Mining from A to Z

What is cryptocurrency

In order to comprehend the intricacies of mining bitcoin or other cryptocurrencies, it is first of all important to understand what they are. Cryptocurrency is money, but in the form of digital information that is stored on the wallets (accounts) of their owners. For some reason, many people think that this is a kind of pyramid, but it is not. Cryptocurrency does not require investments and expectations, it is an investment. Why is that? Because the price of cryptocurrency can rise or fall. But at the same time, it does not lose its direct functions — the functions of money.

Cryptocurrency physically costs nothing, it only stores information (logs) about transactions and the amount of the currency itself on a particular wallet. It turns directly into money when someone invests physical funds in this very electronic currency and raises its value on the stock exchange. Yes, in fact, it is impossible to touch or see the cryptocurrency, but it is also impossible to fake it, because transaction data is stored not in one place (a common server), but simultaneously on all computers of mining miners.

But, like any digital information, cryptocurrency can be copied or transferred as a key to another owner. This means that by typing or writing a text with the wallet key, you can physically transfer the cryptocurrency to another owner.

In fact, it is impossible to touch or see the cryptocurrency, but it is also impossible to fake it

The higher the confidence in the currency, the more it costs physical money, a vivid example of this is dollars. And the more real money is invested in it, the higher its value on the stock exchange and the higher the cryptocurrency rate. Everything is like with forex, only the commodity is not oil or grain, but directly cryptocurrency.

The most popular electronic currency in the world is bitcoin (Bitcoin), abbreviated as BTC. Bitcoin mining is currently a difficult task due to the great complexity of the process. But there are hundreds of other cryptocurrencies and each of them has both a different cost and a different complexity or method of mining.

Miners are those who, with the help of electronic computing systems (usually video cards and farms for mining or asics), support the operation of the entire system. They can be compared to distributing a torrent file. The task is different, but the principle is the same. Cryptocurrency mining is the process of mining cryptocurrency by miners.

What does it mean to keep the system running? This means that miners from all over the world help support financial transactions between cryptocurrency owners by storing and processing arrays with transaction data. Each operation that takes place in the system and requires a certain computing power and an Internet connection.

Developers (creators of cryptocurrencies) voluntarily use millions of computers around the world and thanks to their calculations, the operability of the entire system is maintained. In return, they give out a reward in the form of fractional parts of the currency, such as with Satoshi. The higher the complexity of calculations, the more difficult it is to process an array of data and, therefore, more advanced equipment is required. But more on that later.

Cryptocurrency Mining Process

Before you start mining electronic currency, you need to start a wallet. Your money will be stored in the wallet.

The easiest way is to go to the official website of the cryptocurrency you are interested in by finding the “wallets” section and following the simple instructions to create a new wallet.

Farm premises

Let's assume that you have already got yourself an electronic wallet. Now the question is to choose the method of mining and the equipment with which you will carry out mining. When bitcoin first appeared, and it was in January 2009, an ordinary PC with a simple graphics card was enough for its extraction. During a month of mining on a regular home PC, it was possible to get several dozen bitcoins. Then its cost was less than 10 cents. But over time, the complexity of mining has grown and even one very powerful graphics card has become insufficient. The complexity is also increasing due to the value of the currency and the number of operations that are required to service it. This means that over time, almost any successful cryptocurrency becomes difficult to mine and miners have to improve their equipment. Now a couple of average video cards are not enough for full-fledged mining with good earnings in the end. For full-fledged and very profitable mining, you will need several farms and a couple of months of continuous operation of the farm, and this is to get one whole bitcoin or another type of cryptocurrency in the equivalent of one bitcoin. However, this does not mean that an ordinary user is not able to earn a little extra money on his graphics card. What is a mining farm, you ask — this is when several video cards are combined into one array for more efficient operation of the system as a whole. Usually farms have from 4 video cards, but farms with 8 video cards in one array are considered the top option.

