How to Mine Cryptocurrencies in 2020
Cryptocurrency is not just the Bitcoin. There are a lot of other cryptocurrencies online. Most popular altcoins, or, in other words, alternatives to bitcoins, are the Etherium, Ripple, Litecoin, and Bitcoin Cash.
Although different names, the principle behind all cryptocurrencies is the same. Cryptocurrencies are peer-to-peer networks creating and maintaining fully digital currency and global ledger.
The global ledger keeps records of all transactions on the blockchain and has more than 100 GB data. It is decentralized, but everyone can join and volunteer to keep the blockchain up-to-date with the new transactions.
In order to create a coin in any cryptocurrency, all you need to do is to solve a mathematical problem created by a cryptographic hash function generated by the system. The more powerful computer you have, the faster you can solve the mathematical problems.
Once your computer finds the answer to the solution, it receives the right to decide which pending transactions will be grouped together in the next block of transactions. The block is sent to the whole network so other computers can validate it. After this, you are rewarded with a specified amount of cryptocurrency.
CAN YOU MINE CRYPTOCURRENCY ON CPU?
The first bitcoins were created on a CPU in 2009. Back then, few people knew what bitcoin is. Once the idea of a decentralized currency took off, people started to compete at who will mine more bitcoins faster. You can mine cryptocurrencies on CPU even in 2020, but it will most probably not be profitable for you. After the CPU turned to be inefficient in mining, the GPU became popular. GPU, or a graphic processing unit, was made initially only to speed up the rendering of images in computer games. Since all games had increased graphics requirements, GPU was popularized around 2011.
Today, most of the mining is processed on ASIC miners (application-specific integrated circuits). They are much more powerful than the GPUs, but also are more pricey.
There is virtually no profitability in mining cryptocurrencies on CPU in 2020.
If you consider mining on a GPU, there are a few factors to consider:
• Electricity cost;
• Mining difficulty;
• Cryptocurrency’s price. If the price of one coin is too low, it might not be worth mining
• Hash rate. This is how fast your computer can solve the mathematical problem given by the system. It can be calculated in KiloHash/second, MegaHash/second, GygaHash/second, TeraHash/second, or even PetaHash/second.
• Block reward. This is the amount of cryptocurrency rewarded per block or the number of coins generated when a miner finds the solutions to the mathematical problem. For bitcoins, the system was giving 50 in 2009, but it gets halved every 210 000 blocks. Currently, every block gives 12.5 bitcoins, and the next halving is supposed to happen in May 2020. That will bring the block reward number to 6.25. The decrease in the block rewards will lead to the end of the mining of bitcoins. Different projections give it different timing, but most probably the last bitcoin will be mined in the year 2140.
Solo mining is not recommended in 2020. Most people join mining communities known as mining pools. In these pools, people combine mining power to compete more effectively with other miners. It should be noted that there are fees to enter the pool, and the reward is spread according to the processing power everyone has.
Mining Farms are another option for cryptocurrency mining but it requires a high initial investment. Farms represent premises equipped with multiple ASIC miners.
Another option for mining that is also not recommended in 2020 is cloud mining. With cloud mining, you don’t need to have your own equipment but instead can mine on a remote server. Usually, cloud mining is not profitable because it requires paying a fee to the cloud provider.
With the rising popularity of smartphone apps, mobile mining also became popular. Usually, a mining app will be part of a mining pool and you will get rewarded in the same way as if you were to join a mining pool on a computer yourself. There are pros and cons to mining on a mobile phone, but the most noteworthy negative that should be mentioned is that those apps drain the phone’s battery really fast.
WHAT SOFTWARE DO YOU NEED
As mentioned above, unless you have very powerful equipment, you will have to join a mining pool. Solo mining, if you are lucky, might bring you a mining block once in 20 or 30 days or even a year in some cases (depending on the cryptocurrency you are mining).
The most popular pools are: