Requirements To Mine Cryptocurrencies In 2022

‎Summary:‎‎ ‎‎Mining cryptocurrencies is simple but requires some research and knowledge of the subject to know what you are doing. Understanding its bases and fundamentals is essential if you want to enter the world of cryptocurrency mining, so from ‎‎light companies‎‎ we explain everything below.‎

What is cryptocurrency mining?‎

Bitcoin
What is cryptocurrency mining?‎

By mining cryptocurrencies you participate in the verification of transactions made on your network and in the issuance of new cryptocurrencies. For this there are two types of algorithm crucial to understand the operation of how to mine a particular cryptocurrency: the mining algorithm and the consensus algorithm.‎

‎Consensus algorithm: it is related to the agreement between all users or members of a cryptocurrency network as to its operation which transactions meet the validity criteria, the order of the blocks in the chain, etc. You’ll learn more about the functions of mining and consensus algorithms later. For now, we’ll focus on the two most popular types of consensus algorithms among cryptocurrency networks: proof-of-work (PoW) and proof-of-stake (PoS).‎

‎How Do I Get The Reward And How Much Amount?‎

dollar 2022
‎How Do I Get The Reward And How Much Amount?‎

The miner who validates the block approved by consensus, will take the reward. Each cryptocurrency has different rewards, in case of bitcoin it is rewarded with 6.25 BTC, and every 4 years approximately it is halved by the Halving event.‎

‎Using Pow (proof or work) is a consensus algorithm that is based on solving a riddle using mathematical calculations. ‎
‎ The miner tries to get the answer of such a riddle as quickly as possible, which will allow him to attach a new block of transactions to the blockchain. ‎
‎ The disadvantages of PoW is that it requires quite expensive powerful hardware that consumes electricity.‎

‎Is it possible for two miners to have the same answer simultaneously?‎
‎No. It’s practically impossible. The puzzle of each block requires a different and random solution, so that it cannot be easily predicted. This mechanism seeks to prevent the double expenditure of coins; that is, that someone who has already transferred a cryptocurrency can transfer it back to someone else as if they had never spent it.‎

‎Why Mine Cryptocurrencies?‎

The interesting thing about mining cryptocurrencies is that on the one hand you contribute to the validation of blocks of the network allowing transactions to be made between users, favoring decentralization, and on the other hand the reward you get. In addition, if you decide to hold the coin, in the long term the price can be revalued and obtain greater profits.‎

‎What Do I Need To Be Able To Mine?‎

Ethereum Classic
‎What Do I Need To Be Able To Mine?‎

‎We will explain the different ‎‎things that are needed to be able to mine‎‎ effectively:‎

Hardware

We refer to the physical equipment to mine the desired cryptocurrency. It can range from generic computers to dedicated processors optimized specifically for mining. ‎
‎ Deciding on the hardware depends on several factors: the budget you have to be able to invest and the type of mining algorithm with which the cryptocurrency is programmed. ‎
‎ For example, in Bitcoin the SHA256 algorithm is used and in Ethereum Ethash is used.‎

‎The algorithm is responsible for establishing the rules of encryption and decryption of the information. Turn an easy-to-understand message into something indecipherable. In addition, it makes sure that it is impossible to repeat the same result with another message. In this way, security is achieved in the network and it is guaranteed that no cryptocurrency can be counterfeited.‎

Software

Software is the program you need to start mining. There are different types of software or programs that allow your hardware to interact with the cryptocurrency network and be able to mine it. Depending on the type of hardware, different software will be used. ‎
‎ Among the most popular are CGMiner and Claymore to mine Bitcoin and Bitcoin cash and the second to mine ethereum, eth classic. If you want to mine altcoins that are not minable you can use unmineable, which mining ethereum converts them to the desired currency. ‎
‎ To track the performance of the mining process these already include the power at which you are mining, e.g. 20mh/s (20 mega hashes per second). ‎
‎ On the mining pool website you can see the performance of your hardware.‎

‎Refrigeration‎

Mining involves doing complex mathematical calculations that require power causing the processors to heat up. In this way we must control the cooling of our hardware to prevent it from overheating‎
‎ The most effective ways are:‎

