When Bitcoin appeared in 2009, mining immediately became a huge point of conversations surrounding the world of crypto currencies. Mining is a process during which miners use machines with massive computational power to verify transactions of BTC preventing so-called “double-spending” — a possible vulnerability of any crypto currency related to the possibility of token owners to copy and spend it while keeping the original.
Miners spend a lot of resources and time to verify these operations and they are rewarded for the verification process with Bitcoin. Mining can be slightly different and involve the performance of other tasks. It depends on the type of the crypto currency at hand. However, the very basic principle is always the same: you lend your machine to the network as well as some bandwidth and receive a reward based on the performance of your machine.
Choosing crypto mining hardware: basics that a miner must know
It is possible to build a highly capable rig that would quickly conduct the verification process. However, the most important part of the crypto mining procedure is that you need to not only verify a transaction but also be the first miner whose machine arrived at the right mathematical solution. With thousands of machines competing against each other, a typical bitcoin miner usually risks never getting a single BTC despite investing in high-end equipment.
On the other hand, a fast machine with enough computational power should be able to go through more solutions faster and get the right answer faster than other machines. A mining pool is basically a solution that the community of miners came up with to offset risks and unite resources and spread the profits amongst all invested parties.
Let’s imagine that you want to get into crypto mining on your own and build a rig that will bring you a fortune. We will discuss several important aspects of rig building and what you should be focusing on.
10 Basic tips for crypto mining
It is a good idea to start with the basics. While crypto mining may seem like a very profitable business on paper, there are caveats and little details that may significantly hinder your opportunity to earn Bitcoin via crypto mining. Read these 10 tips from experienced miners before committing to purchasing a powerful miner of your own.
1 Understand risks
The price of equipment and bandwidth necessary to maintain even a small-scale crypto mining operation can be quite high. It depends on whether you can get parts cheaply, how many machines you want to set up, whether you have a sufficient power supply, and good internet. Calculate your upcoming expenses and decide whether it is a good idea to start.
2 Consider maintenance expenses
The PCs will need some repairs. High-end equipment requires fine-tuned environments to run. For example, you will need to control the air condition, temperature, and move heat from the mining room. On top of that, a typical rig can burn through a kilowatt of power in an hour easily. Add air conditioning, ventilation, and internet on top of that and you will have a monthly payment that may be higher than your potential earnings from crypto mining.
3 The competition is fierce
There are literally thousands of miners out there and they have hundreds of thousands of machines running calculations day and night. While it is possible to get a Bitcoin or two (it very often comes to luck), on average a lone Bitcoin miner usually loses to mining pools and miners who own big mining plants.
4 The rewards become smaller
As more and more crypto mining operations are required to support the network, the so-called “halving” is another issue to consider if you want to start in 2020. The halving of the 2020 makes the reward 8 times smaller than it was in 2009. A reward for successful verification is 6,25 BTC. It is still a hefty sum of money since one BTC costs about $7 700 as of the time of writing. If the price remains stable, you are looking at a $48 000 reward.
5 You need the knowledge of technology
While it is possible to just buy a rig and plug it in the power outlet, you will need to understand how these machines work. They usually don’t have a dedicated interface (usually they connect to a server with an OS) and must be controlled with specialized software. If you are not technically savvy, it may be quite hard to run the setup efficiently.
6 You need to understand how pools work
At some point, you will realize that the most efficient way to utilize your crypto mining equipment is by joining a pool. However, different pools have different requirements for hardware. There old school pools that are against CPU, GPU, and even smartphone Bitcoin miners.
7 Understanding ASIC
In 2009, you could use a decade-old laptop and get a Bitcoin or two. Today, you will need specialized rigs with powerful GPUs that are better at calculations. However, many switch to ASIC units. These are specialized machines that are designed to perform a very specific task (in our case, searching for new blocks). ASIC units may cost less than an average rig (in some cases) yet require you to understand how crypto mining setups work.
8 Power is important
Yes, luck is a very significant aspect of crypto mining. However, miners switch to ASIC units and powerful GPU-based rigs because there are times when several machines arrive at the same answer simultaneously. In such cases, the machine that performed the highest volume of calculations will be rewarded. If you can afford to invest in a faster machine, you should do it.
9 Don’t waste any time
As mentioned previously, a Bitcoin miner receives a comparatively smaller reward today than in 2009. The next halving will reduce the size of the rewards further. If you are serious about crypto mining, you should start planning today and working tomorrow.
10 There are different currencies
In 2017, a hard fork appeared that was created by a group of miners who wanted to focus on accelerating the verification process instead of cheapening the price of verification. The new fork is called Bitcoin Cash. There are also Ethereum, Litecoin, and many other mineable crypto currencies that you may be interested in.
“The number of cryptocurrencies available over the internet as of 19 August 2018 is over 1600 and growing. A new cryptocurrency can be created at any time.”
Wikipedia
Pre-built solutions
If you are interested in starting a Bitcoin miner career, you should definitely take a look at the variety of pre-built solutions that are available on the market. There are several established brands that are respected by the community. Let’s briefly talk about them.
- Antminer. Machines from antminer are compact and powerful yet cheap. They are designed to work in BTC and BCH mining pools and offer relatively low power consumption. They are manufactured in China by the Yunhui company. There are also variations designed to mine Litecoin (L3).
- Dragonmint. Produced by Halong Mining, these machines are designed to be efficient and cheap in terms of maintenance. Dragonmint devices are generally considered slightly more powerful than Antminers and offer increased profitability and efficiency with their 16T model.
- AvalonMiner. Produced by Cannan, these rigs have high hashrates (1166 boasts an impressive 68TH/s), and moderate power consumption usually slightly higher than machines from Bitmain. Avalon is a powerful piece of hardware that generates a lot of heat and consumes up to 3,200 W per hour.
