What do I need to start mining?

Note that now there are several forms of online investing, which are called mining. This should be distinguished from staking, another validation mechanism. We will talk about so-called "solo" mining and various forms of collective mining. First, let's learn about what a novice miner needs to know.

The Concept of Mining

Mining literally means "to mine" in English. It is the process of issuing new units of cryptocurrency by transferring rewards to validators – people or organizations that use powerful computing hardware to solve cryptographic problems that allow new blocks to be added to the chain of data on the blockchain network.

Validators manage special node servers responsible for maintaining the validity of information in the blockchain network. The more nodes there are, the more stable the entire ecosystem is and the cheaper transactions are for all participants.

Mining is carried out only in those blockchain ecosystems that use the proof-of-work validation mechanism or similar to it. One of the reasons for the significant reduction in the mining market is the transition of the largest PoW network Ethereum, which works with an algorithm ideal for GPU mining, to the Proof-of-stake validation mechanism.

For owners of powerful GPUs, there are still suitable projects for making money on mining. Here are some interesting projects to consider:

• Ethereum PoW is a project of the classic Ethereum network as it was before the transition to the PoS mechanism. ETHPoW is traded on most centralized cryptocurrency exchanges. The current price is holding at just above $1.78 per 1 ETHPoW. The mining algorithm is the same as that of ETH.
• RavenCoin is another example of a PoW ecosystem focused on GPU miners. Over the past few years, the native token has lost more than 93% of its value in the market and its mining is not as feasible as in 2020, but miners are not discouraged. There are several large pools that mine $RVN.
• Litecoin is a clone of Bitcoin, which is still hugely popular among cryptocurrency enthusiasts. The algorithm is extremely similar to the one used by the Bitcoin network, and therefore uses the computer's central processing unit most efficiently.
• Bitcoin is the progenitor of all cryptocurrency projects and the most popular form of digital asset on the market. The value of $BTC has been confidently above 15 thousand US dollars for several years, and now the asset is leveling off and returning to 2022 figures. A CPU is also used to mine this token.

How to start mining?

Solo mining involves the miner having certain hardware. If you want to use a CPU, it's best to choose the right algorithms (usually used by networks that use protocols similar to Bitcoin). These include Bitcoin, Litecoin, ZCash, and many others.

A multi-core processor is a prerequisite for starting mining Bitcoin and its clones. Now the competition between validators is extremely high, and therefore the chance of getting a mining reward is decreasing. Some miners mine only a couple of tokens per year, and some even less due to a process of lowering the size of the reward called halvening. Now the reward is 6.25 BTC (about $150 thousand), but even this amount may not be enough to recoup all the costs.

What do you need to mine on GPUs? This is the most popular mining method and is suitable for a huge number of different blockchain networks. For example, Ethereum Classic, Ethereum PoW, RavenCoin, Kaspa, Helium, Kadena, Grin, and many other projects will be a great option for those who want to use graphics cards for mining.

Note that different types of algorithms are better handled by models from Nvidia or AMD. These two companies use different architectures, and therefore the efficiency decreases or decreases depending on the algorithm chosen.

How to start mining on a graphics card

GPUs can be used for mining in several ways:

• Transfer all resources to work with the algorithm. This can be done by installing a new operating system on the computer, which will use all the available resources of the PC to mine cryptocurrency.
• Transfer some of the GPU resources to a special application that is installed on your computer. Now there is dedicated software for Windows, Linux, and MacOS. Your computer's performance may be affected.
• Purchase a special ASIC-unit (Application-specific integrated circuit), which will use the architecture of the graphics card only for mining. It will not be possible to use the GPU for any other purpose after integration into the ASIC.
• Transfer part of the GPU resources to the management of the cloud mining pool. The earnings will be small, but if your PC is still running all the time, then this is a good way to cover the energy costs associated with using computing equipment. Your computer's performance may be affected.

Let's take a look at each of the options to explain in more detail how to mine cryptocurrency on a graphics card.

Installation of a special operating system

If you want to focus all your GPU resources on mining digital assets, then you should abandon Windows entirely. There are special operating systems designed for mining equipment, but they can also be installed on a regular computer. You can also save the main operating system on your hard drive, but you will need a separate drive or USB drive to run the mining OS.

One example of such an operating system is the MinerStar project, which allows you to fully utilize the resources of an AMD or NVidia chip (or several). This operating system is as functional as possible and provides an excellent level of performance when mining cryptocurrencies such as Ethereum Classic, RavenCoin, and a number of others.

