A Beginner’s Guide To Cryptocurrency Mining
February 20, 2019 by Priscilla Russell
Cryptocurrency is considered one of the most popular forms of financial assets today. Many of these digital assets operate within blockchain technology which works as a digital ledger or tracker. This ledger is then duplicated in several computer networks for confirmation. To properly make use of crypto coins, certain people may need to mine crypto coins which helps verify numerous transaction resulting in increased security levels.
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To start, here are some facts you need to know about cryptocurrency mining:
Brief Cryptocurrency Mining Overview
According to this explanation of cryptocurrency mining, this process involves using a spare computer or any computer to help solve various calculations needed to confirm a specific coin. This is done by examining the history of a coin within a blockchain which is divided into several blocks. Once these algorithms are verified, users can then expect to receive cryptocurrency as well as transaction fees depending on the coin’s nature.
The term mining is due to the fact that you create these coins out of algorithms and computations, the same way you would mine minerals from a cave. However, mining is not an easy endeavor and it would take a lot of investment to pull off.
Cryptocurrency Mining Requirements
Cryptocurrency mining is a great hobby to have for anyone who is interested in crypto coins but don’t have the necessary means to buy several coins and start a trading career. Compared to active investors, miners make significantly less since they don’t have direct contact with the market itself and they often need more money to start.
Nevertheless, if you’re interested in starting a mining hobby or business, here are some tools and equipment you’ll need to get started:
Mining Rig
Since mining may require several hours of uninterrupted processes, users should use a spare computer they no longer use since it won’t interfere with their daily computer activity. It’s important to know that your rig will have its health decreased over time. Here are the minimum optimal requirements of a mining rig:
Hard drive or hard disc space of at least 200 GB or 200 gigabytes. Some currencies, like Bitcoin, may require additional space for program download prior to the actual mining operations.
Since the verification process requires real-time automatic machinations, budding miners should invest in a stable internet connection that allows them to connect to the internet almost instantly.Unreliable and unstable internet connection could end up with you repeating processes.
Desktop computers that run for more than 6 hours combined with continuous mining exudes a lot of heat which can tamper the computer’s overall system. To keep your desktop safe from external problems, invest in cooling systems like fans and an airconditioning unit to keep your setup and environment from breaking down.
The operating system of your laptop or desktop PC should be at least Windows 7/8.x/10, Mac OS X or Linux.
- Graphics processing unit or GPU
This is the most crucial component of the mining process, and the most expensive. If you want to succeed in mining, you have to first consider getting the best possible GPU for mining.
The download should sustain up to 500 MB or 500 megabytes in a day which means that the current data provider should allow over 15 GB or 15 gigabytes worth of download in a month. The upload should sustain up to 5 GB or 5 gigabytes in a day, which means that your data provider should allow over 150 GB or 150 gigabytes worth of upload in a month’s time.
- Random access memory or RAM
The RAM should be at least 1 GB or 1 gigabyte for the actual mining.
Coin wallet
This is a private database that allows miners to store their earnings. Some of which may include online, software and hardware versions.
Membership in an online mining pool
This allows you to connect with other miners who more or less can share their knowledge about the mining process. Memberships also provide you the chance to seek new opportunities since many of these mining pools have discussion boards.
Mining software package
This software includes features that allow you to verify various cryptocoin transactions almost instantly. Many of these softwares are available as readily downloadable files over the internet. Prior to downloading the software, make sure your computer has the necessary RAM, hardware storage, and updated operating software to match the software’s requirements.
Pros and Cons of Cryptocurrency Mining
It’s hard to say on whether or not someone should start a hobby in mining since it depends on numerous factors that can affect their decision. If you’re unsure on whether or not mining is right for you, consider weighing in the pros and cons of starting this hobby, like:
Pros:
- It allows you a chance to understand the process of crypto coin and blockchain technology.
- Crypto mining is most cost-effective compared to purchasing various coins.
- Miners play a very important role in ensuring a coin’s legitimacy.
- One doesn’t need business or technical expertise to start a hobby in mining.
- It cuts out the middleman which ensures said crypto coin keeps it decentralized nature
Additionally, crypto mining also has a few downsides, some of which include:
Cons
- Expensive investments – while crypto mining isn’t expensive, certain external factors should be included like electricity costs, crypto coin wallets, and necessary computer upgrades. Cryptocurrency mining demand for the graphics processing unit or GPU has contributed to the massive price increase.
- Miners make less income compared to investors – the reason why mining should be seen as a hobby instead of a passive income job is because miners don’t get paid a lot. Aside from earning crypto coins, most people who want to make a large profit may consider investing instead.
- Potential fraudulent activity – similar to investors, miners who download questionable software may fall victim to potential scams and frauds that would otherwise put their security at risk.
Final thoughts
While cryptocurrency mining is certainly important, people should view it as a hobby instead of a legitimate source of income. While miners do get paid, people should understand that since it doesn’t involve direct interaction with the market, its return of investment levels are significantly lower compared to active investors.
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