- Innosilicon. Recently released T3+ series is a bulky machine that you can call “power-hungry” and less efficient than some other machines. The brand is not the cheapest out there. However, you may be interested by buying these rigs from eBay or Craigslist.
Prices on the equipment vary greatly. You shouldn’t really think about buying new rigs right away especially if you don’t really understand how the hardware works. Get some experience and start with used machines that are often sold for one-quarter of the starting price.
Building a miner
So, can you use your laptop or PC to mine crypto currencies? Yes, you absolutely can. However, the real question here is whether you should. Mining a Bitcoin can take literally weeks and even months with a low-end machine. The calculations require a lot of computational power and significantly reduce the performance of the machine in regards to other tasks.
In the vast majority of cases, purchasing an ASIC unit is a better idea. Nevertheless, there are some merits to building a regular PC that can be used to mine Bitcoins and still retain value as your regular gaming rigs.
GPU or CPU?
It is not really a question. Yes, a powerful CPU is quite handy in virtually any situation. However, a typical motherboard can handle several GPUs and provide tremendous computational power. ASRock H110 Pro BTC+ motherboard can host 13 GPUs simultaneously and still be used as a foundation for a regular PC.
- A good CPU is not necessary. A standard Celeron with two cores will be more than enough to run the system. If you plan to use the rig later as a personal computer, you may invest slightly more in a better CPU. However, building a custom mining rig with multiple GPUs for calculation does not require a powerful processor unit.
- GPUs that work well are produced by both NVidia and AMD. The latter offers one of the best and most affordable high-end units in the market — Vega 56. It is a very good choice for those who want to have a highly efficient crypto mining setup.
- Disk space and RAM are on the lowest level of priority. You can literally stick any compatible part here and it will work. Again, you may want to buy a very small SSD if you want to use the rig later or resell it as a gaming PC. 8GB of cheap RAM is also enough.
- A power supply is quite important and often determines the effectiveness of any build. However, most high-end power supplies for crypto mining are quite durable and efficient enough. Examples are SuperNOVA 1600 from EVGA, any 1000W+ part from Corsair, or Seasonic PRIME 1300W Platinum.
Why is AMD so popular?
AMD and NVidia are both highly popular manufacturers of hardware and graphic cards in particular. GPUs from AMD are not only performance-oriented but also more efficient in terms of pricing. For example, their RX 5600 XT is a great GPU that can outcompete NVidia’s 2060 series yet goes for half the price of it.
On the other hand, you will need to get the AMD flash software and tinker with VBIOS settings to make these cards run better. If you understand what you are doing, it is much cheaper and thus more efficient to buy moderately priced GPUs from AMD.
AMD GPUs are generally more flexible and can be manipulated with other BIOS editors. For example, Polaris BIOS Editor.
Get a used machine
There are many Bitcoin miners who gave up on the idea of crypto mining. It can be expensive and requires a lot of dedication. You can easily find used crypto mining rigs on eBay and Amazon. While ASIC units may seem intimidating at first, there are also PCs with multiple GPUs that are very cheap and less power-hungry than dedicated ASIC miners.
They won’t perform as well as high-end, state-of-the-art rigs built from scratch specifically for mining. Nonetheless, newcomers may not need overpowered rigs, and building a small mining plant in your garage with an air-conditioning unit using used equipment can be a good idea.
Is it worth it to invest in a miner?
It is largely accepted in the community that mining without an ASIC miner and joining a mining pool is riskier than before. There are many important aspects that you need to consider when calculating possible risks related to a crypto mining operation.
⦁ Halving is inevitable. We already talked about the halving and its effect on miners previously.
⦁ The price of electricity in your area is quite important. Electricity and maintenance are the biggest expenses for miners and greatly affect profitability.
⦁ Price volatility. Bitcoin is not fiat money. The price fluctuates dramatically depending on the confidence of the so-called “HODLers” in the currency. The market cap may stay the same, jump to a new height in a couple of weeks or drop below a thousand bucks. You cannot predict how much you will earn in a span of a year.
There are specialized calculators that you can use to get an estimate of how much you can earn. However, these are very rough estimates that should not be used as the foundation for an informed decision. Calculate everything: delivery of equipment, rent, electricity, air conditioning, bandwidth, maintenance, and many other factors that may be unique for your particular situation.
“Bitcoin mining can still make sense and be profitable for some individuals. Equipment is more easily obtained, although competitive ASICs cost anywhere from a few hundred dollars up to about $10,000.”
Investopedia
Making money as a miner
The reality of the modern Bitcoin era is that you need to forget about solo crypto mining and consider working in a pool with other dedicated miners. It will allow you to reduce risks and split the costs amongst several miners.
Since luck is involved, you will be earning Bitcoins unevenly. Sometimes, it will take months before a successful mining operation. At other times, you will be seeing results on a weekly basis. The stability here is based on statistics and basically requires you to reflect on the data gathered by thousands of Bitcoin miners before to understand whether potential profitability is worth chasing after.
Cut down your expenses
When building a rig on your own, you will want to reduce spending on less important parts such as RAM sticks, hard drives, CPUs, and even motherboards. Cut expenses in every single area as hard as possible to increase the efficiency of crypto mining operations. For example, search for cheap places to rent with cheaper electricity. Invest in efficient yet not fancy air-conditioning and dehumidifiers.
Try to read and educate yourself to reduce expenses related to maintenance and perform simple tuning/repairs on your own. Wait for a good opportunity to sell Bitcoins on a reliable crypto currency exchange.
The main takeaway
Crypto mining is definitely not as exciting and wildly profitable as a couple of years ago. However, with the emergence of newer currencies and BCH as well as more efforts from the community of miners, it is still a sustainable industry that offers you a great investment opportunity.