocurrency as a reward for the work you have done. Crypto miners authenticate transactions to be benefited from their labor in the shape of cryptocurrencies. Generally, most cryptocurrencies, like Bitcoin, depend on a blockchain, a decentralized ledger.

What is a blockchain? A blockchain is a set of interlinked blocks that contain acute information such as cryptographic hashes. These blocks are the collection of data transactions attached to the ledger’s end, ensuring a transparency layer. This serves as an inflator when you see the payments linked (chained) to the system of recording data.

How does Cryptocurrency Mining Work?

The term “crypto mining” refers to gaining cryptocurrencies by cracking cryptographic codes or problems. This needs authenticating data blocks and attributing transaction records to the blockchain.

Crypto-currency mining is a transaction technique requiring the use of machines and encryption procedures to resolve complex functionality and store the data in a blockchain. There are whole networks of machines that engage in crypto mining and maintain blockchains to exchange information.

Step-by-Step Review of Crypto Mining Process

Now we will delve deep into the cryptocurrency mining process and gain a deeper understanding of how it functions.

1. Verification of the Transactions:

Cryptocurrency or blockchain is based on transactions. For better understanding, let’s consider the following example from daily life to understand how this all comes together: Consider yourself as a crypto miner, and your mom purchases a bag from her friend.

To pay for her purchase, she sends her friend a bitcoin unit. As a usual process, this transaction needs verification for completion.

2. Formation a Block by Adding Individual Transactions

In the further step, all separate transactions are combined to form a block of data. In the above example, your mom’s bitcoin payment is one such transaction.

This transaction, once verified, will be added to the blockchain, and it will be available publicly. No one can alter these blockchains.

4. Hash function

Once the transactions are enough to form a block, additional information or metadata is added to it. It includes hash from the last confirmed block, header, new hash, etc. 

Once this new hash is added to the unconfirmed block, it must get verified.   At this stage, if good luck is with you, you can be the first one to solve it. Here, your computing power plays a vital role because the more your computing power, the more your chances to solve the puzzle.

A higher hash rate means your chances to solve the puzzle are good. Hash rate is the output of a hash function. It is the speed at which your machine can complete the puzzles.

4. Verification of the New Hash

Once the block is successfully added, it now the time to check if it is legit; other miners in the network should validate that you have solved it. But cracking this code is quite nerve-racking.

There are hash calculators that can generate a complex puzzle out of a simple sentence by using different algorithms; for example, I have created this puzzle by adding “I like Mining” to gost-crypto, and the result is cbb8a62b2ea0deeff4349f1fb46531ac3db325ebf7ad4e4616e589cc6e6eaf86

5. Time to Publish Blockchain

If you have reached this step, it is party time. You have solved the hash, and your miner’s network has verified it. In the crypto-mining dictionary, we call if PoW – Proof of work. This newly created block will add at the end of the blockchain.

What Do We Need For Mining Cryptocurrencies?

There are thousands of cryptocurrencies available today. Each available with its algorithm. A specialized mining rig may only use a single algorithm.

Suppose you purchase ASIC hardware to mine bitcoins. In that case, you will also mine other cryptocurrencies that use the same algorithm (for example, Bitshare, Bitcoin Cash, or ByteCoin), but not cryptocurrencies that use a different algorithm.

On the other hand, machines are continuously evolving, and some companies are beginning to sell ASIC devices that can solve several different algorithms.

Furthermore, if there is no specialized hardware to deal with a specific algorithm, it is still possible to mine cryptocurrencies using graphics cards. There are many benefits to mining with graphics cards, including mine several cryptocurrencies and the computer producing significantly less noise and heat. Nonetheless, you must maintain it and refresh the cards regularly.

1. Purchase a Bitcoin Mining Machine

To begin mining, you must first acquire a mining rig. While miners in the early days of Bitcoin use normal home computers and, later on, graphics cards, you will not be able to acquire any Bitcoin today.

Bitcoins are now mined using dedicated hardware designed specifically for mining Bitcoins or other currencies built on the same algorithm.

This hardware is called ASIC (Application Specific Integrated Circuit chips), and it consumes less energy when mining Bitcoins much faster. This system is costly and time-consuming to manufacture, but its pace is astounding.

About ASIC Mining Rig

If you want to start mining, consider the following criteria when making your decision: output (hash rate), power consumption, and price.

The hash rate indicates how many attempts the computer will make per second to solve a cube. It would help if you read through the reviews of different miners and then choose the one that appears to be the most advantageous to you.

Instead of focusing solely on price, consider the total proportion of price, efficiency, and consumption. To put it simply, the most productive miner is the best. You will find motivation on the website Asic Miner Value, which contains comprehensive details about new miners.

Keep in mind that these devices can be difficult to obtain these days due to extremely high demand. It also affects the price of these devices, which can range from hundreds to thousands of dollars.

Bitcoin mining necessitates a large amount of electricity and a specific location for a computer, as mining rigs are loud and release a lot of heat.

The service miner homes solve this problem by allowing you to put your computer in a skilled datacentre and eliminate all of your worries. You can take advantage of the low energy costs, a cooled environment, and continuous monitoring.

2. Setting up a Bitcoin Wallet

Bitcoins are saved in the blockchain. It would be best if you had a Bitcoin wallet to receive new Bitcoins, and only this wallet allows you to operate or use Bitcoins. It gives you bitcoin addresses.

Bitcoin address is like an ATM card with an ATM number and private pin code. Bitcoin address comprises a public key, just like an ATM number and a private key, similar to your pin code.

The public key is very interesting and comparatively a long number containing both alphabets and numbers. It looks something like this: 18ukxpD1eqnVjuSSD5884Ez8r4d8py1dSdzw.

