Cryptocurrency Mining

Blockchain technology is the fastest evolving development in the financial sector. In fact, the technology is advancing so rapidly, and applications now buttress even to other niches of the society including social media, education, and medicine among others. Since the entry of cryptocurrencies in 2009, the most dominant thing is mining. In this post, we comprehensively look into cryptocurrency mining and demonstrate everything you need to know about it.

To delve deeper into cryptocurrency mining, it is important to go back at the beginning of cryptocurrencies.

What are cryptocurrencies and how do they work?

Cryptocurrency is digital money. It is a form of currency created to be secure and completely anonymous. Cryptocurrencies were invented to help make payments easy, fast, reliable, and completely anonymous. The currencies are crafted to avoid the risks that come with fiat (conventional) currencies because of direct control by central authorities such as banks and central administrations.

When Satoshi introduced Bitcoin in 2009, the blockchain technology was borne. The technology uses a decentralized system to initiate, execute, and confirm transactions. Because they are fully decentralized, it means that anyone can join and be part of the network. Most cryptocurrencies such as Bitcoin and Ethereum require users to signup and download user clients (blocks) that are installed on their computers. Once you install the user blocks, the computer becomes one of the inter-nodes that can be used for initiating transactions or confirming others. Here are some important terms in cryptocurrency world that you should understand when venturing into mining;

  • Transactions: This is any form of funds transfer from one digital wallet to another. Once a transaction is made, it must wait for a confirmation from the different nodes.
  • Public ledger: Once a transaction is confirmed, the details are stored in a public ledger. Note that identity of the transactions, as well as the confirming nodes, are fully encrypted.
  • Cryptographic: This is a system of cryptography that helps to control coins creation for verifying transactions.
  • Native currencies: These are individual coins that run in every blockchain network. They include Ether, Bitcoin, Ripple, Dogecoin, Golem, NEM, Monero, or Dash among others.

cryptocurrency cloud mining

What is Cryptocurrency mining?

Mining is the process of confirming transaction in a blockchain network and adding them to the public ledger. For this process to take place, miners are required to solve complex computational problems (think of these as mathematical puzzles). Notably, mining is open source. This means that when a transaction is initiated, all miners in the network get into the race of confirming it. The first miner to get the puzzle right adds a block to the ledger.

The transactions, blocks, the ledger, and miners work together to ensure that no changes can be done after a block has been added. All the correlating transactions become permanent after a block is added. To motivate miners to solve the puzzles and confirm transactions a motivational reward is deposited in the miner’s wallet. Therefore, it is the mining process that gives the native coins value.

One notable thing about cryptocurrency mining is that it keeps evolving. In 2009, the process of mining coins was relatively simple. This could be attributed to the fact that only a few people understood about cryptocurrency and the designers wanted to attract more people. But this has since changed. Today, mining is very complex, and newbies might even find it extremely difficult to start if they have no idea about blockchain technologies.

Some people might ask; why cryptocurrency mining? Mining is a form of investment. The miner devotes his resources such as computer, space, and time to help with sorting multiple blocks when confirming transactions. If you purge out the miner, a blockchain technology will look like a hollow shell. The system would not work. Now, this investment (mining) is what has been drawing a lot of interest from all people.

So advanced is the mining investment that some people are now relying on it as the main source of income. As we are going to demonstrate, some companies have opened doors for cloud mining that rewards the users directly. For others such as Faucet.cloud, users are encouraged to refer other miners to get a proportion of their returns. This means that mining is moving from one level to another. Let us turn to the main mining methods.

The main methods of cryptocurrency mining

The blockchain technologies have demonstrated they have numerous benefits not just to the founders, but the extended communities. For example, the social media has found a unique way of encouraging people to create and publish high-quality posts using blockchain technology and mining. As more players enter the cryptocurrency world, the methods of mining have equally advanced. Here are the three main methods.

CPU/ GPU Mining

This is the least powerful method of cryptocurrency mining. All that you need is a computer with an Intel or AMD Central Processing Unit. Theoretically, the computer can be used to mine cryptocurrencies. But in practice, the process will be very slow according to the current mining standards.

What miners are required to do is enhancing their cryptocurrency hash rate by including additional graphics hardware to their computers. The graphics cards provide additional GPU (graphics processing units) that are meant for heavier mathematical work. This makes them ideal for SHA hashing calculations needed to solve complex blockchain transactions.

The top GPU providers in the market today are Nvidia and ATI. Though their high-end cards can be costly, they provide a significant advantage over the CPU hashing capability. For example, a standard 5970 graphics card will provide more than 800 MH/sec. When compared to a standard CPU that offers only 10 MH/sec, it means that your mining will be greatly enhanced.

