Over the past few years, it is quite noticeable that crypto currencies like Bitcoin have earned an immense popularity. A large number of individuals are buying and selling crypto currencies. Moreover, Bitcoin has become a huge hit in the mainstream financial ecosystem and is a worldwide phenomenon today. More and more people are looking forward to participate in the crypto currency domain.
Crypto currencies are generated via mining
It is important for you to understand that crypto currency cannot be produced similar to that of a regular money. There is a lack of any central authority that issues notes and coins. Instead, crypto currencies likes, Bitcoins, Litecoins, or any Alt-coins are produced or generated via a process known as mining.
What do you understand by Blockchain and how does it function?
Before you understand and get a grip on the entire process of crypto currency mining, it is essential that you understand about Blockchain and the way it functions. Blockchain is basically an advanced technology that backs almost every crypto currency that is out there. It is a decentralized register or a public ledger of each and every transaction carried out in a specific crypto currency.
The transactions are accumulated into what is referred as blocks. The blocks are verified in order to assure that they are lawful and legit by crypto currency miners. This evaluates whether the same crypto coin has been used repeatedly before the transaction gets cleared. Such a move also ensures that the input and output expenses match. The next successive transaction block gets connected and it follows.
It is how crypto currencies are created and new coins are also formed.
Mining of new blocks
There is no central bank or governmental authority. There needs to be a method or a way of accumulating each and every transaction that is carried out with a digital currency and thereby create a new block. There are network nodes that execute the tasks, and they are referred as dubbed miners. Every time a transaction is accumulated into a block, it is supplied to the Blockchain.
If you supply the block, you will get rewarded with some of the specific digital currency. The devaluation of the virtual currency is prevented by miners. They build a lot of blocks, and make the whole task very difficult and challenging to conduct. The miners are forced to provide solutions to complex mathematical problems, referred as proof of work.
What do you know about crypto currency mining?
Also referred as cryptomining, it is a method where varying types of crypto currency transactions are tested and then added to the Blockchain digital ledger. Crypto currency mining is also known as Cryptocoin mining, Altcoin mining, and Bitcoin mining (the most popular one). In the last few years, the activity of crypto currency mining has grown exponentially.
Every time when a digital currency or a crypto currency transaction is executed, a crypto currency miner has the responsibility to make sure that the transaction and the update of Blockchain is authentic. The domain of mining process includes a competition among crypto miners. They have the task to resolve a complex mathematical problem involving cryptographic hash function. It is involved with a block that features the transaction data.
The first miner who is able to come up with the code crack, is rewarded for authorizing the transaction. They can earn a small amount of crypto currency of their very own. If you are one of the early adopters of crypto currency mining, you will be awarded. You must have heard about Bitcoin, the first decentralized crypto currency that has swept the world. There are several other crypto currencies that are doing quite well in the market. If you want to, you have to participate in the game of crypto currency by learning the basics of it in a proper manner.
Which Alt-coins should you mine?
In case, you have started mining the Bitcoins way back in 2009, you must have earned a lot by now. Simultaneously, you must have also lost a lot of money as well. If you are beginner miner or a novice, mining Bitcoin is not a good idea at all. The reasons are clear:High maintenance costs
High level of mathematical difficulty
Huge up-front investment
The above factors make it quite difficult for novice miners, and doesn�t make it a profitable avenue as well.
Feathercoins, Dogecoins and Litecoins are the three scrypt based crypto currencies are considered the best for beginners for crypto mining. With the present value of Litecoin, an individual can earn from anywhere between 50 cents to 10 dollars every day via the consumer level hardware. On the other hand, Dogecoins and Feathercoins will result in slightly less profit than Litecoin using the same consumer level hardware. Peercoins can also give you a good return on your investment. Such crypto currency mining is becoming very popular among the beginners.
When there are a large number of individuals participating in the crypto coin rush, it becomes challenging or difficult to mine. This is mainly because an expensive hardware will be needed in order to find out the coins. If you want to mine for the particular coin, you will be forced to invest quite heavily. You also have the option of taking your total earnings and then shifting to a much easier crypto coin. You have to also make sure of the Bitcoin mining legality of the country you are mining.
How to calculate the hashes?
If you wish to create a successful block, a cryptographic hash is the ultimate requirement. If you want to get the perfect hash matching, it is necessary to calculate as many as hash possible and wait for the perfect match. Once the right hash is discovered, a new block gets formed. The miner who discovered it will be awarded with a few crypto currency units.
