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Newcomers to cryptocurrency have several options for acquiring it. They can buy their first tokens using fiat money, or any currency that’s controlled by a government or central bank—your trusty old U.S. dollar for example. There’s also the choice to trade one crypto coin for another, or even to earn tokens as compensation for doing a job or selling a product. Arguably, however, the most adrenaline-inducing way to get crypto is through mining—and as many mining enthusiasts can attest, it’s also one of the most rewarding methods for earning crypto coins.
Crypto mining can be considered the modern-day equivalent to the Gold Rush of the 1850s, except that the assets are all digital. But just like mining for gold was in the 19th century, mining for crypto is definitely not an easy task. It requires advanced knowledge of crypto technologies, as well as a competitive sensibility.
If these facts don’t discourage you—and if they actually whet your appetite for acquiring more coins—here’s all you need to know about crypto mining. This briefer will help you understand how to mine for a coin like Monero (XMR) and how to add newly mined tokens to your Monero wallet.
The Principle of Crypto Mining
Before you get started on mining for crypto, you must first understand how exactly crypto mining works. In simple terms, crypto mining involves solving a complex mathematical problem using a computer that’s connected to the cryptocurrency’s blockchain network. Miners must compute for a hexadecimal number, or a “hash,” whose 64 digits are equal to the target hash or comprise the closest possible answer of a lesser value than the target hash.
The first miner that solves the hash puzzle is awarded a newly minted cryptocurrency coin. Oftentimes, the winning miner is the one who has verified the most transactions in order to arrive at that hash.
Knowing that many users may join the blockchain in order to try their luck, the cryptocurrency’s developers may employ measures like adjusting the level of difficulty for mining. If the overall computing power among the miners is high, the problems are likely to become more difficult. In contrast, if less computing power is involved, the problems are likely to decrease in difficulty.
Some cryptocurrencies, like Bitcoin (BTC), have a fixed supply of coins that can be mined, and thus may also be subject to a rate reduction of how many coins can be mined at a given time. Other coins, like Monero, have no limit to the number of tokens that can be in circulation. The supply may factor into which cryptocurrency coin a miner will choose to mine.
Those who are new to crypto mining may be wondering why it’s grown in appeal. Aside from the thrill, many miners like the generative quality of mining. It can feel extremely empowering to rely less on fiat institutions to get their own currency.
In turn, miners share some responsibility with crypto developers and their fellow miners. They take on the task of verifying crypto transactions before any new coin is released into circulation.
Crypto Mining: The Hardware Element
All prospective crypto miners need to start their mining journey with a dedicated mining rig, and a key element of any rig is its hardware. Some coins demand that a miner invest in a sophisticated mining rig, inclusive of a graphics processing unit (GPU) or an Application-Specific Integrated Circuit (ASIC).
But the barrier of entry for mining is lower for coins like Monero. In the case of XMR, the only special hardware that a miner needs is a central processing unit (CPU). That means that XMR miners can start learning the craft on basic laptops or desktop computers.
Crypto Mining: The Software Element
The second thing a crypto miner needs is crypto mining software to connect their computer to the blockchain. The miner’s choice of software should be compatible with their CPU, otherwise they may not be able to receive the fruits of their labor. The mining software should also be able to accommodate and link seamlessly with the miner’s crypto wallet of choice.
Crypto miners can use basic mining software to work solo or to join a mining pool with trustworthy individuals. But there’s also the option to subscribe to a cloud mining service that will give the user some extra computer power from a cloud provider. Whichever arrangement the miner chooses for their software, they will just need to be aware of how much they’ll have to pay in terms of fees.
Some Last Tips for Success at Crypto Mining
Your own success at mining depends on several different factors. These include the coin you choose, the overall power of your rig, and your strategy for mining. Other factors that will shape your crypto mining experience are your efficiency with resources, like electric power, and the extent to which you’re protected from malicious agents when you’re mining.
Again, crypto mining can be a risky endeavor. Just like cryptocurrency itself, the rewards that you can get out of mining are speculative. If you ever take it up, you have to be prepared to lose the game more than once. That means that you should only spend what’s reasonable for you on crypto mining in terms of your time and your money.
The closest thing to a foolproof formula for crypto mining is hard work, knowledge of the system, and a mining rig that suits your needs. If you’re dead set on becoming a good crypto miner, may you acquire all of these—and may you eventually strike gold.
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