Below we will try to give an example of mining using modern top-end video cards. All data will be entered into a table with a complete and up-to-date calculation of the cost of video cards (the price of a 1x or 6x GPU). The farm consists of 6 video cards on different graphics processors (GPU x6) with their average power consumption in watts (Power), plus the maximum theoretical power of each individual graphics card (TPD). There is also data on the profitability of the farm per day and the payback of one farm in months. Zcash (ZEC) and Ethereum (ETH) will act as cryptocurrencies, as an example of mining efficiency. We will not forget about the efficiency of mining a particular cryptocurrency, so there is an item in the table of the best currency for mining for one of the farms.

Table of video cards for mining (data for September 16, 2017)

As can be seen from the table, the best solution for mining for the speed of payback on the basis of a farm will be a bundle of six GTX1060 6GB video cards, and the most profitable in terms of profit / month ratio logically won a bundle of six GTX108011GB Ti — this is the most expensive bundle. Yes, the most profitable video cards for mining cost a decent amount of money, but they pay for themselves quickly.

Alternative ways of mining cryptocurrencies

Asics Farm

But they are not united by video cards, because you can mine with asic (asic). This device is called a special purpose integrated circuit. They specialize in mining specific cryptocurrencies (which depends on the device itself and your preferences). At the moment, almost all major mining companies and advanced miners use asics for mining cryptocurrencies. As already mentioned, they are very narrowly focused, that is, they mine a limited range of cryptocurrencies or only one specific one at all. But due to their narrow focus, they do it much more efficiently than individual video cards or farms built on their basis. Asics also consume less electricity.

On the horses! Or how and how to start mining

So, if you have decided and are firmly convinced that you want to mine using a graphics card, then you will definitely have a logical question: how to choose the most suitable one? Well, do not forget about the eternal dispute: AMD or nVidia? Unfortunately, there is no definite answer. It all depends on the availability of video cards on the market, their cost at the time of purchase and the cost of the mined cryptocurrency. Based on the data in the table above, we can conclude that AMD video cards are more suitable for mining Ethereum (ETH) currency, and Zcash (ZEC) is better to mine using nVidia. Therefore, it is necessary to consider each graphics card model individually, for your wallet, a specific cryptocurrency and the availability of video cards on the market.

Farm of video cards

Is mining even possible on medium- or low-cost-level video cards? Possible! For example, GeForce GTX960, a graphics card from the beginning of 2016. It is capable of mining up to $20 per month, giving out 115-145 kH/s when mining cryptocurrencies such as Monero or Bytecoin (not to be confused with bitcoin — Bitcoin). At the same time, it consumes electricity for $0.05-0.010 per day — depending on the electricity tariff (meaning the CIS countries).

Considering the replacement of a low-power graphics card, I would like to pay attention to the GPU GeForce GTX1060. It is 2.5-2.7 times faster than the GeForce GTX960 and therefore earns up to $55 per month (depending on the exchange rate and the specific currency). Do not forget about the discomfort that the constant work of your farm can cause. If we consider one graphics card as a purchase, then the noise from a constantly spinning fan / moat will not be critical. But a farm of 4 or even 6 video cards easily turns into an annoying noisy swarm of constantly spinning Cooling system blades, which can irritate both the miner and his family and friends. Accordingly, it is better for a miner planning to assemble a farm to take care of a separate room or to accept and live in constant noise.

If you have decided on a graphics card and the rest of the problems have also been solved, how do you start mining?

Very simple! To do this, you need to find a pool that suits you or that you like (a pool is when miners from all over the world unite into one stream to mine more efficiently and faster). Download a script or a mining programme that will be offered by your chosen pool, then select a currency and click on the Start button. One of the most famous and popular pools in the world is Minegate. Then the extracted currency accumulates and is withdrawn to a personal wallet.

Mining, conclusions and suggestions

Dynamics of Bitcoin exchange rate changes

Mining is not just a way to earn money. For many, it has become a whole religion. But really, who would have thought that in 8 years one bitcoin from 5 cents would rise to the value of $ 5000. Of course, there is always a certain risk, but as practice shows, everyone who got carried away with mining, recaptured all their investments in an average of 11-12 months.

However, do not forget that all currencies are very dependent on many factors, including political, economic, etc. This means that the cryptocurrency is either growing in price or falling every second. This means that your earnings or losses will be different every second. Finally, I would like to wish you stable mega-hashes and constant and confident growth of your chosen currency, good luck!