Mining is both selfish and full of soul, serving a greater purpose. You can selfishly collect new coins and take one for the team, by stepping up cryptocurrency networks with the ability to validate blocks and add information to the blockchain that is accurate and in sync. To do this you must be a miner with a specially designed mining rig. You can mine solo or with a pool. Here we will try to guide you to do what is best for yourself and the network and to do it as cost effectively as possible. As every miner will help set the price of their cryptocurrency and protect and insure its future! Here we will look at what miners do, if mining will be profitable for you, and how to do it.
Miners are essentially doing two things at once; they validate transactions keeping the network secure and attempt to solve complex computer puzzles known as the Proof-of-Work. In Bitcoin miners use a Proof-of-Work computational process to determine who has the right to add new information to the blockchain and collect the reward for doing so. First, transactions gather in the memory pool or mepool and wait to be added to a block. Because miners look at the mempool they have a good idea of Bitcoins health. A block happens about every 10 minutes and transactions can be processed at a rate of about 7 a second. Visa is much faster than this, however, Bitcoins speed is bolstered by crypto exchanges and the lightning network. Once confirmed, then, transactions are added to a block. This block contains a hash or fingerprint of all that came before it. Thus, proving tampering with the blockchain is impossible as you would literally have to rewrite history! When miners are competing to win a block they are searching for the “nonce” if you find it you turn the mempool into a block, that block goes into the blockchain, and you receive 3.125 Bitcoins plus fees. Now, on April 20th 2024 the block reward was cut in half, so expect miners to expect more money per coin! Also look at the mempool to see if this coincides with a Bitcoin bull market! This leads us into the price of Bitcoin and its difficulty to mine and acquire.
As the price of Bitcoin increases more miners may join the race. They contribute computing resources in an effort to find the nonce, add transactions to the blockchain, and collect their reward. It is difficult to find the nonce, but once found is easy to verify. It all works based on difficulty. Each attempt to find the nonce is known as a hash or the hash rate. If there are a lot of miners providing a lot of hash power to the network, blocks will be found faster than the given 10-minute interval and after 2016 blocks, or approximately 2 weeks, the network will adjust the difficulty making it more intensive to mine a block given all the hash power being provided. If blocks are being found slowly, taking more than 10 minutes time, the difficulty is adjusted down and blocks should be found faster, around the 10 minute mark. Thus, Bitcoin adjusts its difficulty to maintain a balance for miners! You can see the hash, difficulty and nonce of each block along with transactions and fees at blockchain.com.
What mining also does is ensure within the community that no central party can control the Bitcoin ecosystem. It is meant to be distributed amongst many participants in a decentralized fashion, thus making Bitcoin more robust. In theory if 51% of the mining power is in the hands of a single entity they could create false blocks with false transactions and fudge the system. By allowing mines to be selfish they will act only in ways that benefit the system and secure the network going forward. This is profitable for the network and the next question is will mining be profitable for you?
Is Mining Going to be Profitable for you?
First in the battle is the option to either join a mining pool or go it solo. Both are viable options as pools will likely get you coins deposited faster, whereas with solo mining the coins are all yours! The next thing to consider is should you just buy the crypto currency. In our opinion the option of mining is better than outright buying as you can continue to earn bits of currency for almost ever, instead of in one large lump sum investment, that may be over or undervalued. Plus, you can use your hardware to mine other cryptocurrencies if opportunity presents itself. Also, if the market crashes and you sell, you may be in trouble, but if you keep calm and mine on you can earn more coins at a discount price and then sell even more coins when the market rebounds versus just buying from day one and holding to day three after the drop has passed. Some clever debaters will point out we can do Dollar Cost Averaging where we buy a little crypto every interval, just like mining, but at the end of the day you can still sell and repurpose your mining equipment! Mining is also better as it gives you “fresh coins” that some love as they provide anonymity, while helping to secure the network in a better way than just sending transactions over it. In many cases it is about philosophy, so some people even mine for free! However, in all honesty if hash rate skyrockets it may become harder and harder to mine Bitcoin, whereas if you simply bought life would be easier for you! Thus, in philosophy it may be best to mine when the market and hash rate is down, and invest when the hash rate and market is up!
When determining if mining is profitable one must ask how many people are mining Bitcoin. If there is not a lot of miners it could be a signal to you to get going! It does not matter if you think Bitcoin is a fad, its technology and philosophy are here to stay. Plus, if there are not many people mining you could score coins at a discount. If there are a lot of people mining, the price per coin will go up and you can score coins at a premium! Then the network will rebalance difficulty. Right now there are miners running nodes around the world, about 19,000 of them according to CoinDance and 19,000 according to BitNodes. According to BitNodes there are 18,000 reachable nodes and 59,000 worldwide. If you’re a part of this things look very favorable.
Also, if you want to get in the game you must consider a solo versus a pool mining approach, we can see the pools represented here. Pools come and go; Slushpool use to be huge and now it is quite antique. The next question to consider is the network hash rate. Hash rate is measured in Exo Hashes per second. If you are having trouble converting TH/s to PH/s to EH/s go here and type in your TH/s and get EH/s it is simple! The Bitcoin network currently has a hash rate that is 560 EH/s. If you spent $8,274 and bought 2 Bit Coin Miner S19 XP you can produce 514 TH/s that is 0.000514 EH/s. Divide that by the network hash rate of 560, you get your percent stake in the network. The network makes 450 coins a day at a given price of $65,000 so there is $27,000,000 not including fees so we will add fees to make $30,000,000 a day. With your stake this equals, for you, $27.53 a day. If you look at it this way over a year, $10,050. Then you must subtract energy. Perhaps you would prefer to use a Mining Calculator instead so go here! For efficiency’s sake put in 514 TH/s, and see 20.8 Joules are required for each TH (or T). We get the Watts of 5,345 Watts times 2 equals 10,690 W at $0.13 per kWh $33.35 dollars a day or $1,000 a month. A day you are making 60.55 – 33.35 = $27.20 or $10,093 a year. But you spent $8,274 to do so. So, you made a few thousand dollars to start but can do it again! If we go to the Mining Calculator and put in our Price of Bitcoin at $65,000, our Hash Rate at 517 Th/s, and our energy consumption of 10.69 kWh and $0.13 per kWh per hour we have an insane $10,093! And to add to the insanity if you have a loss you can write it off against other Capital Gains profits you may have made.