At this point, it is critical to note that GPU mining leaves you with multiple options. Unlike other mining methods based on the cloud that is highly specific, GPU allows you to mine multiple currencies. For example, you can use GPU to simultaneously mine Litecoin and Bitcoin because they have different proof-of-work algorithms. You can, therefore, switch between the currencies to keep the risk low, move with shifting demand, and earn more. As blockchain technology keeps advancing, mining is fast shifting from GPU to ASIC.

ASIC/ FPGA mining

Many people especially those who find mining cryptocurrencies using GPU difficult turn to ASIC (Application Specific Integrated Circuits). The ASICs are highly reliable because they are designed to simply do one thing; mine cryptocurrencies at super-sonic speeds. Since these chips are crafted with high specificity, the technology and time required to generate them are very complex. This means they are equally expensive. You can get an ASIC device of between 500 Gigahashes/second to 2 Terahashes per second in the market.

Field Programmable Gate Array (FPGA) is an integrated circuit created to allow further configuration. This means that manufacturers of mining hardware can acquire them and incorporate in their mining equipment. Like the ASICs, the FPGA circuits are particularly programmed for cryptocurrency mining. A single FPGA chip can deliver up to 750 Megahashes/sec. To get more hashing power, companies prefer including more than one chip in every mining unit.

Mining in the cloud

For many mining enthusiasts, getting and managing the hardware is too complicated. With the popularity of cryptocurrency mining continuing to grow rapidly, technology has made it possible for people to mine their favorite coins on the cloud. The process involves mining companies that set distributed servers to allow miners operate from their standard computers.

Most mining companies have many server rooms with multiple graphics cards that multiply the hashing power. Then, they rent the hashing power to miners on a contract basis. They require clients to signup and engage either in fixed or short-term contracts. Most companies measure their hash power in BTC/GH/Day. For example, a client who wants to mine Stellar at 1GH/s per day would be set to 0.0681 BitCoins or R2315. Two great examples of companies offering this service include hashflare.io and genesis-mining.com.

Another type of cloud mining service is through companies that invest in the infrastructure and even help clients do the mining. This means that you simply invest in mining and wait to get returns. A company like faucet.cloud simplifies the mining process so much that anyone can venture into it no matter the experience. You simply signup and buy FCL (the native currency) to start trading. This means you are entirely passive because the system does all the heavy lifting.

Pros of using cloud to mine cryptocurrencies

  • The process is quiet because you do not need to install additional hardware in your facility.
  • There are no additional electricity related bills.
  • You will not be left with redundant equipment after deciding to quit mining.
  • The danger of getting let down by equipment suppliers is very low.
  • There are no special maintenance costs apart from those associated with your normal computer use.
  • It is very easy to start mining because the cost involved for subscription is very small.

Cons of using cloud mining

  • The risk of fraud is very high.
  • The process is less fun because the miner is passive.
  • The profit you can get from the process is smaller because the cloud company has to cut its share.
  • You lack full control over the resource.
  • The main causes of mining failure

    While cryptocurrency mining is a great way to get a lot of money, you will be surprised to realize that a lot of people rarely get through the first few steps. To some, even understanding the concept of cryptocurrency is difficult enough to deter them from making a move. But at a time when everything appears to be moving towards the blockchain technology, one can only succeed by understanding what makes others fail in their mining efforts.

    Expecting to make a lot of money at once

    While mining cryptocurrencies is no doubt lucrative, it is a big mistake to expect to become a millionaire overnight. For many people who have this intention, the chances are they easily get frustrated and give up. The best thing is starting and progressing gradually.

    Starting with the most complex cryptocurrencies

    Notably, the cryptocurrencies in the market today present varying complexities when it comes to mining. For example, if you start with Bitcoin, the mining complexity is very high compared to others such as Stellar and Ripple.

    Not investing in the right system

    While it was possible to mine cryptocurrencies using your computer about a decade ago, it is practically impossible today. If you are entering the mining niche, failure to invest in the right equipment will result in failure. The best thing to consider is ASIC or selecting a cloud mining service.

    Failing to understand the shifting demands in the crypto mining niches

    Cryptocurrency technology is very fluid. You cannot afford to be rigid! Because most cryptocurrencies have a specific amount of coins released at inception, progressive mining continues depleting them. This means that mining becomes increasingly difficult over time. You must be flexible to note when mining becomes extra difficult. This is the best time to shift to newer cryptos.

    Picking cloud mining companies without carrying due diligence

    The simplest method of mining cryptocurrencies is through cloud services. However, this could easily become a trap. Because of the many people turning to cryptocurrency mining, a lot of scammers have entered the market. If you do not carry due diligence, there is a high risk of getting defrauded.