The whole calculation process can be conceived as the guessing competition of an apple. You have the opportunity to guess and the first one who does it and answers correctly, wins. The faster the guess, the higher chance of winning.
Requirements to mine crypto coins
You need the following in order to mine crypto coins. They include:
The operation of Cryptocoin Mining
- A coin wallet, which is a private database protected with a password. You can safely store all your earnings and thereby maintain a wide network ledger of transactions.
- A mining software package (free), usually made of stratum and cgminer.
- You need to have a membership in the online mining pool. A mining pool is basically a community designed for the miners. They include their computers and thereby increase the income stability and profit.
- You also need to have a membership at an online currency exchange. This helps you to exchange your virtual or digital coins for traditional cash and vice-versa.
- Having a reliable and high speed internet connection is a must. It is preferred to have an internet speed of 2 megabits per second or even faster.
- A cool or an air conditioned space or location for hardware setup.
- A customized computer is a better option to be used for mining. You can use your current computer system as well to begin with without any customization. But when another miner is running, you will not be able to use it. A note for the serious miners-avoid using laptops, handheld smart devices and gaming consoles as they are not as effective in generating income for you.
- An ATO GPU or Graphics Processing Unit or a special processing unit, known as mining ASIC Chop. The cost for such advanced units or devices for mining will vary from $90 (second hand) to a new one, costing around $3000. Basically, the ASIc chip or the GPU will the hub of accounting services and mining work.
- It is necessary to blow cool air to your computer system used for mining. Mining can generate heat and cooling the software is necessary for the success. Hence, a house fan is a must.
- You need to have the urge and the hunger to constantly learn and update yourself with the latest coin mining techniques and thereby get the optimized results.
In order to understand the functioning of crypto mining, our focus must be given to the �scrypt coins�. They include Feathercoins, Dogecoins, and Litecoins. The main goal of the Cryptocoin mining is to fulfil the following three aspects:
Is it worth mining Cryptocoins?
- Offer the bookkeeping services to the Cryptocoin network. You have to understand that mining function 24*7 through computer accounting, known as �verifying transactions�.
- You can earn small rewards for the accounting services you provide. The reward is basically the fractions of coins that you can receive every alternative day.
- It is essential to keep your personal cost down, which includes the hardware and the electricity.
There is no doubt to the fact that Cryptocoin mining can help you to generate a small income, or perhaps one or two dollars almost every consecutive days. This is true when you consider mining crypto as a hobby. In fact, almost every crypto currency is easily accessible to the common mass. An individual can earn up to $1000 and recover the hardware costs that are needed within in a span of 18 to 24 months.
Setting practical expectations is necessary
In case, you are considering Cryptocoin mining as a source of alternative income, it might not be a good option to opt for. As an investor, you have to understand that investing only a few dollars while mining will not give you a considerable amount of profit. You have to make sure that you are willing to invest at least $3000 to $5000 for hardware costs. This can give you around $50 every day and sometimes even more.
When your intention is making a substantial amount of money, it is always recommended to purchase the crypto coins with cash rather than mining them. You can keep them it store and wait for the time when the coins rise in value equivalent to gold and silver and then sell them off. It is absolutely necessary to understand the way the crypto market is operating and accordingly make your decisions.
If you want to mine really smart, you have to keep in mind that the electricity cost is under $0.11 per kilowatt hour. When you are mining crypto coins with the help of a 4 GPU card, the cost can be around $8 to $10 every day. It basically depends on the crypto currency you mine. Therefore, the electricity cost will be around $250 to $300 every month.
There are two things that you need to look out forThe direct investment required to purchase 4 ASIC processor or 4 AMD Radeon Graphic Processing Units.
The current market value of Cryptocoins.
There might be a situation where your virtual currency might have an upsurge in value. This definitely gives you the opportunity to become the person owning thousands of dollars in crypto coins. The emphasis here is that you might have a rare chance of the situation. When you plan to make some revenue via crypto coin mining, it is always recommended that you do it as an intention of a hobby. It shouldn�t be taken as a source of income.
You need to expect smaller returns. It can be compared as collecting the dust of gold instead of the actual gold. Moreover, it is also important to ensure that you don�t neglect researching and studying in details before investments. This helps to avoid or prevent any kind of scam currency.
How much can you earn by mining Bitcoins?
