Cryptocurrency mining: How it works and what you need to know?

Have you heard of cryptocurrency mining and want to know more about it?

Are you interested in how it is done and how much can be earned?

Many people are tempted by the idea of buying a machine, putting it on the ceiling, turning it on, and not thinking about it anymore.

Unfortunately, not everything is so ideal, and for the story about mining, it is necessary to take into account many factors such as electricity consumption, cryptocurrency prices, equipment prices, novelties in the crypto world, noise, heat, etc.

Before you decide to do mining, you must first ask yourself the following things.

What cryptocurrency do I want to mine?

First of all, you need to research which cryptocurrency you want to mine.

The type of equipment you buy depends on this.

One should research and know well the project(Bitcoin, Ethereum, Monero) in which one invests because later changes are difficult or almost impossible.

For example, you will use ASIC devices for bitcoin mining, and you will use graphics cards for Ethereum and Monero mining.

Since Monero and Ethereum have different mining algorithms, you will also be looking for different graphics cards.

We will use the example of Ethereum mining due to minimal investments and because it does not require special equipment required by Bitcoin.

It is possible to mine Ethereum on any average computer with a graphics card.

You will not earn much like this, but it is a good way to get acquainted with the concept of cryptocurrency mining.

How much money should I invest in cryptocurrency mining?

Before we start looking for equipment, we need to determine the amount of money we can set aside for the purchase of equipment.

It is important to think carefully about the budget and invest only what you are willing to lose.

This principle is related to every type of investment in which there is a risk, and the risk is especially pronounced in the world of crypto.

It is recommended to avoid loans and other types of borrowing in order to purchase equipment for cryptocurrency mining.

Where can I find cryptocurrency mining equipment?

There are several ways to mine cryptocurrencies, and everything is based on processor power and equipment optimization.

For simplicity, we will focus only on Ethereum mining, and the principle is similar to mining other cryptocurrencies.

Research has shown that Ethereum is very popular, partly due to the cost-effectiveness of mining and cheap electricity.

To mine Ethereum, you need graphics cards, the same ones used in gaming computers.

You can find these cards at any computer hardware store.

Buying graphics cards in such stores is a good option because you will be sure that they have not been used before, and you will also receive a warranty on the equipment, which is very useful in case of a breakdown.

However, a good part of the miners decides to look for the equipment through advertisements.

This variant will probably save you money, but the correctness and guarantee are in question.

The equipment you purchase comes down to your budget and risk tolerance.

Do I have space for the equipment?

Depending on the equipment, you must also consider the space that the equipment will take up.

It is necessary to consider the equipment not only on the basis of how much physical space it will take up but also how much heat there will be in the room and how noisy it will be.

You don't want to sleep in a room where mining rigs work 24 hours a day.

The heat in the room will depend on the consumption of your equipment.

If your equipment consumes 1kW, it is the same as if you have a heater of that power that works for 24 hours.

The minimum space could be a pantry with a window, but it would be advisable to keep the equipment as far away from you as possible.

A typical example of a cryptocurrency mining space is an unused garage, basement, or attic.

The room must have good ventilation and internet access.

If you can, connect your rig with a cable, because the WiFi connection can cause you additional problems due to its unreliability.

What will be the electricity bill?

Your electricity bill will depend on the consumption of your equipment.

If you are doing this in your house or apartment, you need to consider different zones with different prices.

The best and easiest way to calculate your electricity bill is to first calculate the consumption of equipment in kilowatt-hours and multiply that figure by 24 and then by the number of days in the month.

The result will be an estimate of your electricity bill.

An important note is that this will be a bill only for the consumption of equipment.

Consider other home appliances if necessary.

How do I connect the equipment to the network?

In our example, Ethereum mining graphics cards are typically linked into something called rig in jargon.

A rig is, in essence, just a computer with a large number of graphics cards, so you need to know how to assemble a computer if you decide to make your own rig.

There are a lot of tutorials on the topic of assembling rigs, which can be a great start.

Alternatively, you can buy a ready-made rig or pay someone to assemble it for you.

In addition to assembling hardware, it is necessary to configure the software used for cryptocurrency mining.

Is cryptocurrency mining worth it?

This is the question that probably interests everyone the most, but unfortunately, the answer is not so simple because your rig does not mine dollars, but a cryptocurrency that you can convert for dollars.

As we know, the prices of cryptocurrencies can vary a lot in price from day to day.

Most miners do not sell cryptocurrencies at the end of each month, but build stocks and wait for the price of cryptocurrencies to rise in order to maximize their profits.

It is important to note that Ethereum at one point reached a price of almost $5000 and that its price since its inception has jumped by more than 20000%.