    Failing to factor the cost associated with mining

    When you decide to venture into cryptocurrency mining, the best thing is taking it as an investment. This means factoring associated costs and balancing with revenue. If you fail to factor all the associated costs, the chances are that the entire venture could run into losses.

    Five tips that will help you to succeed in cryptocurrency mining

    Once you decide to venture into cryptocurrency mining, it is important to take it as a conventional enterprise. This means following closely and ensuring to update the system as regularly as possible. Here are additional success tips for miners.

    Consider cryptocurrency mining as a progressive learning venture

    No one can say he is completely conversant with all cryptocurrencies. Since 2009 when the first cryptocurrency was introduced, every new blockchain platform introduces new concepts. To succeed, you must remain open to progressive learning.

    Start with the simpler cryptos before getting to the more advanced ones

    If you are just commencing, mining cryptocurrencies such as Bitcoin and Ethereum can be a tall order. These cryptos have very complicated puzzles that you will find extra difficult to solve. Besides, they have attracted interest from many people including the most experienced miners. This lowers the chances of confirming any transaction. Therefore, consider starting with recent cryptos such as Golem, Litecoin, Dash, and Ripple.

    It is not the time to fully do away with fiat currency!

    The notion of the freedom and potential of using cryptocurrencies can be overwhelming. However, the system is still young and has a long way to go before most of the systems accept it. This means you still need the local bank, the local dealer, and the fiat currency. Therefore, you should only use a small proportion of personal resources on mining and keep the rest in fiat currency.

    Use pools as opposed to mining alone

    While you can mine and make good returns, joining a pool will help you to triple the success. By joining a mining pool, the computation power is consolidated to raise the chances of confirming more transactions. Remember to be extra careful when picking a pool by following these tips;

    • Establish the reward methods. Some pools have proportional rewards while others use individual scores.
    • Pick the pool with lower mining and withdrawal charges.
    • Establish how frequently the pool uncovers the blocks.
    • The best pool should provide users with ample statistics to help them solve mining puzzles easily.
    • Go for a stable pool that guarantees continuity.

    If you are using cloud services, make sure to take advantage of affiliate rewards

    To motivate users to join their networks, some cloud mining services provide great rewards to miners who refer others. If you refer a lot of people, the chances are that your revenue will keep surging even without doing any mining.

    Best Cloud Mining Tools

    Genesis Mining

    Genesis Mining is one of the best cryptocurrency mining sites in the market today. They are a cloud mining service that takes away the worry of costly hardware, installation, and associated operational logistics. They take care of the hardware and leave miners to concentrate on growing their investment. Starting at Genesis Mining and growing fast is very easy because of their rich features and great support.

    Supported Coins: Bitcoin, Unobtanium, Litecoin, Dash, Zetacoin, Darkcoin, Monero, Dash, Startcoin, Dogecoin, Bitcoin Dark, Peercoin, Namecoin, Ethereum, ZCash, Ethereum Classic
    Company Location: Hong Kong
    Founded: 2013

    Read Review Signup Today!

    Minergate

    Minergate is a multicurrency mining pool with easy-to-use GUI miner. MinerGate allows users to mine coins through a smart-mining option or choosing your favorite cryptocurrency manually. Merged-mining is available for FCN and MCN, allowing you to mine two currencies at once without the loss of hashrate for the main coin. Join our vibrant community of more than a million clients.

    Supported Coins: Aeoncoin, Bitcoin, Bytecoin, Dashcoin, DigitalNote, Ethereum, Ethereum Classic, Fantomcoin, Infinium-8, Litecoin, Monero, MonetaVerde, Quazarcoin, Zcash
    Company Location: N/A
    Founded: 2014

    Read Review Signup Today!

    Hashflare

    Hashflare is taking mining Bitcoin and other cryptocurrencies to the next level by clearing all the obstacles for miners so that they can concentrate on the core task. Unlike the conventional CPU/GPU mining, Hashflare reduces the mining process and time that investors start getting returns. When you sign up and make the initial investment, the first payment can hit your wallet in 24 hours. Besides, Hashflare also allows users to select the preferred mining pools to maximize ROI.

    Supported Coins: Bitcoin, Litecoin, Ethereum, Zcash, Dash
    Company Location: Estonia
    Founded: 2014

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    Eobot

    Eobot is a cloud mining site that allows users to mine almost all types of cryptocurrencies including Bitcoin, Golem, Zcash, and Ethereum Classic among others. The main target is ensuring that all people irrespective of their financial status can mine cryptocurrencies. Even if you only have $10, Eobot allows you to join, start mining and make good returns. This is one of the best sites for beginners.