When you are mining Bitcoins, it is mined in units, known as Blocks. An average reward for the completion of a block is 12.5 Bitcoin. If you calculate the price of around $10,000 per Bitcoin, it means, you have the opportunity to make a revenue of around $125,000 (12.5 x 10,000). In 2009, when Bitcoin was founded, one block of mining Bitcoin, would give you 50 BTC.
In 2012, the same thing almost got halved, that is, around 25 BTC. In 2016 and beyond, it stands at 12.5 BTC. It is predicted that by 2020, the reward size will be halved again, near about 6.25 BTC. You need to keep a track on the Bitcoin Clock and keep an update on the halves that occur in the real time.
Limitations of crypto currency mining
Some of the limitations include:The acceptance of crypto currencies like Bitcoin is very low in the mainstream financial market. There are a very few online retail site that accept Bitcoin as the mode of payment. Hence, you have to convert Bitcoin and other virtual currency into the traditional currency.
One of the biggest issues of Bitcoin mining is the unstable value. The value of crypto currencies fluctuates a lot as compared to the traditional currencies like Euro and Dollars.
Since there is no centralized authority that monitors the transactions, there is indeed a lack of protection. Bitcoins and other crypto currencies are not insured like bank money. In case, the digital wallet is lost, you end up losing everything.
Bitcoin is basically a software that consists of codes. Often there are technical difficulties that are not identified. This can have a negative effect on the whole operation.
Often questions pop up whether you are actually making any profit or not from Bitcoin mining. The electricity cost of mining is quite high. Moreover, you have to invest a minimum amount of money to start making revenue and then profit.
Condition to earn Bitcoins with mining
If you are really eager to earn Bitcoins, there are two conditions that as an investor you have to cater to.
- You have to make efforts. Without hard work, you gain nothing.
- Apart from the hard work, you need to have the luck factor as well.
The easy part is the verification of 1 MB worth transactions. Your effort is important here. Your luck factors play when you become the first miner to come up with the right solution to a given numeric problem. This process is called the �proof of work�.
What do you understand by the right answer to a given numeric problem?
You must have read and heard about the miners solving the challenging mathematical problems, right? In reality, this is absolutely not the truth. Basically, what you need to do is become the first miner and come up with the hash or 64 digit hexadecimal number. It needs to be either less or equal to the target hash. This is more of a guess work that you have to master.MH/S or Mega Hashes per second
GH/s or Giga Hashes per second
TH/s or Tera Hashes per second
What is the function of hashes or 64 digit hexadecimal number in Bitcoin mining?
Since it is more of a guesswork involved, it becomes necessary that you are aware of the computer power. This is important so that you are able to become the first miner. In order to successfully mine first, it becomes vital to have a high hash rate. It is measured in either,
If you minutely explore, you will come across an undisclosed metaphorical number in the envelope, which is referred as target hash. The miners are making use of a number of cooling fans, and specialized computers in guessing the target hash. As a miner, you can make the guesses very randomly by producing as many as nonces as possible, and at a rapid pace.
How to maximize guesses the right target hash before anyone?
A nonce is the term used for number used only once. In fact, it is a primary key in the generation of the 64 digit hexadecimal number that is so much is limelight. In Bitcoin mining, a nonce is 32 bits in size, which is way smaller than the hash. The size of a hash is 256 bits. If you become the first miner whose nonce generates a hash less than or equal to the target hash, you will be awarded with credit. Since your hash is able to complete a block, you will rewarded with 12.5 BTC.
In theory, this is similar to achieving the same goal with the rolling of 16 sided die 64 times and thereby arrive at random numbers.
If you want to get rewarded for mining, it is essential that you execute a fast mining rig. In fact, joining a mining pool is also not a bad idea. A mining pool is a group where miners come together and combine their computing power and then spilt the Bitcoins mined. Often mining pools are compared to the powerful clubs where the members buy the lottery tickets and then agree to share their rewards. When people mine together in groups in pools, large number of blocks are mined as compared to the individual miners.
It won�t be wrong to mention that it is more of a numbers game. The problem is that you cannot make guesses with the patterns, and thereby, make any prediction looking at the previous target hashes.
Identifying Bitcoin or Ethereum cloud mining scams or frauds
The entire mining industry is filled with scams and frauds. There is no exception to the Bitcoin, Ethereum, or any other crypto currencies. There is a wide array of ways that can steal your hard earned cash and you feel like a fool. Starting from scam coins, mining rigs to scam contracts a number of things can take place, you won�t even realize before you lose out all your earnings.