Keep in mind that no other computer functions can be used while this system is running. In order for it to work as efficiently as possible, the computer must have certain characteristics for mining:

• A processor with a clock speed of at least 1GHz, dual cores, and 64-bit support.
• 2 to 8 Gb of DDR3 or DDR4 RAM (more is better).
• From 16 Gb to 64 Gb of storage (preferably a SATA SSD).
• Internet connection via LAN cable or Wi-Fi.

Installing Mining Software

Now let's take a look at one of the easiest ways to start mining on one graphics card without using any other resources. There are two most expedient ways for you to go:

• Install software such as Cudo Miner or Kryptex Miner on a personal computer with a video card. These programs run in the background, using all the free resources of the graphics card to mine cryptocurrency. You choose which network or pool you want to join. If the performance of your system is not a top priority, you can prioritize the mining algorithm. Then the computer will run slower, but the probability of receiving a mining reward will increase.
• You can also use the services of cloud mining platforms. In this case, you either transfer the resources of your computer to a special organization engaged in mining, or allow other users to rent the computing power of your graphics card remotely. A good example of the second type of provider is NiceHash, where you can rent out your card at a flat rate.

The main disadvantage of this option is that you will either not be able to use the computer normally, or you will receive very small commissions for providing the computing power of your graphics card to other miners.

Purchase of an ASIC block (Application-Specific Integrated Circuit)

An ASIC is a special computer that is created only to execute certain algorithms and is not able to perform any other functions. Such machines have huge potential when mining tokens, but can cost up to $10,000 or more.

After the significant collapse of the mining industry, a huge number of used ASIC blocks appeared on the secondary market, and therefore you can buy productive equipment for a few hundred dollars. The problem is how to make the most of it.

There are a few of the most popular options:

• Let's talk about what a mining farm is, how to start mining cryptocurrency solo and not resort to the services of intermediaries. The ASIC needs to be configured. To do this, you need to download the operating system for mining, install it on the device, connect it to the Internet and choose the appropriate algorithm for mining. You will be responsible for all administrative costs associated with the operation of the device, including maintenance, electricity, and others.
• Joining a cloud mining pool. BeMine and some other market leaders offer owners of some types of ASICs to directly connect to the work of a huge pool and receive a guaranteed reward distributed among all participants. This option is suitable for many owners of one or two machines, as it reduces risks and allows you to get a stable income. All expenses are still up to you, but with cloud mining, you will always be able to accurately calculate your balance by the end of the month.
• Buying a mining contract. There is also a reverse scheme, where you do not need to buy equipment and be responsible for its condition and performance. Platforms like Minedollars allow customers to simply buy a contract to use their cryptocurrency mining equipment. It should be noted here that you take the investment risk (for example, the value of the currency may fall while the contract is in effect), but all administrative costs are paid out of the service provider's pocket.

ASICs are extremely specialized devices, and therefore you can't buy them without a clear plan. If your venture fails, then the device will simply collect dust in the garage. It will be difficult to sell it on the secondary market if the situation in the mining industry does not improve.

An alternative way to use ASICs and GPUs

Now, the cloud computing industry has made an obvious turn towards the AI industry. GPUs and ASICs with multiple chips are ideal for AI training. Several large marketplaces for the purchase and sale of computing resources have already begun to actively offer all their users the opportunity to work in this industry.

If you have mining hardware on your graphics card, then this option should be considered as an alternative. The current state of affairs in the mining industry is extremely depressing, and most large farms suffered significant losses in 2022, which has led to increased uncertainty about the future of this sector among investors.

How To Start Mining Cryptocurrency In 2023?

There are a huge number of options for those who want to engage in mining. From running mining software in the background (like Kryptex) to buying cloud mining contracts, there are options for every wallet and risk style. However, such diversity does not mean flexibility in terms of investment.

All mining methods inevitably run into problems related to the situation in the cryptocurrency market as a whole. If Bitcoin begins to lose value, then the profitability of mining begins to fall. This rule is valid for other PoW platforms as well. Regardless of the mining method you choose, you always take the investment risk.