So, if we are to go back and verse simple investing (or Hodling, Hold On for Dear Life) we can see what happens. If we simply invest we can spend $8,000 plus $1,000 a month in electricity to make 0.3 BTC a year or mine and get 0.34 BTC minted a year, thus we break even! Yet as a miner we can do it again and again regardless of market moves. We could go huge and turn $8,274 into $10,093 factoring in electrical costs. Who to believe? We must believe the network hash rate which is impossible to calculate and is likely to only grow so get in now! If more miners are in, hash rate will go up, price could go up and you could make more money over time and with your holdings. If prices go down, hash rate could go down and you can snap up coins at an easier and more frequent rate. Then simply wait, or switch your currency you are mining to a better one, see that here.
Profitability also means a sweet spot. What and how many cryptocurrencies can you mine? How expensive is your hardware? How much energy does it use? How efficient is it? When it comes to the crypto currencies you can mine, GPU’s (Graphical Processing Units) let you switch back and forth with ease. You can switch your blockchain but keep your hardware! The crypto currencies you can mine also depend upon the algorithm being used. Some gear such as ASICs (Application Specific Integrated Circuits) are much more specific in their computation and configuration, and can only be used with certain blockchains. For example, the SHA-256 algorithm can be used for BTC, BCH, NMC, and UNO. Whereas scrypt can be LTC, GAME, DGB, and AUR. When it comes to the price of your hardware more is not necessarily better. One must consider the output of hashing power and energy used together, making it more efficient. We also need software to keep things efficient, easy, and predictable. So, if you find a deal on a miner that is easy to use with what you have got, is cheap, can produce lots of hashes per second and does not compromise on energy efficiency, you have a winner and should probably invest. This is not like risky derivatives and should deliver coins on a regular basis over time, faster if you are with a winning mining pool.
Obviously if you run into a scam there is going to be problems for you. It may be freedom in the open market, but the question is why would someone sell you a perfect ASIC miner that they can use and make a profit with for themselves? The answer would be to profit quickly and to support the crypto sphere. And that is exactly what you must do as a miner! You must move fast and be aware that people buying secondhand equipment have found backdoors and worse hidden within them. These older models can send crypto to places you don’t want it to go and give hash rate power away. They have even delayed shipping equipment saying they were testing the power when really they were using the computers for themselves! There are also problems with cloud mining farms. Some are not real; others are Ponzi schemes. There was once Honey Miner where you could mine, not with a GPU or ASIC but your desk top PC! However, one smart miner realized the program was only taking 1% of his CPU processing! A lot of people lost money and could never get it back, just check the forums. The site had a sleek design but one must look beyond facades. Other cloud mining farms confuse users and downright use them. They can usurp hash rates from your farm and send it to theirs! In all honesty it seems more worth it to invent your own path than follow another, and if you do shell out dollars, make sure you are getting far value in return and that your equipment remains your own! This goes for pool mining as well!
How To Mine
First you want to get Bitcoin Core installed and become a node, a node can mine it really is quite simple! Thus, you have the software. If you want to mine other currencies be sure your gear is tailored to do so. As noted GPUs are best in this case. Other software is there to help you mine better: CGminer and XMR Stak. There is also Easyminer, HiveOn, MotherOfDragons, and MultiMiner. Do have fun.
Then, get a wallet to collect your mining rewards. Additionally, connect to the mining pool you want to use with a username and password or go it solo! Some pools include AntPool, f2Pool, Poolin, and VaiBTC and more as shown above.
Get your mining rig together. Install the required user interfaces and get your rig to talk to itself to ensure it is not regurgitating hashes!
After, you have collected a block or your share of it through your mining pool convert it to fait or other cryptocurrency from an exchange or another party.
One can also Cloud Mine. This is where you rent mining equipment in a warehouse, and they do the mining for you. Why would any company do this? Probably because they have a huge farm and software that makes them more efficient, so they turn the efficiency around into new packages! It is like getting bulk discounts and selling the extra. You can do this with ECOs. They even let you buy equipment. So, for the newbie this may be a viable option. There is also Nice Hash where you can buy hash rate power and sell it as well.
If you want to use your hash power for more than just making money you can become a philanthropist and give it away. You can use FoldingCoin to help cure cancer and Alzheimer’s disease by mapping protein structures with your computer. You can use CureCoin as well to fold proteins and cure diseases! You do the computations you get the coins.
So, in summary many people have many different tastes, but to be a miner you have to be tech savvy, have the ability to make it thought the down times, and know when to switch when mining is not sustainable. You have to believe in the ethos of cryptocurrency and have to be beyond simply gambling and speculating for profit. You must be dedicated to the system over your desire for profit. The best miners will be able to get their gear to talk to each other, so no nonce attempts are duplicated. Mining should ensure no one entity controls the blockchain space and should protect and integrate a proper ledger for the use of both miners and the general public. Miners can slowly nurture the crypto sphere and give back with new coins injected into the system! They can help set the price point for a currency and view the mempool to see where transactions are going next. It’s all in the future.
Thanks for reading about the Manifesto and the revolution and all the best in the future.
