You’ve probably heard about crypto mining, also known as cryptocurrency mining, and you’re wondering how you can get started with it yourself. This guide will take you through the steps to start your own crypto mining operation and get you up to speed on how the mining process works, so you can make smart investments and potentially make money in the process! (If you don’t want to focus on making money, that’s okay too!)
What is Bitcoin mining
How does it work? Bitcoin mining is how new Bitcoins are made. When people mine, they create fresh blocks by solving a series of computational puzzles. Each block contains a reference to a previous block, which forms an unbroken chain going back all the way to Bitcoins creation. The number of Bitcoins awarded for solving each puzzle varies, based on how much computing power was needed to solve it.
How do you mine a cryptocurrency
In order to mine cryptocurrency, you have to have a computer or multiple computers that are equipped with a specialized piece of hardware called Application-Specific Integrated Circuit (ASIC). For example, if you wanted to mine Litecoin, you’d need a computer with Litecoin mining software and compatible ASICs. To start mining Bitcoin, for instance, you’d need specific mining software and a powerful enough ASIC miner – as Bitcoin mining is far more complex than Litecoin mining.
Pick your hardware
The first step is picking your hardware. Do you want a discrete graphics card or an integrated CPU? Or maybe you want to go all-in with mining ASICs? The first step is deciding what type of hardware you’re willing and able to use, then researching what cryptocurrency it mines best. Once you’ve decided on your approach, look for retailers that offer miners at a reasonable price point. Some popular choices include
Find the best places to mine
Cryptocurrency mining takes a lot of resources: electricity, space, and even a good amount of tech know-how. You’ll want to find an area that provides as many of these things as possible—low electricity rates, cool temperatures (for cooling your hardware), plenty of space, and low humidity are all considerations when choosing where you’ll mine cryptocurrency. Fortunately for us miners, there are plenty of places that fit that description.
Consider electricity costs
When you’re getting started with crypto mining, it’s important to consider electricity costs. The cost of power can vary based on how much processing you need to perform on your equipment, which is a function of several factors including how many miners you have and how fast they operate. Some miners even take advantage of renewable energy sources, like solar panels or wind turbines, which can further decrease their energy costs.
Set up your PC and connect it to the internet.
The majority of crypto mining happens on a PC, so you’ll need a desktop or laptop with internet access. While most PCs can be set up for crypto mining, there are some prerequisites to ensure you don’t burn yourself out.
Join a pool.
Instead of solo mining, you can join a mining pool. These are groups of miners who combine their computing power and split the mined bitcoin between participants. Mining pools are standard because they smooth out rewards and make them more predictable; instead of waiting for a random amount of time, miners know exactly how many bitcoins they’ll earn every day. But on an individual level, joining a pool means you get fewer bitcoins than you would solo mining.
Do you really need special software?
The first thing to know is that you don’t need a supercomputer or specialized hardware or anything like that. Anyone with a computer (including laptops and smartphones) can mine cryptocurrencies if they have a strong enough internet connection. Mining software helps make it easy by providing users with a simple interface through which they can control their miners.
Stay safe while using public Wi-Fi networks while downloading the blockchain.
Protect yourself by running any downloaded files on a Virtual Private Network (VPN). A VPN adds an extra layer of encryption when you’re online, which protects your data from being compromised. It also encrypts any data traveling between your computer and devices connected to public Wi-Fi networks, so it’s much harder for hackers to intercept your information.
Don’t lose your private keys. Ever.
If you’re new to crypto mining, you might be confused by all of these terms like private keys and public addresses. Don’t worry; it’s easy. The key is your private key, a secret code that lets you access your cryptocurrency. When using software like Electrum, be sure to backup your private keys. If you lose them or forget them, there is no way for anyone else—not even your exchange—to recover them for you.
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