Diving into cryptocurrency mining

Bianca B. Bianca B.
12 Apr 2022
4 min read
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Diving into cryptocurrency mining

Crypto mining is the process in which new coins are generated. But how does it work? The mining process requires special software which solves different complex mathematical equations, validating cryptocurrency transactions on a blockchain network and getting rewarded (referred as proof-of-work). In this way, you become an important part of the network, securing it with your dedicated hardware and generating more coins to put into circulation. Nowadays there are 4 ways of mining cryptocurrencies: cloud mining, CPU or GPU mining, and using ASIC (Application-Specific Integrated Circuit miner) devices. 

Out of all of them, Cloud mining is the easiest but riskiest type of crypto mining. The process requires you to rent a cloud-based mining rig managed by a third party company, which provides you rewards without the hassle of managing the hardware required in the process. Scams and Ponzi schemes are growing rapidly in the cloud mining business, making it more difficult to trust companies and choose this option. A couple of great examples of Cloud mining platforms where you can mine Bitcoin are Shamining and Compass Mining

ASIC mining devices are easier to set up and don’t require technical skills, but the ones which are more profitable tend to be very expensive. As they come preconfigured, you are limited with what coins you can mine. Usually, these devices can mine coins based on the SHA256 algorithm such as Bitcoin, Litecoin, Bitcoin Cash etc. Bitmain is notorious within the mining community, having S19 Pro as one of its best ones so far. Another great example is Goldshell which has a variety of devices with different price ranges and different coins to mine (Kadena).

CPU and GPU mining requires you to have some sort of technical background, as you need to choose the best hardware and build a mining rig. The process is similar once the hardware is configured; firstly you need to make a wallet, then choose and install mining software, and lastly, you need to join a mining pool that will help you generate more power. With CPU mining you are limited with what coins you can mine, and is not as profitable as other ways of mining crypto. It takes more time to start earning some profit out of your investment.AMD is taking the lead with its CPUs, having Threadripper 3990X as one of the best ones.

Mining through GPUs is the new trend now. But how do you build a mining rig?

The first step in the process is selecting the GPUs, based on power consumption and hash rate. Then you need to buy additional compatible hardware that needs to be properly configured for the miner to work. This consists of a motherboard, CPU, PCI-E risers, RAMs, a powerful power supply (PSU), HDD/SSD, and lastly a mining frame. As with the CPU mining, once the hardware is set up, you need to have a secure crypto wallet, install a miner and join a mining pool. Mining through GPUs is better in the long run as you can constantly change coins, miners or pools, depending on the market transition, costs and rewards generated. Nvidia and AMD are the only ones so far who produce GPUs, but Intel has recently announced that they will soon enter the GPU market. Some great Nvidia GPUs are 3080 and 3070 from the RTX family. And the best ones from AMD for mining are 6800XT,  6600XT and Radeon VII

There is no right or wrong coin to mine, but with the market being unpredictable sometimes, you need to make sure you are doing all the calculations before you decide to invest in any of these mining tools.

Don't forget to follow us @cryptonezo to stay updated with the latest blockchain and cryptocurrency news.

Bianca B.
Bianca B.
About the Author

IT Analyst for 6 years, mining crypto, investing and trading stocks & crypto, generally passionate about blockchain technology.

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