Get all your questions answered about Bitcoin and crypto mining
CRYPTOCURRENCY MINING: BITCOIN AS A CASE STUDY
Are you looking to understand how mining cryptocurrency works? Do you desire to trade in the crypto market but find the required capital a bit too high?
If you answered “yes” to those questions, then you’ve come to the right place.
This article will explain the idea behind crypto mining, how it works, the cost of mining, and the merits & demerits of mining cryptocurrency.
Most people have heard of “Bitcoin,” “blockchain,” “cryptocurrency,” but many don’t know how to mine.
You must first understand what this means before you begin to wonder if you can mine something that’s not physical.
Let’s begin by understanding what cryptocurrency is.
What is a Cryptocurrency?
Cryptocurrency, in basic terms, is digital money known as “coin.” A more complex or technical definition will be to say that cryptocurrencies are digital assets intended to serve as an exchange in business transactions.
What separates these currencies from the conventional ones we know (e.g., dollars, euro, yuan, etc.) is their originating point and the system by which they run.
Paper money in counties is disbursed from a centralized system known majorly as central banks.
Instead of this, digital currencies use a decentralized scheme. What this means is they are disbursed and issued from multiple sources and are not state-controlled.
However, the cryptocurrency with decentralized control works through a distributed ledger technology, which is usually a blockchain that serves as a database for public financial transactions used to keep track of the crypto market.
Cryptocurrencies like Bitcoin have become the new money. Industries and market structures have started accepting coins as payment for transactions, and they’re becoming more and more widely used in today’s buying, selling, and investment.
How Are Cryptocurrencies Created?
The next question we must then answer is: How does the decentralized system make these coins?
We know the centralized system prints paper money and through the conventional means of minting. Majority of Cryptocurrencies run on blockchains.
A blockchain is what gives authenticity to each coin of cryptocurrency. It is an ever-growing collection of records called blocks that are cryptographically connected and protected.
Blockchains are immune to data alteration implicitly by nature. A blockchain is usually run by a network of peers that adheres to a protocol to verify new blocks to use as a public ledger.
What Does it Mean to Mine a Crytocurrency?
Mining Bitcoin or other cryptocurrencies isn’t as basic as digging or drilling. It isn’t the same as going into caves to get coal or gold. It entails inspecting coin transactions.
Miners are people or businesses that help to audit the cryptocurrency supporting blockchain network. They do this by completing blocks that are added to the blockchain of checked transactions.
When Bitcoin mining operators complete one block, they are awarded Bitcoin, hence the name mining to depict a system that rewards their “digging” – checking and balancing transactions.
If you were to buy a pair of Nike sneakers at a store today with a $100 note, you most likely wouldn’t get to use that exact note to purchase anything else.
Paying that note to a cashier is kind of like what miners do with transactions. Only unconfirmed transactions can be mined after the miners identify the transaction as legitimate.
For each of these confirmed transactions a miner creates, a node has to add it to its database, where it is then made part of the blockchain.
What is the Cost of Mining Bitcoin?
The cost of mining Bitcoin was projected by researchers, in the early days of 2020, to range from around $12,000 to $15,000 come May.
But today, the cost of mining is much cheaper than speculated. The prices range from $5,000 to $7,000.
The price came down due to two major reasons – complexity change of the crypto market and cheaper energy in terms of electricity.
This issue has made Bitcoin more accessible in recent weeks, and just like paper money, too much circulation means a reduction in the value of purchase.
Although there are speculations that the reduction in mining cost will harm the crypto world, miners and investors are fairly glad about the drop in cost.
What Equipment is Needed For Mining cryptocurrency?
Depending on what coins you want to mine and the size of mining operation you want, you have a number of options to start mining cryptocurrency.
If you choose to buy a desktop computer for mining, you can use it as a multitasking machine to get your work done, play games and browse the webs. If you build your own mining rig, it will be designated to handle one task and that is to mine your crypto.
There are benefits and some things we don’t like about each way of setting up your mining rig.