Buying ASIC blocks is extremely risky now. Investing in the latest generation of graphics cards may not be the best investment either, given the catastrophic collapse in prices in the secondary market in the spring of 2023. In the case of a direct purchase of equipment in order to start cryptocurrency mining from scratch, you do not take on yourself and a number of other costs:

• Administrative expenses. Even though it takes very little time to manage the farm, you still need to spend it. Check the efficiency of the algorithm, monitor the condition of the equipment during the work cycle, and deal with other routine processes related to the management of your business.
• Maintenance. Not only does the equipment require an internet connection and a power outlet, but it also requires an optimized working environment. The right temperature, humidity, adjustable ventilation and stable voltage – all this must be ensured during the preparation phase. Devices break down and require care and other maintenance.
• Electricity costs. This is the main factor influencing the efficiency and feasibility of cryptocurrency mining. If you can afford to buy electricity at a discount, you will be able to work with any cryptocurrencies with maximum profitability. It's no secret that some of the most lucrative farms are in parts of Africa where electricity is simply stolen.

If you're interested in cryptocurrency mining, how to get started with hardware, and whether it's worth doing at all, then researching the potential profitability should be your top priority. Many entrepreneurs still manage to use the equipment with maximum efficiency and make good money on mining, but this activity is not suitable for everyone.

Alternative Mining Methods

There are several other interesting options for those who are interested in where to start mining cryptocurrencies. They cannot be called unique or deserve a special mention, but they remain real services in the mining industry, so we will tell you about some alternative ways to mine cryptocurrency:

• MinerGate. This is a mobile application of one of the mining pools. The main advantage of this mobile program is that you can use your phone's processor to mine cryptocurrencies with an architecture similar to Bitcoin. Among them are the king of the hill BTC, Litecoin and ZCash, as well as a number of others.
• Bitcoin Miner Mobile is another app to use your phone's computing power to mine Litecoin, Bitcoin, and ZCash. You can also choose which mining pool you want to join. Note that this app only works on Android phones.
• Mining for heat. ASIC units and graphics cards generate a huge amount of heat when executing complex algorithms, and therefore they can be used as household heaters. In winter, this allows you to significantly save on heating, and the cost of electricity is compensated by the extraction of crypto. If the prices go up, you will be able to make some extra money.

Use of alternative types of equipment. Technically, you can use any technique with a built-in processor for mining. For example, there are special schemes for Raspberry if you are interested in computer hardware and application programming. Some craftsmen use game consoles like PlayStation to run mining algorithms, there are even special apps to install on PS3.

Such methods may seem a bit crazy or ineffective, but if you don't know where to start mining cryptocurrency, then using a mobile app or joining a mining pool are great ways to get acquainted with the industry for the first time. There are no initial investments.

The Future of the Mining Industry

Cryptocurrency enthusiasts and fans of new technologies have created a huge hype around mining, but this has led to a quick realization that exponential growth in computing power is impossible due to the limited amount of electricity available for recycling and the impact on the environment.

Already in 2018, Ethereum developers began preparations for the transition of the entire network to the Proof-of-Stake validation mechanism, which successfully happened in the fall of 2022. This was a major blow to the entire mining industry. Not only Ether, but almost all second-layer networks have switched to PoS, and a number of new networks are simply trying to please the masses and use an EVM-compatible architecture that involves the use of PoS.

Now the main areas of work for experienced "farmers" are Bitcoin, Litecoin, ZCash and a number of other cryptocurrencies with algorithms for CPUs. This has created an imbalance in the industry with a gaping hole in the GPU mining sector, where alternatives are not the most profitable. DOGE, Ethereum PoW, RavenCoin, and others barely recoup the cost of electricity if you live in places where kilowatts are sold without a discount.

Another major factor is the price dynamics. Although Bitcoin has returned to above $25K, many cryptocurrencies have never recovered from the crypto winter. For example, RavenCoin ($RVN) lost more than 58% in the first two quarters of 2023. These are disappointing developments for those who are interested in mining from scratch.

Starting a cryptocurrency mining business now is not the best investment idea, but it's not the worst either. The big advantage of this sector is that you can start mining on a GPU without any initial costs, test several algorithms and mining pools, and then decide whether you should seriously mine or not.

What not to do:

• Don't buy expensive ASIC blocks. Now they do not pay off, and if the profitability is calculated incorrectly, they can become just dust collectors that no one will buy from you!
• Do not mine where electricity is too expensive. You can check the potential profitability by using a mining calculator.
• Don't think that crypto mining will be your main source of income. The days of huge earnings are over. It is not worth counting on another huge jump in BTC or ETH in the face of a weakening global economy.

If you are interested in cryptocurrency mining, where to start your own business and how to make it profitable, then take the time to learn all the nuances in practice. Try different options for low-cost investment in production (buying contracts, using an onboard graphics card or smartphone). If successful, try to expand the enterprise gradually.

In conclusion

Mining can be extremely lucrative even in a shrinking market, but you should still weigh the pros and cons.