A Beginners’ Guide to Crypto Mining. What is It and is It Profitable?
Recently, due to the growing popularity and spread of various cryptocurrencies, especially bitcoin, a related term called “mining” has been increasingly used.
Mining is the process of “mining” cryptocurrency, virtual money, the issue of which is not regulated by anyone. The process works thanks to blockchain technology – a chain of blocks, each of which stores information about an individual transaction. The blockchain’s performance depends directly on the processing power of the computers connected to the blockchain.
When applied to cryptocurrencies, the term refers to the process involving the use of computer resources to process payment system transactions by creating new blocks, securing them and forming new records in a common database. Let’s find out the peculiarities of mining in today’s realities.
The essence of mining is that computers in many different locations around the world perform calculations and thus generate new blockchain blocks. This system is compared to a big book, containing all the records of what is happening with cryptocurrency. It is the platform on which any cryptocurrency is based.
This activity is necessary for the transactions to take place, to ensure a high degree of security, as well as the smooth functioning of the entire peer-to-peer decentralized system. The greater the number of miners and, consequently, computer resources involved in the process, the more reliable and stable the system is. Let’s evaluate the relevance of mining today.
Is Crypto Mining Profitable?
Miners – users, who ensure the passage of transactions, decentralization of the network and its protection against unauthorized access and changes. They get remuneration in cryptocurrency for the work of their equipment.
Miners’ profits depend on three components:
- The number of coins received. This important indicator of a miner’s earnings is based on the power of the equipment, the difficulty of mining, and the value of the reward.
- The value of the cryptocurrency. Cryptocurrency prices are set by the market. And there is no way miners can influence them. Unless, of course, the miner of digital assets is the owner of a large number of coins, wishing to sell them at one time.
- The cost of equipment and related costs (electricity, equipment maintenance, Internet charges, etc.).
It is possible to determine how profitable mining is only in the short term: today, this week, this month. The longer the analysis period, the harder it is to make reliable profitability predictions. This is due to the factors that cryptocurrency miners depend on. They are volatile and dynamically change over time.
Before entering the market “from scratch”, you need to ask yourself the question: for what purpose are you going to mine cryptocurrencies. If you expect to be able to earn a tidy sum in a few months – you shouldn’t start now.
Yes, the value of crypto is growing today, but no one can predict how long this growth will last. Maybe a month, maybe six months. As you can see from the above calculations, the payback period is longer than that. Of course, if the rate increases by 2 times, then you can have time to return the investment and earn money.
However, you should not forget that mining is one of the less risky ways to make money from cryptocurrency. It won’t be big and fast, but it will be reliable and regular.
Let’s understand what crypto can be mined.
What Cryptocurrency Can Be Mined?
Cryptocurrency mining is not the most obvious type of income on the Internet.
The most popular cryptocurrencies for mining:
- Ethereum (ETH) is the second most capitalized cryptocurrency after WTC. The advantage of this cryptocurrency is unlimited issuance. It is developing no less rapidly than other cryptocurrencies. Today, you can even use Ethereum to sign smart contracts to make payments in various applications. If you are not interested enough in this cryptocurrency, read what the Ethereum Foundation is all about. We’re sure it will change your mind.
- Stellar (XLM) is one of the cryptocurrencies that makes life easier. Many experts claim that Stellar is an improved version of
- Ripple. In this case, there is no emission, which is also a plus for many miners.
- Tron (TRX) – the cryptocurrency has been around for about a year, but its capitalization is already over $7 billion. This cryptocurrency is appreciated by fans of games, entertainment shows and other gambling entertainment. Tron’s decentralized cryptocurrency platform is ideal for entertaining.
- Cardano (ADA) is a cryptocurrency for the ambitious because the functionality of the cryptosystem of this digital currency is quite diverse. Its internal algorithms are scientifically verified, which allows the rate of the cryptocurrency to grow through mining. Experienced crypto market participants claim that this cryptocurrency is one of the best long-term options.
- Litecoin (LTC) is one of the top ten digital currencies by maximum market capitalization. Litecoin is referred to by many as an improved version of bitcoin. Its advantages are low commissions, a lot of payment terminals, and its popularity on the market.
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How Long Does It Take to Mine 1 Bitcoin?
In general, it takes about 10 minutes to mine one bitcoin. However, this assumes a perfect hardware and software setup that few users can afford. A more reasonable estimate for most users with a great setup is 30 days to mine one bitcoin.
Today, cryptocurrencies are on top. The concept of cryptocurrency, which exploded the Internet community, gave birth to a new industry in making money – cryptocurrency mining. Every day the number of miners is steadily increasing, and mining cryptocurrencies is becoming harder and more labour-intensive!
Some time ago it was possible to mine at home on just a home PC and earn a decent amount of bitcoins, nowadays you need special and expensive equipment to mine cryptocurrencies.
If mining is a long-term investment, then you can try. This will require a willingness to hold the cryptocurrency for a long time without selling it on the market to cover costs.
The cryptocurrency market continues to evolve, so new players here can quickly start making money. That’s why it is important to know more about crypto.
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Now you know all about cryptocurrency mining in simple terms and how you can make money from it.
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