Perhaps you’ve heard about cryptocurrency mining. Sounds intriguing, but you don’t know what it’s all about. It refers to a way to earn Bitcoin, Dogecoin, and other kinds of cryptocurrency using your computer. The mining effort involves making cryptocurrencies in return for solving complex computational and mathematical problems. You can exchange the crypto coins you earn for cash, or you can hold onto them, anticipating an appreciation in value. However, successful mining requires your computer to be pretty sophisticated.
Understanding the blockchain connection
To begin with, cryptocurrencies are usually built on blockchain networks. The job of a blockchain is to store and track digital data. Think of a block as a digital ledger. Mining helps maintain the integrity of blockchain ledgers: Bitcoin and other cryptocurrencies depend on mining to verify the data in their ledgers.
Choosing a computer
When Bitcoin first appeared some years ago, it was possible to mine coins on your old home computer. Today, there are three mining options, two of which use specialized hardware:
CPU: Using a regular processor available on all computers
GPU: Using the powerful graphical processing ability of gaming computers
ASIC: Using a computer specially designed for mining cryptocurrencies
It is still possible to use your home computer, but you should expect only minor rewards, if any, for your efforts. GPU mining is a better choice since you can mine a wide range of coins with a gaming computer. ASICs, of course, are built especially for the task of cryptocurrency mining.
Looking at expense vs. profitability
The necessity for special computer hardware means increased expense. Also, cryptocurrency mining requires a lot of energy, so be prepared for your energy bills to skyrocket. It would be best to consider these costs since they could eat up your profits. Keep in mind that cryptocurrency value is volatile, and it is, therefore, difficult to estimate your ROI (return on investment).
On the surface, the idea of mining cryptocurrencies sounds quite doable: Let your computer solve complex mathematical problems and earn coins. However, there is no guarantee that you will make a profit, especially when you consider the expenses associated with the task. Therefore, you might want to think about joining a mining pool, as many people do. The way this works is that a group of cryptocurrency miners share their computing power and split their earnings. Another option to explore is cloud mining. You can learn more about different options by visiting websites such as minergate.com and StormGain.com. At the end of the day, cryptocurrency mining can be an exhausting and unsuccessful effort or an exciting and profitable ride.