So, the question that arises is how can you identify or recognize a Bitcoin scam. In reality, this is quite a difficult task for anyone to know about it. Furthermore, the scam artists are also becoming quite smart and wise in their endeavours. There are several companies where you can find a list of verified cloud mining contracts and coin mining. In case, there is any doubt on the Bitcoin mining service provider, evaluation is done, and if found guilty, the cloud mining contract won�t appear on the list.
The list of only those service providers or companies will be there who have decent track record existence. In fact, doubtful reports about companies will also be put up on the community forums. But, it also becomes essential that you are careful and cautious enough of such comparison sites who often play from the scammers� ends. Often it has been found that such sites, don�t hesitate to advertise wrong information favouring the scammers because they earn a percentage of it. They absolutely don�t mind or worry about the users who depend on such comparison sites.
The market of cloud mining has emerged quite popular. The prime reason is that individual miners find it quite expensive to handle the mining rigs all by themselves. Such a move has definitely attracted the scammer. Henceforth, in the last few years there has been the emergence of a wide number of fraud or scam cloud mining sites that provide mining contracts for crypto currencies like Bitcoin and Ethereum and other forms of Alt coins.
It has been found that despite the industry, the scammers always step up their game to stay ahead of those who are keeping an eye on the whole event. It becomes such a challenging task to get any proof for Bitcoin cloud mining scam. This is because it is spread across the geographical boundaries.
What are some of the tricks they apply?
There is no domain name that is registered with any real user. It is instead hidden.
A company is registered, keeping in mind the reputation or prestige illusion of a particular location. But usually the directors and the other management officials are usually registered as foreign residents. Hence, the identity can be easily faked.
They deliberately avoid when asked to show any proof of their mining equipment or other requirements.
Usually the scammers will keep aside all their funds, and make use of the funds of the clients. This is done to initiate payouts and create an illusion of transparency and honesty, which generates more clients. A Bitcoin address will be shown from where they make their payouts, that is, from a client, and it is verified. There will one day come a moment when the address stops making any payment.
They encourage using more of promotions so that things can be executed in a fake way and create an illusion of reality.
It won�t be wrong to say that they bribe the comparison sites who give verdicts in favour of such scammers. The bribed comparison site will ask the clients to rely on it as a verified address is there from where payouts are being made.
From the above mentioned points, it becomes of utmost importance to understand that jumping into any hasty decision or conclusion regarding any crypto mining provider is very lame. It is necessary that you carry out your research work and evaluate the company lists along with the feedbacks and reviews from the members of the community. Moreover, you should not miss out checking the equipment reviews as well and the list of scam or fraud companies that are unable to provide with an adequate proof that needs verification. It is always better to stay safe rather than lose all your hard earned money.
The way to use the mining calculators
If you want to be successful in the field of mining, it becomes necessary that you are completely aware of the using of crypto mining calculators. It is a very simple and easy to use tool. It only demands you to include your electricity costs and hardware information. This helps you to get a clearer picture and a better idea about the complete operation of mining and the profits involved. The aspects like network challenges and the price rate of the coins are also included.
Based on your budget and the kind of crypto currency you plan to mine, there are three types of mining designed specifically for the non professional miners. They include:
- DIY mining rig
You can create it using your very own personal computer (a desktop) with as many as graphic cards you are able to afford and fit. This should be restricted to the number of PCI-E slots that are present in your system�s motherboard. There are people who make use of a normal PC case rather than any extraordinary casing which can help in the cooling of the components more efficiently.
- ASCIs or Application Specific Integrated Circuit
It is an independent unit that is equipped with an Ethernet port or a USB port. This is indeed the top most technology that is used in the mining industry in the present era. The miners are usually costlier or more expensive when compared to the DIY mining rigs. The reason is very simple. The ASCIS miners are able to generate more hashes per watt of power. The unit can be used for mining only the crypto currencies like Bitcoin, Ethereum, Litecoin, Dash and Zcash. The other crypto currencies are usually the memory algorithm and demands for GPU or CPU for effective and high per4formance mining.
- Cloud mining or mining contract
There are several contract companies that offer mining services where performance is determined by contract, which is known as Mining Contract. The miners of the cloud mining might engage a particular level of mining potential set for a specified time at a particular duration.
It is important that you research and come up with a site that provides you with a genuine and authentic information on the mining equipment market and the mining contract market. You can also compare them and find the best one for you. No matter whether you have the desire to mine all by yourself or get a contract, all you can do is make use of the simple metrics. Moreover, it is the mining calculator that will definitely help you to make a final decision.