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When it comes to cryptocurrency and digital assets operations, one of the significant aspects of crypto operations is their mining. In a nutshell, the mining of cryptocurrencies is a process of availing resources to a crypto network, and in return, you get a reward. Now there are thousands of cryptocurrencies and networks, and each requires different resources for mining and also has different mining rewards as per distinct rules.
For instance, the top two prestigious cryptocurrencies’ networks, bitcoin and ethereum, use computational power as resources from miners. This is because the efforts needed to mine these digital assets require intensive graphic processors to rapidly process the operations to earn recurring rewards. However, it’s not like networks use only high computational power; some like PKT Cash crypto can be mined using bandwidth and a CPU like a computer, server, or mobile phone. Crypto mining does need a little bit of technological understanding, but still, it’s easy to do that too. But what to do, where to begin with, and what to follow, here are the steps following which you can get a basic idea for the same.
A crypto mining set up to mine crypto
Crypto mining needs to be set up for mining operations. To mine cryptocurrencies competitively, you would need a more powerful computer. With different cryptocurrencies, the requirements for equipment change accordingly. But the general phenomenon it follows, more powerful equipment could lead to higher yields. So it’s become crucial to invest in the equipment needed for mining.
Have particular mining software
After you invest in a mining setup, you would now need to install an operating system and software for crypto mining. For particular cryptocurrencies, there is a need for specific software. For instance, you would need several free or paid software options like CGMiner, Multimner, BFGMiner, etc., in order to mine Bitcoin or ethereum. Several apps are also there like BetterHash and CudoMiner to ease the process.
Crypto wallet to store the earned digital assets
As mining brings rewards to miners who need a wallet to receive the rewarded cryptocurrency. A Crypto wallet could be either a hardware wallet or an installed software wallet. However, while choosing a crypto wallet, it’s important to make sure that it is compatible with the mining crypto. Some are specifically designed to store only specific cryptocurrencies and might not be compatible with others.
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Choose a mining pool or go with the solo mining
There are options in front of miners to either go for a mining pool or solely mine cryptocurrencies. However, it’s recommended for beginners to choose a mining pool as it gives a competitive advantage and ensures a consistent payout. Just keep in mind that the pool should have a good reputation and a strong track record.
Track how much you mine
While mining cryptocurrencies, it’s important for miners to keep a record of their yields, especially in the case of bitcoin and ethereum like cryptocurrencies. It’s a way to ensure or to check if the strategy is working, making profits or not.
However, the strategy could be possible for only sole miners as mining pools have different interfaces that possess a single universal way to track mining.
What’s in there for you? Is crypto mining worth it?
It’s a crucial question to ask which needs to be answered before moving further towards crypto mining. Having this in mind on a broader note, crypto mining has two primary purposes that are to support the network and generate income.
While mining any crypto, miners have to incur various types of costs upfront, including software, hardware, and energy (electricity) costs. On top of that, the mining rewards initially may not be in an amount to profit the miner, which makes mining a short-term loss process most of the time. But it’s a possibility, and that too for the short term, in the long run, the possibilities are too high that mining remains profitable.
The possibilities are that the mining cost is less than what’s the current value of the crypto you are mining. In such a case, the mining could be profitable for you if the crypto that is being accumulated is at a discount on its current price. When this discount is counted in the future according to discount-to-market-value can showcase profit in the long run.
For insurance, think of a bitcoin miner in 2010 who was not profitable at the time because of the low value of bitcoin, but in 2022 the same coins are worth far more than actual mining costs. So eventually, the bitcoin miner at a loss in 2010 is most likely to generate significant profits until 2022.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
