Cryptocurrencies are digital instruments of value, which are not regulated by a central body unlike digital or paper versions of fiat currencies. They are stored on digital ledgers known as Blockchains which record all transactions between crypto traders and also execute new transactions with the use of smart contracts.
However like other instruments of value, cryptos don’t just come from nowhere, they have to be created on the blockchain in order to maintain their value. The process by which new cryptos are added to the blockchain is known as cryptocurrency mining.
Because the demand for cryptocurrency has gone up a lot in the past decade ( a unit of Bitcoin for example is now $20,000), people have found it easier to mine cryptos rather than trade for them. As a result, mining has become more popular. So the question then is how can you start mining crypto
As we have pointed out above all crypto transactions are stored on a blockchain, and crypto mining is adding new blocks to the blockchain. Each new block added to that blockchain contains units of cryptocurrency that are protected by an alphanumeric string of numbers known as a hash. Thus in order to get new crypto you must be the first to guess the hash correctly. The process of guessing a correct hash is known as proof of work
What you need to know is that a high-value cryptocurrency like Bitcoin for example has thousands (or even millions) of other miners mining for it, at the moment, an average miner’s odds of getting a correct bitcoin hash is about 1/22 trillion. With these high odds, you are going to need a computer with major computing power to even have a chance at competing against millions of people who also have the same goal.
As noted there are more than 9000 cryptocurrencies that you can mine, the number of miners on a crypto blockchain is determined by the value of the crypto. There are some cryptos that you can even mine on your mobile phone because they are so low in value that there are not many miners on its blockchain, but to mine a valuable cryptocurrency like bitcoin, you need an Application Specific Integrated Circuits or ASIC. ASICs are computer systems that are purposefully built for crypto mining and they are so powerful that they consume huge amounts of electricity.
Because you require ASICS, a power source powerful and regular enough to power your hardware to build a successful mining rig, cryptocurrency mining will always be an expensive endeavor. However, you can do the following in order to reduce your costs on mining hardware.
Instead of mining a very valuable crypto like bitcoin, you can mine a relatively inexpensive coin. While you will still need powerful hardware to some extent, the cost of the systems and your expenses on power will reduce.
The main thing that ASICs do is to generate enough hash power for you to mine successfully. Instead, you can buy hash power for the pool you want to mine in. That way you don’t need to buy a powerful ASIC or a powerful GPU which can be expensive, you can buy a relatively cheaper one that will also save you power costs
Instead of solo cryptocurrency mining, which will require you to buy expensive GPs and ASICs. Try to join a pool of miners and work with them. While you might not get as many rewards as solo mining, it will ensure that you get something, without having to expend your money on expensive equipment.
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