Mining cryptocurrencies is based on the concept of the hashcash proof-of cryptocurrencies are based on complex algorithms. To ensure the security of the network, miners have to rapidly process large amounts of data and solve complex problems with extreme computing power. The faster they do it, the more coins they get.
Cryptocurrencies have become an increasingly popular way to invest and obtain digital assets. But where do these cryptocurrencies come from? How are they mined? And how can you join in?
This article will answer these questions and more.
What is Cryptocurrency Mining?
Mining is the process of making new coins as a reward for solving complex mathematical puzzles. The puzzles are made up of a series of algorithms, and the first one to solve it wins the block—and thus the cryptocurrency that was just created.
Cryptocurrencies are based on a decentralized system. There is no central authority that controls the issuance of new currency. So how is this done? If we take the bitcoin example, miners all over the world compete to add new blocks to the blockchain, and the first one to solve the puzzle gets to put a new note in the bitcoin wallet.
How Crypto Mining Works With GPU
The graphics processing unit (GPU) is a special circuit board with separate chips for graphics processing, which is why it is also sometimes called a video board. GPUs can be found in many computers, from laptops to desktops and everything in between. GPUs were originally designed for gaming, where they can be used to render complex 3D graphics in real-time. But they have other uses, too.
When mining cryptocurrencies, GPUs are far more efficient than central processing units (CPUs). CPUs are good at doing many different tasks, but they are slower at doing one thing—specifically, solving complex mathematical problems. This makes them poor choices for mining cryptocurrencies.
How To Mine Cryptocurrency With GPU
Today, most GPUs have the ability to mine cryptocurrency. This means that when they are fed with data, they will automatically start solving the mathematical problems that are necessary to mine cryptocurrencies.
Unfortunately, there is no widely accepted mining application for GPUs. Most mining software is designed for CPUs, so it performs poorly on GPUs. There are a few mining programs that are optimized for GPUs, but they are not very common.
The best method to use your GPU for mining cryptocurrency is to first understand how it works.
If you are interested in mining with your GPU, it is best to turn to open-source mining software. These programs were designed for GPU mining, and they will run on most modern GPUs.
There are multiple ways to mine cryptocurrency with a GPU. The most common method is looping. This method involves continuously running a mining program on your GPU, and then extracting the results and sending them to a wallet.
You can also mine cryptocurrency using cloud mining. Cloud mining is a service that allows you to rent hashing power from a mining pool.
You will pay a daily fee for this service, and the pool will distribute the mining work to all the participating GPUs. This method requires you to have a good understanding of cloud mining, and there are plenty of resources online to help you get started.
How To Mine Cryptocurrency With CPU
As noted above, CPUs are not good at mining cryptocurrency. That said, some people still use them for this purpose. The reason for this is that CPUs can mine cryptocurrency when paired with the right software.
Solo Mining With A CPU
Solo mining is the most common way people mine cryptocurrency with a conventional computer. When done solo, a CPU acts as both the mining rig and the mining software. This means it does the hashing and runs the mining program on its own.
The only problem with this approach is speed. CPUs are simply too slow to mine cryptocurrency profitably. You also need a ton of processing power to solo mine. If you have a CPU that can handle the workload, it will make you money, but it will take a long time.
Pool Mining With A CPU
You can also mine cryptocurrency with a CPU, but it will be much slower than the GPU methods discussed above. The most common way to do this is to use a pool. Pools are groups of people who work together to mine cryptocurrency. This allows them to share the workload and get more done in less time.
What you need:
- A computer running Linux or Windows
- A wallet address
- The right mining software for your operating system
The steps you need to follow:
Step 1: Find a pool
There are plenty of pools to choose from. One of the most trusted is Slush’s Pool.
Step 2: Create an account
Pick a username and password, then enter the email address you want to use.
Step 3: Create a worker
A worker is tied to your account and stores your mining stats. You will need to create a unique worker for each computer you use for mining.
Step 4: Download the mining software
This is where it gets tricky. You need to find the right software for your CPU, operating system, and pool. Most pools have their own software you can download, but if not, here are some options:
Windows users can try CCMiner, which is compatible with multiple pools and has an easy-to-use interface. Linux users can try CGMiner or BFGMiner, while Mac users can try MinePeon.
How To Mine Cryptocurrency With ASIC
ASIC mining is the process of using ASIC (application-specific integrated circuit) hardware to mine cryptocurrency. ASICs are custom hardware designed for a single purpose—in this case, mining—and they are not repurposed from an old computer.
Since cryptocurrencies are based on a hashing mechanism, they are perfect for the ASIC mining process. A mining rig stuffed with ASICs is capable of solving complex mathematical problems in seconds.
There are multiple ways to go about this. One method is to buy an entire mining rig. These rigs often have multiple GPUs, and they are connected to an Ethereum mining motherboard. This type of setup is complex and requires a lot of space. It also means you will have to manage the hardware, software, and electricity on your own.