    Supported Coins: Bitcoin, Ethereum, Litecoin, Steem, Dogecoin, Ripple, Dash, Reddcoin, Bitshares, Curecoin, Xem, Monero, Zcash, Factom, Bytecoin, Augur, Lisk, MaidSafe, Gridcoin, GoldCoin
    Company Location: Los Angeles
    Founded: 2014

    Read Review Signup Today!

    Faucet.Cloud

    Faucet.Cloud mining is one of the best mining tools in the market today. Here, mining is so much simplified so that even new miners can start making good returns on their investment in no time. All the hardware is installed for miners such that all that they need is concentrating on the mining process. The site even provides incentives to users who refer new miners.

    Supported Coins: Bitcoin, Ethereum, Litecoin, Dogecoin, Dash, Zcash, Namecoin
    Company Location: N/A
    Founded: N/A

    Read Review Signup Today!

    IQ Mining

    The basic principle of IQ Mining is that everyone should be able to mine and make good returns from cryptocurrencies. They have the hardware, the right software, and goes to the next step of mining the cryptos for you. You simply invest and leave the rest to them. With their simple signup process, deposit, and support, even those with little knowledge about cryptocurrency mining are assured of making good returns. Their daily average payout is $80.

    Supported Coins: Bitcoin
    Company Location: N/A
    Founded: N/A

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    Hashing 24

    The thrill of any cryptocurrency miner is earning more. After all, it is an investment. This is what Hashing 24 works extra hard to provide and guarantee all users. The platform is meant for people who are interested in Bitcoin mining. The platform is designed using ASIC chips that guarantee optimal performance for all users. All you need is to sign up and select the preferred plan to start mining Bitcoins.

    Supported Coins: Bitcoin
    Company Location: UK
    Founded: 2012

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    Hourpower

    If you are looking for a service that provides high and faster returns on investment in cryptocurrency mining, look nowhere else other than Hourpower. They have three main plans that pay in 24 hours, 48 hours, and 72 hours depending on the user preference. Besides, the platform is run by professionals who manage the funds and guarantee stable profits by hedging bitcoin in the bitcoin market.

    Supported Coins: Bitcoin
    Company Location: N/A
    Founded: N/A

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    Micro BTC

    To make more in cryptocurrency mining, the best method is using the cloud. But even here, some services such as the Micro BTC stand out because of the ease of use. While experts in the network handle the hardware and entire infrastructure, the service moves a step ahead to guide users with easy to understand metrics. They guarantee profits and even reward users who refer new miners. Note that all this is offered with no maintenance fee.

    Supported Coins: Bitcoin
    Company Location: N/A
    Founded: N/A

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    Scheriton

    Mining cryptocurrency is the new thing in town that no one wants to miss. But the conventional methods that require special infrastructure and come with limiting expenses have created unnecessary bottlenecks. Now, Scheriton clears these hurdles by setting up everything for miners. Unlike other cloud mining services, the Scheriton provides metrics on the main interface so that miners can decide on what to mine faster. It is the platform that no one wants to miss because every opportunity is captured to deliver more.

    Supported Coins: Bitcoin, Dash, Dogecoin, Ethereum, Litecoin, Namecoin, Peercoin, Monero
    Company Location: N/A
    Founded: N/A

    Read Review Signup Today!

    Terabox

    TeraBox is bitcoin cloud mining service where you can purchase cloud-based mining power (GH/s) at the most competitive rates and start mining bitcoin.

    Supported Coins: Bitcoin
    Company Location: N/A
    Founded: 2014

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    Nicehash

    NiceHash is hashing power marketplace where you can mine altcoins and get paid in Bitcoins or you can buy hashing power from other miners in form of cloud mining.

    Supported Coins: Bitcoin, Ethereum, Litecoin, Steem, Dogecoin, Ripple, Dash, Reddcoin, Bitshares, Curecoin, Xem, Monero, Zcash, Factom, Bytecoin, Augur, Lisk, MaidSafe, Gridcoin, GoldCoin
    Company Location: N/A
    Founded: 2014

    Read Review Signup Today!

    Conclusion

    Cryptocurrencies are becoming part of people’s daily lives. Within ten years, over 1000 cryptocurrencies have entered the market. Because every cryptocurrency requires miners to confirm transactions, the emerging potential is immense. You must position yourself well by progressively learning about new blockchain technologies, picking the best mining strategy, and staying fluid. Besides, you need to be on the lookout when new cryptos emerge to take advantage of initial offers to mine as many coins as possible.

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