- You can buy a performance PC with the latest specs and components that offer a fantastic mining machine. Going this route is more expensive but it’s a completely hands-off experience and you get a powerful beast of a machine designed for multitasking and mining.
- You can build your own machine by purchasing an ASIC mining rig, designed with different modes, all with intent of being an efficient vehicle to produce crypto. The ASIC doesn’t use a GPU which ultimately means you will operate at a lower price and have lower power usage.
If you’re wondering where to purchase a high performance PC for mining or an ASIC mining rig, we have found a couple sources. At the time of writing, all of these products are available and in stock but make sure to check the inventory because due to popular demand, we often see a wait and backup till one can be received.
Most affordable personal mining rig
Designed with space and convenience in mind, the Antminer D3 is an ASIC miner offering mid-range capabilities with a hashrate of 19.3 GH/s. Power consumption is a tad higher but efficiency rating claim is 93%, a solid contender for the price and if you have minimal space.
Best value mining rig
The most popular mining rig is hardly ever in stock. The Bitmain Antminer S17 is a hyper-efficient ASIC with a hashrate of 56 TH/s and an efficiency rating peaking at 94%. When the S17 is available, you can pick it up at Bitmain and sometimes you can find it the S17 on Amazon.
Desktop mining rig
This comes down to personal preference providing you select a few key components that are critical to your mining success. Sticking with gaming computers that have fast processing and next level graphics card is just the start.
We found four high-powered desktop PCs that will allow you to plug in and start mining cryptocurrency with ease.
CPU for mining
GPU for mining
Mining cryptocurrency is popular today, but it’s hard to understand how you can get started.
Cryptocurrency mining can be a great way to generate passive income. However, there are several things that make this process difficult and confusing for new users.
The best GPU for mining will give you the most profits with the least amount of effort needed from your part. We have researched and tested many different GPUs so we know which ones work well together in order to maximize your profits without having to invest too much time or money into research yourself.
Extra accessories for mining
If you decide to build your own rig, here are some of the most common accessories and pieces of equipment you will want to use for setting up and maintaining your cryptocurrency mining operation.
A lot of people are looking for a good open air mining rig case/rack to protect their rigs from dust and other elements.
There are many bad racks out there, but also some really great ones. It’s important to do your research before making a purchase so that you don’t waste money on something that won’t last or doesn’t fit your needs.
If you’re interested in purchasing an aluminum open air frame mining rig rack/case we have reviewed the best options based on quality and price.
What are the Pros and Cons of Bitcoin Mining?
Like everything we do and we are involved with, Bitcoin mining has its upsides and downsides.
For one, you have absolute leverage and control of your Bitcoins, unlike conventional banks that can freeze your money and account.
No one can counterfeit your mined coins, and you get them at a lower price than buying a coin in its entirety.
The other advantages that come with mining Bitcoin are the same as owning and using cryptocurrency itself.
Things like identity theft, credit card data theft, and other issues are eradicated because it’s a digital currency.
One major downside of mining Bitcoin is the high level of power the activity drains. Bitcoin mining has wide environmental impacts and requires plenty of energy.
The decentralized control of cryptocurrencies also means there is poor corporate responsibility. This means that there is little to nothing states can do to call for reparations for damage caused.
Sometimes this might make you think twice about investing in mining but don’t let it stop you.
Another downside to mining that you must note is that the extreme uncertainty in Bitcoin prices affects mining.
One day Bitcoins worth thousands of dollars, and the worth is less than expected on another day. These continuous shifts affect crypto mining.
Mining cryptocurrencies is a recent phenomenon, and it may take a while for society to embrace it considering the fact that more people use and are comfortable with paper money.
However, on the plus side, most people no longer go around carrying cash, just a plastic card. So, already, the first step has been taken towards a cashless economy.
Mining Bitcoin is also becoming a more and more acceptable aspect of society as people begin to learn how to make real money in exchange for physical products.
Cryptocurrency is the currency of tomorrow. As bitcoin mining is ripening, the entry barrier has been raised for individual miners.
Most mining is carried out by a multitude of miners who combine their resources and try to use their cumulative computing power to get Bitcoin as the reward for their work.