In this article we are going to deal with several things related to mining cryptocurrency. We will see what does it mean to be a miner, we will describe the necessary steps to be a miner and we will see the components of a mining rig (with a hardware search app). We will analyze if mining cryptocurrency is profitable, or if it is better to cloud mining, and we will see if it is worthwhile mining cryptocurrency in South Europe.
A miner is a key piece in blockchain technology. Its function is to consolidate the blocks of the chain of blocks that contain the information of the transactions made by the users of the network.
To make that task difficult and to prevent anyone from tampering the data, PoW (work tests) are used, which consist of complex and very intensive calculations performed by computers (cpu or graphic cards), and ASICs (which are machines designed with special chips to bitcoin mining).
Each time a miner manages to consolidate a block, he receives a reward for the work in the form of bitcoin, ether (currently about 3 ETH) or another specific cryptocurrency.
The reality is that nobody mines on their own, but is part of a mining pool, where they receive "shares", which are fractions of those 3 ETH (in the case of ethereum), which are distributed according to your contribution to the pool.
Most guides who talk about mining, sometimes have some theory about Bitcoin, but in reality you do not need to know all that to mining cryptocurrency. But if you're still interested there are books about bitcoin.
It is not complicated. There are already software programs that can be downloaded and that are in charge of mining cryptocurrency, with just a few parameters configured.
Something indispensable is to have a wallet, to store, receive, or send cryptocurrency that we accumulate with mining. The truth is that there are many wallets available (online wallet, wallet for the computer, wallet as an extension of the web browser, physical wallet in a usb, wallet for smartphones and even paper wallet).
At the first sight we can discard the physical wallet, since they have prices that are too high than what we are going to earn initially mining cryptocurrency, the collar is more expensive than the dog. That's a very safe wallet against hacker attacks, since it is not connected to the network.
We can also discard the paper wallet, because as you can imagine it is not very agile, since it would be necessary to move the accumulated coins in the paper wallet to one connected to the network to be able to make transfers. It is also a very safe wallet because it is not online.
Having a wallet as a browser extension (for example, Metamask) is intended to be used in Dapps (Distributed applications that work with ether).
We would have the online wallet or the wallet for the computer. In both cases it is important that you have the wallet's private key, otherwise you could lose all the accumulated cryptocurrencies. As a computer wallet, Exodus is recommended and as an online wallet Coinbase.
A mining rig is a piece of hardware specially assembled to mining cryptocurrency, it contains the common parts of a personal computer, such as the CPU, the memory, the hard disk, the network interface, the power supply, etc ... but it contains many graphics cards (GPUs), about 6 or 8 usually and a specific motherboard to connect so many GPUs. Even more than one power supply to be able to use all graphics cards at the same time.
For mining cryptocurrency we have several programs, usually they are connected to a mining pool. A pool is like a group of miners who work together to mine the blocks. We can use some like these:
Minergate is a computer program that is capable of mining several cryptocurrencies using the CPU and the computer's GPUs. It does not require excessive configuration and is easy to use. Once downloaded Minergate is installed and an account is created. Then the "smart miner" option is executed and activated, we select the number of cores of the cpu or gpu and we will already be mining. Every so often depending on what we accumulate will be transferred to our wallet.
Nicehash is another computer program that is capable of mining using a variety of algorithms but is charged in bitcoin (BTC).
At a more advanced level we can find Ethminer to ethereum mining and we can configure it according to what we want. First we create a text file (a .bat or .cmd) with the following:
setx GPU_FORCE_64BIT_PTR 0 setx GPU_MAX_HEAP_SIZE 100 setx GPU_USE_SYNC_OBJECTS 1 setx GPU_MAX_ALLOC_PERCENT 100 setx GPU_SINGLE_ALLOC_PERCENT 100 ethminer.exe --farm-recheck 200 -U -S eu1.ethermine.org:4444 -FS us1.ethermine.org:4444 -O tuwallet.WorkerThe parameters are the following.
--farm-recheck - is ms between checks for changed work -U cuda -G opencl -S - stratum port -FS - backup mining pool -O - key wallet.worker
Claymore is a program that allows mining using AMD and NVIDIA graphics cards mixed in the same mining rig. And it allows you to mine two cryptocurrencies at the same time as ethereum and decred or siacoin. Using the ethpool pool:
EthDcrMiner64.exe -epool us1.ethpool.org:3333 -ewal miwallet -epsw x Using the nicehash pool: EthDcrMiner64.exe -epool stratum + tcp: //daggerhashimoto.eu.nicehash.com: 3353 -ewal miwallet -epsw x -esm 3 -allpools 1 -esta EthDcrMiner64.exe -epool stratum+tcp://daggerhashimoto.eu.nicehash.com:3353 -ewal miwallet -epsw x -esm 3 -allpools 1 -estale 0
To know the profitability we need to subtract the expenses of the income. In order to obtain income we will have to sell ether to obtain euros. For expenses first we have to buy the components (CPU, motherboard, memory, disk, graphics cards, power supply) if we do not have them. This can be counted as a depreciation, but of a short period, since in a short time it will take more power to continue earning the same.
Then you have to take into account the cost of electricity that is needed, for this you can use devices to measure that expense, since it would have to be subtracted from the total income.
In the hot months, it is important to cool the room where the mining rigs are located, which would have to add that extra electricity and air conditioning equipment if we do not already have them. Incidentally, unforeseen expenses must be taken into account, in case any hardware component breaks down.
You also have to subtract the commissions from the pool and the ether transfers to your wallet (if any). And finally take into account the issue of taxes, since as an economic activity, we should deduct those taxes attributable in our country.
You can use this web page to calculate the profitability of mining cryptocurrency knowing the power of hash per second, and the consumption and cost of electricity you have.
Another option to make money mining cryptocurrency, is not to spend money on the purchase of hardware, but "alguilar" calculation power of an existing mining farm and then recover that money plus a long-term interest. It is measured in hash units per second. For example, a graphics card of the Nvidia GTX 1060 series can give us about 20 MH/s.
In the best case it will give us a profitability, depending on the contracted hash power, without counting the rise or fall of that cryptocurrency against the euro in all that time. It is less risky than buying the hardware yourself, since you eliminate that risk. Popular webs to cloud mining are Hasflare and Genesis.
The price of electricity in South Europe is high enough to make it very profitable to mining cryptocurrency. Even so, it is possible to obtain a small profitability based on the mining rig. With a mining rig of two GTX 1060 graphics cards we could recover the investment in at least 10 months. We must take into account the summer months, since their countries enjoys an excellent time, very hot, which does not benefit to mining cryptocurrency.
These mining rig generate considerable heat, and either invest in cooling the room or it will simply be more profitable to turn off the mining rig and go to the beach or the pool. As we have mentioned before, in many countries it is not free of taxes, since as an economic activity, it would be necessary to deduct those taxes.
In this article we have discussed many concepts that we need to mining cryptocurrency by describing in a single text most of the things we need to know. Surely some doubts appear, you can leave them in the comments. If you liked it or found it useful, share it on social networks.