Mining cryptocurrency is an activity that many experts have compared to the American Gold Rush during the 19th century. While the early gold speculators of the American Midwest relied on horses, carts and spades to find their gold, cryptocoin miners rely on computer hardware.
While the hardware required can be costly, returns can take several months to roll in — which puts ordinary Internet users off. Nevertheless, these hurdles haven’t stopped millions of people around the world mining cryptocoins such as Bitcoin, Litecoin and Feathercoin.
Take Litecoin, for instance. Someone willing to devote some serious processing power to mining this popular digital currency can expect to earn anything between 25 Cents and 10 Dollars per day. For users willing to dedicate their hardware to the process of mining, there is some money to be made — particularly if those users are willing to hold onto their coins for a number of years.
Is There Any Serious Money to Be Made from Mining Cryptocurrency?
The answer to this question isn’t a simple one. For example, imagine you got involved in Bitcoin mining way back in 2009. Successfully mining just a few coins and holding onto them would have given you a very nice little nest egg today.
However, the unprecedented rise in value of Bitcoin won’t necessarily be replicated by other digital currencies. But if you’re simply a hobbyist who wants to pay for their mining hardware over the next year or two, mining cryptocoins could be well worth the effort.
If you want to make some serious money from cryptocoins, you will probably need to invest with your own money. You’ll also need to come to terms with the fact that you’ll probably have to sit on your investment for several years. However, if the success of Bitcoin is anything to go by, there is a genuine opportunity to make money from buying cryptocurrency.
How Does Cryptocoin Mining Work?
The science behind cryptocurrency mining is rather complex, but it is based on the principle of being paid for making your processing power available for huge transactions.
The execution of various accountancy services to the network. Your computer will be “verifying transactions” on a continuous basis. Payments for processing these transactions are made with fractions of cryptocoins — usually paid every few days.
What Do I Need to Start Mining Cryptocoins?
While cryptocurrencies operate in different ways, you will definitely need a few things to start mining. The first thing you’ll need is reliable hardware, preferably located in a cool, air-conditioned room. Processors can become very hot when executing so many calculations at the same time.
You will also need dedicated mining software, which you can download for free from one of the major cryptocurrency network’s website. And finally, you’ll need a digital wallet — in which all of your cryptocoins will be stored.
But even if you have all of this in place, successful mining isn’t guaranteed. To increase profitability and ensure a steady income stream, many miners team up with others in online mining pools — combining processing power to make the process more profitable for everyone involved.
As your computer will be communicating with others around the world, you will need a fast and reliable broadband connection. And when the cryptocoins finally start rolling in, you’ll need access to a currency exchange in order to convert them into real-world cash.
Can I Use My Existing Computer for Mining?
As long as you have a reasonably modern and powerful computer, you should be able to use it to get started. However, you probably won’t be able to use it for anything else when mining in underway. For the best results, a powerful desktop PC should be used solely for mining. Laptops, handheld devices, tablets and consoles are generally not suited to efficient mining.
Your computer will need to have a powerful ATI graphics processing unit or a dedicated ASIC chip. Your GPU or ASIC will be performing all the heavy lifting, so it’s worth investing in the best you can afford. These units create an incredible amount of heat, so it’s worth having a few external fans in operation, as well as the fans inside the computer.
Do I Need Any Special Skills or Knowledge to Get Started?
The leading mining software packages contain everything you need to get started. Installing the software and following the instructions is often enough to set up a computer as a mining device. However, the technologies and techniques involved are constantly evolving, so it’s always worth following industry developments and reading about new ways to improve mining yields.
Is Mining Really Worth the Effort?
If you can get started relatively cheaply, and you’re not expecting to get rich, cryptocoin mining can give you a modest income — which many people use to upgrade their processing hardware.
But before you dive in, it’s worth remembering that mining comes at a price. You might need to upgrade your existing software. You’ll also need to pay for increased electricity usage, which can be substantial given all the processing power being used.
The most successful miners can earn the equivalent of around 100USD per week. But when you take into account the costs involved, you’d have to have a pretty good set-up in order to turn a serious profit. This is why most people join a mining pool — or cut out the mining process altogether and buy cryptocurrency with traditional cash.
If you decide to go ahead and start mining, it’s worth remembering that you’ll make less and less money over time. Many cryptocurrencies have a finite number of coins available. And because miners are always striving to improve their hardware, you’ll be getting an increasingly smaller slice of the pie as time goes on.
To stay ahead of the game, you should be constantly updating your software, mining techniques and hardware. And perhaps most importantly, you need to be following industry developments. Adapting your mining strategy or switching to different digital currencies should ensure that the process remains reasonably profitable for you.