What is Crypto Mining?

2024.09.11

what is crypto mining

What is crypto mining? A brief explanation

Although the whole market is currently in a slump, it hasn't been that long since cryptocurrencies peaked and made new all-time highs (ATS). There are articles in the media describing crypto mining as a great way to earn passive income and a great business idea. Will this actually happen? How will crypto mining work after the ETH merger and is it still possible to make money from it? To understand how cryptocurrency mining works, imagine a transaction package like the one in the SWIFT system. The transaction approval system in blockchain technology is based on performing many mathematical operations in a short time. Miners use their machine's computing power to ensure the security of the entire network and in return receive a reward in the form of cryptocurrency. The amount is specified in the source code of each coin, and the reward is often reduced from time to time.

Is cryptocurrency mining profitable?

There was a major change in Ethereum's code in mid-September 2022. Since then, one of the world's largest cryptocurrencies is no longer available for mining, and mining has become significantly less profitable. Cryptocurrency mining can still be profitable, but you need access to very cheap electricity, such as through a solar power system. Currently, energy prices need to be less than 6 cents per kilowatt-hour for the business to be profitable. A lot also depends on the equipment you use to mine cryptocurrency, as modern GPUs are much more efficient than older ones. This doesn't change the fact that at the peak of the bull market, the payback period for an investment in a rig is only 7 months. It might be worth getting yourself properly equipped now.

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What is a cryptocurrency mining rig?

In the early days of cryptocurrency mining, people used regular computers to process transactions on the blockchain. But what if you could earn many times more without having to buy a case, additional hard drives, or RAM memory? You can easily build or buy a cryptocurrency mining rig. It is a device that consists of several graphics cards and a corresponding powerful power supply, working in conjunction with components known from a regular computer.

The best mining rigs – 3 configurations

Let’s look at some example configurations. We have prepared a list of 3 configurations that will allow you to mine cryptocurrency efficiently.

1. Budget configuration – GTX 1660 Super

Let’s start with the simplest rig. The GTX 1660 Super is a very economical graphics card, so you don't need an overly powerful power supply.

A mining rig based on 12 GTX 1660 Super cards and a pre-built platform will cost around $3,900.

2. Mid-range configuration – RTX 3070

It's time for a more powerful kit. The RTX 3070 is more expensive, but offers significantly more computing power and is a very versatile model. The RTX 3070 rig is based on the same platform and is priced at around $7,350.

3. High-end configuration – RTX 3090 Ti

RTX 3090 Ti based crypto mining rigs have incredible computing power. These graphics cards come with 24GB of VRAM each. This setup also uses 5000 watts, so you will need at least three power supplies.

Crypto Mining Software

Before you can start making money, you need to make sure you have the right tools. In addition to a graphics card, you will need crypto mining software.

Operating System

First, you need an operating system. Some miners use Windows 10, but Hive OS is the best choice. It is a modification of Linux designed specifically for creating mining rigs. If you use only one rig or ASIC miner, Hive OS is completely free. Otherwise, you will have to pay, but the monthly fee is very reasonable.

Miners

Each cryptocurrency is mined using a different program, so there are many miners. Hive OS itself will suggest a miner depending on the cryptocurrency you choose.

Wallet

Now it's time to choose your wallet. In our article on investing in cryptocurrencies, we said that while hardware wallets are the most secure, desktop wallets are the best compromise between security and convenience. First, choose Exodus. You will surely see its simplicity.

Is it possible to mine cryptocurrencies via phone?

Investing in mining equipment is not always possible due to reasons such as rising electricity prices. Therefore, you may wonder whether it is possible to mine cryptocurrencies using a mobile phone. Unfortunately, probably no one has yet managed to make money from it. There are ways to make better use of your mobile phone. For more details, read our text on the subject.

Prospects

It is easy to see that cryptocurrency mining is not a very profitable business at the moment, since it can take several years to recoup your investments. If you have a low budget, it is better to buy cryptocurrency or mine it on your computer, for example, using NiceHash, rather than building a mining rig or trying to mine cryptocurrency on your mobile phone. Save your money and look for buying opportunities and wait for better times. The next bull market probably won't come until 2024, so it's pretty soon. The sooner you decide that mining is really profitable, the more profit you'll make. Also, in your free time, you can always invest in your future, for example, by buying new certificates.