What is currency mining?
Table of content:
- How has mining changed in recent years?
- The difficulties of starting mining today
- After understanding “what is currency mining” today, there is question: is it not too late to mine?
- How to choose a cryptocurrency for mining?
To understand, the process of mining, it is important to answer the question: what is currency mining? Mining is the production of cryptocurrency using the capacities of special equipment. For Bitcoin and a number of other coins, this is the only way to increase emissions. Miners receive remuneration, as their activities ensure the functioning and integrity of the entire system. This is the main task of mining.
How has mining changed in recent years?
When bitcoin appeared, almost no one knew about it, and few of those who knew hardly expected that after a few years one coin would cost more than $ 14,000.
People took on mining from the interest in new technology, for the sake of “fan”, but rarely – for the sake of real earnings, so mining was not very common. And so it was very simple. In 2009, it was possible to mine on home computers that did not have a particularly high performance.
The situation changed by 2010, when Bitcoin’s mining could receive stable earnings. It was possible to earn 5 dollars, but to get them almost nothing had to be done. Therefore, some began to be included in the mining process, and those who joined earlier began to think how to increase the productivity of their machines, because $ 5 is excellent, but $ 10 is better.
There were a lot of decisions, some remained in the past, but then the first home-mining farms appeared on the video cards, which are still known. Technological race has begun.
The first ASIC was presented in 2012. Then the farms began to grow into industrial ones. In fact, this double milestone in the history of mining has largely excluded the home farms from Bitcoin’s race.
However, they resisted, switching to alternative cryptocurrencies – Litecoin, and after to Ethereum. By 2015, Bitcoin reached a four-digit mark and thus strongly attracted public attention. Realizing that they were late for a couple of years, some newcomers who understood the situation bet on the promising looking Ethereum. There were more and more, and in 2016, by their forces, Ethereum emerged from the shadows and started very fast to make up for lost time.
At the same time, other currencies appeared, Bitcoin’s course was still attracting attention, and people were mining, only they were now mining the Ethereum. By the end of 2016 – the beginning of 2017 there were so many “miners” that the single-lane masters were again out of work: the complexity of obtaining “ethers” has increased too. Only – the paradox – this time they were pushed aside not by giants with ASIC – they pushed themselves out.
The difficulties of starting mining today
With a guaranteed success, the miner can not start today: the golden time for successful mining remained in 2010-2012.
The success of mining in this case involves a combination of two factors, namely:
- the rate of extraction of the selected currency (i.e., the low complexity of mining);
- prospects and reliability of the chosen currency.
Bitcoin, for example, in 2010-2012 corresponded to both parameters: it was easy to mine, and it was promising. Now it remains promising and reliable, but the complexity has grown so much that it can not be driven alone. The situation is not better is the case with Litecoin, Bitcoin-Cash, Ethereum and other “old cryptocurrencies”.
Another thing – the new little-known currency. It is much easier to mine them. However, the question is: how useful is the mining for a miner and how useful it will be to him in the future.
If the reliable currencies are mined with the expectation that after a while they will increase their rate in comparison with the current one, then the growth of the rate of new currencies is in question. And, as a rule, the probability of its growth in the future is directly proportional to the complexity of mining.
That is, for example, the ZCash cryptocurrency, which many miners are now interested in and which looks more or less reliable and promising, requires already greater capacities than any little-known currency from the top 20. A little-known currency from the top 20 cannibal is convenient and easy, but it will not burst in a couple of months, whether it brings income, it is unclear.
So it turns out that the miner has to choose: to mine more reliable currencies – and to receive crumbs or mine less reliable, which can collapse at any moment.
Despite the foregoing, today there is no definite opinion on whether it is worth starting a mining or already late to do it.
Both positions have supporters, both positions are supported by successful miners and financial analysts. In such circumstances, one can say that none of them is absolutely wrong.
After understanding “what is currency mining” today, there is question: is it not too late to mine?
There are some factors to clarify the situation.
- The growth rate of more reliable currencies.
We are not talking about Bitcoin, but, for example, the Ethereum can bring a noticeable profit to the miner in future. Its path is very similar to that of Bitcoin. Now it costs $ 1400, and the prerequisites for decaying its predecessor are not visible, and consequently, in a few years it can cost the same $ 9000.
- Strangely enough, the same development of technologies in the cryptosphere.
Among the new currencies, there are interesting, promising “coins”. And this is only the beginning. Technological currencies will continue to appear, increase in price and overtake their predecessors, and therefore, if they are tracked and started to be mined in time before they are taken by the majority, you can get a good profit. It does not require too expensive farm – the average is enough.
- It is necessary to say about the equipment.
The talk of the town became stories about the lack of video cards and how enterprising citizens bought them by the hundreds and resold it overpriced. Nevertheless, trade exists in the conditions of informatization and globalization, what means that the deficit of video cards could not and can not be a protracted phenomenon. They started to appear again.
Prices so far remain at the same level, but their decline is predicted, since, in addition to equipment from the “official” suppliers, the “gray” goods have come to the market, naturally, at lower prices. Official stores will have to rely on them.
Finally, when assessing the profitability of mining, two economic-geographical factors must be assessed:
- the cost of electricity;
- The exchange rate of the national currency to the dollar.
There are countries where there is barely enough money to pay for electricity that a small farm consumes. And there are countries where electricity is cheap. Not to mention that some people live in regions where it can be obtained from renewable sources. In these places, mining can bring a good net profit.
In countries where the dollar is a national currency, it is less profitable to mine, than in countries where a month’s life costs hundred dollar.
How to choose a cryptocurrency for mining?
Bitcoin, of course, is now a “Runaway train” for everyone who does not want or can not spend on equipping a truly competitive farm for mining 20-30 thousand dollars. It is possible to try miming of altcoin.
Much depends on the miner. Before you begin to purchase equipment, you must answer yourself several questions:
- How much are you willing to invest in mining?
- Are you ready to invest in a long-term enterprise with a low payback in the beginning or do you need to recoup costs as quickly as possible?
- Are you ready to invest in a cryptocurrency with a high risk or do you need maximum reliability?
If the budget allows you to invest in a powerful farm (more than $ 4 thousand), then the Ethereum will be the best choice. Despite the complexity, in the near future, it still makes sense, if you do not buy 3 cheap video cards, but buy 9-12 or at least 6 leader cards. Payback does not exceed a year, and often reduces to 3-5 months.
If the budget fluctuates within 2-3 thousand dollars, then it will not be possible to collect a large farm for mining a tangible amount of the same Ethereum. Although if the miner is ready to wait and he does not need to repel his investments quickly, he can build a small farm and start saving up the Ethereum, waiting for his starry hour, when the crumbs become equivalent to a substantial amount in dollars.
What is currency mining and what is better to mine? In general, it makes sense to pay attention to other altcoins. More promising are those that offer something new and necessary, and therefore among the options – Monero, ZCash, etc.