  • Incorporate cooling into the hardware‎
  • ‎Cool and ventilated environment where miners are placed‎
  • ‎Use liquid cooling systems‎
  • ‎You should always monitor temperature and performance so that you can get the best mining results by optimizing profits‎

‎Billfold‎

In order to receive payment for the cryptocurrency you are mining you need a wallet address. You can use a physical wallet like Ledger or a virtual one like Exodus, or just use the address of an exchange like Coinbase or Binance.‎

‎If you are looking for security, the ideal is to have the cryptocurrencies stored in a physical Ledger wallet, in which you have the seed words and they are impossible to hack directly.‎

‎Mining alone or in a pool?‎

If you decide to mine alone and manage to validate a block you get the entire reward. But the power of a device is negligible compared to the hashrate of the entire network. If you decide to mine “only” you should own hundreds or thousands of powerful devices to be able to compete with the hashrate of other miners or pools. ‎
‎ Therefore, the chance of your little miner competing is technically nil.‎

‎There is only one correct result for each proposed puzzle in a cryptocurrency network and only one way to get this answer. The probability that a mining node will solve such a puzzle depends on its mining power compared to that of the other mining nodes in the network. For this reason, for the vast majority of miners it is more convenient to mine in a pool and distribute the rewards.‎

Hacer Staking

Staking means leaving your cryptocurrencies on the network for block validation. It is an alternative to PoW that does not require hardware thus reducing energy costs. ‎
‎ To be able to staking you need to own that cryptocurrency and block them on the blockchain network. This way you certify that you will not use those funds for purposes other than for the validation of transactions. Giving guarantee of your commitment, since if you act irresponsibly wanting to damage the ecosystem you could lose all the cryptocurrencies you have blocked. ‎
‎ The selection of the validator node that will add the next block to the chain is semi-random, but, the more cryptocurrencies you have assigned for this purpose, the greater the chances of being chosen. Consequently, you will earn more money.‎

‎It can also be seen as the process of restricting the trading use of crypto currencies in order to earn rewards.‎

What is needed to do Staking?

Validating transactions with Proof of Stake does not require high power consumption that involves mining, nor does it require specialized hardware. It is enough with internet access, a pool and having a minimum of coins.
Through Binance you can now start doing blocked Staking.

Mining Bitcoin or Altcoins?

dollar 2022
Mining Bitcoin or Altcoins?

Bitcoin (BTC): The most famous cryptocurrency in the world is not profitable due to the high competition and the mining farms that are spread all over the world. The more people decide to mine bitcoin, the algorithm becomes more complicated, so more and more computational resources are needed to obtain a hash.

  • Algorithm: Proof of Work (PoW, “Proof of Work”)
  • Reward: 6.25 BTC

Ethereum (ETH): The second cryptocurrency with the highest market capitalization. Today it is still a good option for mining but you need a computer with a minimum of power.

  • Algorithm: Proof of Work
  • Reward: 2 ETH

Monero (XMR): This cryptocurrency has a high level of privacy and decentralization. The advantage is that you can use it to mine both CPU and GPU.

  • Algorithm: Proof of Work
  • Reward: 2.47 XMR

Litecoin (LTC): Litecoin is an option to mine because it is a fairly stable currency, (although in the crypto world this is not a guarantee) and does not require a large investment to obtain profits.

Algorithm: Proof of Work
Reward: 12.5LTC
Dogecoin (DOGE): This cryptocurrency was born as a meme but has now become quite popular. Elon Musk and other influencers have promoted this coin with the goal of reaching 1 USD in value.

  • Algorithm: Proof of Work
  • Reward: 10,000 DOGE

However. If what you want is to get bitcoin, one option is to mine the cryptocurrencies mentioned above and then exchange them for bitcoin. This way you can mine more affordable cryptocurrencies with cheaper hardware and get bitcoin just the same.

Future Projection

Without a doubt, cryptocurrencies are still a very recent phenomenon that have only been around for a little over 10 years. And third generation cryptocurrencies like ADA Cardano are 5 years old and have a very long way to go.

So if your question is whether you should invest in cryptocurrencies, the answer is yes. You must investigate and understand how each coin works, its ecosystem, what problem it solves and the human team of people behind the coin. In this way you can know if the cryptocurrency can be useful in the long term and appreciate its value considerably.

Also another great opportunity for cryptocurrencies comes from promoting mining with cheaper green energy.