Who Wants to be a Miner in the 21st century?

Cryptocurrency Mining: Mining in the Digital Era

Mining… We are all familiar with this term. That’s why you might be asking yourself if you’ll be needing a pickaxe and a mining cap. Fortunately, this isn’t that type of mining.

Basically, cryptocurrency mining is a process by which bitcoins are entered into circulation in the digital currency system. Furthermore, it assures the confirmation of new transactions by the network (and it prevents the double-spending of digital currency on a distributed network), being a critical component of the maintenance and development of the blockchain ledger.

It consists of special computing equipment, with specialized chips to solve a mathematical puzzle, in the form of cryptographic hashes, by which a bitcoin is created. A hash is a truncated digital signature of chunk data. They are generated to secure data transferred on a public network.

Miners compete on a hash value generated by a crypto coin transaction and the first miner to crack the code, adds the block to the ledger and receives the award.

Can You Be a Miner?

Actually, you can, but it is kind of pricey because you need to make certain investments and you may recover your initial investment later in time (depending on what you are mining and how the market goes). It is possible for a basic mining rig for some of the less popular cryptocurrencies, that the expenses will reach around 3000$. Some miners even spend more than 10.000$ on their rigs.

You need a GPU (graphics processing unit) or an application-specific integrated circuit (ASIC). A miner will need an 8+ core CPU. It is recommended to have a CPU model with support for Intel SHA Extensions: AMD since Zen microarchitecture, or Intel since Ice Lake.

As for the RAM, higher RAM does not guarantee you a better mining performance, so anywhere between 4GB and 16GB should do just fine. For you to choose the best option for the size of RAM, you should look at the operating system for mining, and if virtual memory is used.

Apart from the equipment, be aware of the fact that mining requires a lot of power. The electricity cost involved in mining a single bitcoin can be very expensive, even in the countries where power is generally cheap. For you to save some money in this case, you may consider a less powerful mining rig.

What Options of Mining Services Are Out There?

Apart from building your own rig from the scratch, there are some options that you may want to take into consideration, with their advantages and disadvantages.

Cloud Mining

Cloud Mining implies buying time on someone else’s rig. For example, companies like Genesis Mining and HashFlare charge you a hash rate. If you purchase a higher hash rate, you might receive more coins, but it will cost more. You may have to pay monthly for a company like this, or according to the hash rate. It is also possible that you may be requested to pay a maintenance fee in addition to the monthly one.

Take in consideration that some companies even have a one year contract, which can leave you in a total disadvantage if the cryptocurrency drops.

On the other hand, cloud mining absolves you of paying for the equipment and for the electric power.

Be aware of the different scams related to this type of mining: for example, you can be promised a certain percent of the earnings and never actually see your money, or you may even be asked to pay more to be able to withdraw it.

Hosting

This method may be beneficial for you if electricity is really expensive in your country, compared to others. Basically, you will have your rig run at someone else’s place, and you will have to cover the electricity costs for your rig, as well as a little commission to the host. In my opinion, the best option for this method would be if you choose someone from your family or a close acquaintance, so you can be sure that everything works just fine and your rig is in good hands.

Pre-built Rigs

This method consists of buying an already built rig. It can be beneficial because it may help you save some money and you do not have to build the rig from scratch.

One disadvantage may be in dealing with any problem that may appear. If you do not know how the rig works, it will take you even more time to realize where the issue comes from.

Another possible disadvantage, as it is generally for any kind of equipment that you buy from someone you do not know, the equipment may not be in such a good condition as it was presented.

If you have the necessary funds and plan to invest more in this field, you can have someone to help you. You can hire someone who is more skilled to install the rig for you and offer maintenance if needed.

How Much Can You Earn?

In 2009, when the first bitcoin was mined, mining just one block would get you 50 BTC. Then, in 2012, only 25 BTC. In 2016, 12,5 BTC and in May 2020 it was reduced to 6,25 BTC.

So, it is noticeable that every 4 years, the reward for mining drops to half the value of the previous one. This happens because of the increasing number of people who join the mining service because the existing reward from the block has to be divided among all of them.

The “reward” comes from the transaction fees which are charged every time a transaction is made. These fees also rely on the price of the cryptocurrency at a specific moment, so your profit also depends on that.

You need to look for the price of the cryptocurrency you are mining for if you plan to sell it. There are days when it can go high or when it can drop, so you need to pay attention, study and understand the market to find the right moment to sell your cryptocurrency.

So, these are pretty much the essential basics of mining in the digital era. Now that you are more informed, you can decide if it’s for you, or if you’re happy with just buying and exchanging, which is just as fun and rewarding as well as a lot easier. If it’s the latter, IXFI’s got you covered for all your trading needs. All you need is a bit of courage, no pickaxe necessary.

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