I have compared it with ATM because this public address serves just like an ATM number or bank account number; to receive new bitcoins, you need to share your pubic address. Whereas your private key is very sacred, and it is mandatory to keep it secret and secure.

It would help if you had it not only to send off transactions but also to access them. In the event of losing a private key, your access to your address will be denied, and you will lose your Bitcoins forever,

There are different types of wallets ranging from simple online to the most secured hardware wallets. Just like other things, each wallet comes with its advantages and disadvantages.

3. Join a mining pool

Having the best ASIC miner will not guarantee a Bitcoin gain. This is because today, we have so many gigantic mining farms all around the world, and mining Bitcoins on your own on a small scale is also not very feasible.

There is a solution to this problem; just like other business cartels, we have mining pools. Many small miners, when they come together and join hands, can form a mining pool.

They can share their understanding and also computing power, resulting in a very strong mining pool.  Since the resources are shared, so are the benefits. Benefits from the mined Bitcoins are shared among the miners; in this scenario, financial gain is lower but regular and, to some extent, guaranteed. It depends on your computing power; the greater your contribution in terms of power, the greater the returns are.

Here is good news – you don’t need to have a very high-level machine to join a pool. There are numerous options, and you can choose from many pools. You need to sign up and pay the fees to the organizer.

There are several pros & cons of each pool, and a very easy-to-understand comparison is available online. You can check the below image from bitcoin.wiki, where offerings and fees are listed for each pool.

Once you decided on the pool, you need to register on the website and create your account. You will receive your worker ID for mining Bitcoins.

4. Time to Choose Mining Software for Your Machine

By this time, you have the required hardware, a Bitcoin wallet is also set, and you have an account with the mining pool. Now, the next step is to select a good mining software for your machine.  This is very crucial because only mining software can connect you to the Bitcoin network.

This software not only allows you to mine a Bitcoin but also provides insights about your work and some important data, for example, the temperature of the mine, cooling requirements, mining speed, etc. Mining software delivers your work and adds all the information back to the blockchain. So, choosing good mining software is extremely important because it will decide how well your mining goes.

Here, we have got you covered. As per our analysis, below mentioned are the best Bitcoin mining software in each category:

5. Time to kick-off

By this time, you have fully equipped to mine a Bitcoin. All required paraphernalia are now available with you.  Let your mining game begin. There is no doubt that Bitcoin is half skills and half luck.

Possibility of Crypto Mining by Using A Smartphone

Today the role of a mobile phone is no longer the connector only, but it also works as a handheld device for almost all kinds of virtual jobs. So, the question is can we mine a crypto-currency by using our smartphone? Well, the simple answer is Yes!

Although cryptocurrency mining is possible through mobile phones, it has many disadvantages that it will make you think twice.

We have discussed that to mine a cryptocurrency effectively; we need powerful hardware and software; mining on a cell phone would not bring impressive results. It may hamper your device.

Another important factor is that competition in this area is so high that competing and winning a serious miner via mobile phone are very low.

How to Mine Cryptocurrency via Phone?

Overall it is the same as we have described above; it is just that it happens at a very low scale because of the computing power of a mobile phone.

Still, you can start mobile crypto-mining. Just keep in mind since your resources are low, you will get a smaller return. You can join a mining pool and start to begin the mining. Since your power shared is low compared to others in the pool, you will get a low reward.

Requirements for Mobile Crypto-Mining

No need to rely on any specific mobile phone model for crypto-mining; just a simple android based smartphone is enough. Android has the best compatible operating system for mining.

Just like mining software, you need to have a mining application on your phone. There are many mobile apps in the market that support crypto-mining, but you cannot download them from the Google play store.

Google has banned almost all the mining apps because of their detrimental effects on mobile devices. It includes but is not limited to slow device performance, damage to the battery and hardware, overheating, etc.

Not only Google but Apple also restricts mining apps from their apple store. So, if you are an iOS user, you cannot mine via iPhone.

Android users can still download the mining apps from other sources and reap the fruits from crypto-mining. Below are some useful mobile applications for this purpose:

Comparison of different Mobile Devices

This comparison is not very latest, but it can give us an idea that the newer your phone model, the better the performance is. This comparison is based on the hash rate:

Source: /r/Electroneum, MinerGate Forum

In a nutshell, mobile crypto-mining is not as difficult as folks think. You need a mining application, and it will start mining in the background as you use your phone, just like playing a sound cloud while chatting with your friend.

The flip side is, these apps have the potential to damage your device. As a result, instead of benefiting from this idea, you will incur an expense.

What Is The Reward For Cryptocurrency Miner?

The rewards associated with cryptocurrencies are declining. Here we can study Bitcoin mining rewards since the beginning rewards keep on declining.

Back in 2009, you can earn 50 BTC by mining a single block. But this was halved in 2012, and the reward was reduced to 25 BTC for one block. It further reduced to 12.5 in 2016, and it did not stop here and the reward once again halved to 6.25 BTC in 2020. It means, today, you can earn 6.25 BTC by mining once Bitcoin block.

Is Cryptocurrency Mining Worth It This Year?

The question is, is it worth it? How much a bitcoin or cryptocurrency miner earn? Yes, although the reward has declined in the last few years, the value of cryptocurrency is sky-rocketing. 

Today earning 6.25 BTC by mining a single block means a reward of USD 357,022. So, the potential of cryptocurrency mining is very high. However, the process is very demanding in terms of resources, and maybe it is not ideal for many.

References

https://www.investopedia.com/tech/how-does-bitcoin-mining-work/

https://www.google.com/amp/s/www.webopedia.com/definitions/cryptocurrency-mining/amp/

https://www.forbes.com/sites/jasonevangelho/2018/03/13/mining-101-what-exactly-is-cryptocurrency-mining/amp/