What is Cryptocurrency Mining?
Crypto mining is the process of solving a complex mathematical puzzle before your competitors in order to be rewarded with crypto tokens. Miners are essentially auditors that verify crypto transactions and secure the network. Each transaction throws up a complex hashing puzzle, and the first miner to crack the code is able to authorize it. If you solve the numeric puzzle first and verify the transaction, you will secure “proof of work”.
You will then be rewarded with your own crypto tokens to compensate you for your efforts. Miners are rewarded with new Bitcoins every 10 minutes, and mining other cryptocurrencies is also growing popular. It is now a specialist industry dominated by firms with large mining factories, but some individuals still enjoy mining as a hobby, or they bid to turn a profit by teaming up with fellow miners in a pool, or paying for a cloud mining service.
Is Crypto Mining Profitable?
Crypto mining was a highly profitable venture in the early days. It was possible to mine Bitcoin using a basic CPU, and it grew a reputation as a lucrative venture. However, increased competition has ensured that the barrier for entry is far higher for anyone considering crypto mining 2020. Bitcoin’s block rewards are also reduced by half every four years, which impacts upon the profitability of mining. The level of difficulty for mining bitcoin was 1 when it launched in 2009. By May 2020, it had shot up to more than 16 trillion, meaning you are much more likely to win the Powerball jackpot on a lottery ticket than to correctly predict a correct hash on a single effort. You can only compete if you invest in cutting-edge technology and join a mining pool, or use a service that charges you fees that eat into your potential profits.
Crypto mining has therefore become a highly expensive and painstaking pursuit. You have to factor in the cost of power, because crypto mining in 2020 requires a great deal of electricity. You should also consider the efficiency of your power system, the time you will spend mining and the fiat value of Bitcoin or any other cryptocurrency you are mining. Much will depend upon the value of the cryptocurrency at the time. These digital tokens are highly volatile, and the price can shoot up. A doubling in the price of Bitcoin, Ethereum trading or Monero could double your profits, but it could make mining more competitive and increase the level of difficulty. You can find crypto mining profitability calculators online to help you make an assessment.
Who Should Make Use of This Comparison?
You should use this comparison if you are planning to dip into the competitive world of crypto mining. If you have engaged in Bitcoin Trading UK, Bitcoin Trading USA or Bitcoin Trading South Africa, or perhaps Ethereum Trading, mining provides a compelling alternative, and you could find this comparison useful. You may have been wondering, what is crypto mining? Now we have revealed the crypto mining meaning in the crypto mining explained section above, and if you are still keen to get involved, you should use this comparison to find your perfect match. However, it is equally relevant to advance crypto mining veterans, as you can always benefit from switching to a different cloud mining site or to a new crypto mining pool.
How to Identify a Safe and Secure Crypto Mining Site
Cryptocurrencies like Bitcoin operate on a decentralized basis and they do not fall under the jurisdiction of any specific authorities. Many users are therefore concerned about fraud, hacking and security breaches. Anyone interested in crypto mining must also take steps to ensure they are using safe, secure, trustworthy sites that will not try to scam you. Follow these steps to avoid being ripped off and to find safe mining sites:
- Conduct due diligence. Be wary of mining sites that offer you promises of financial gains that seem too good to be true. Stick to established operators that have a long, demonstrable history of treating miners fairly and facilitating quick withdrawals. Check out reviews from users and experts at sites like TradersBest.com and popular crypto mining blog sites in order to gauge how trustworthy a site is.
- If you are considering a mining pool operator, look for data transparency. The operator should provide a real-time view at all times, allowing you to confirm that the total hash rate declared is fair and that fellow pool users are not ripping you off by quoting lower payouts.
- Identify a mining pool site that uses task assignment mechanisms to evenly distribute the mining among users. It can pay dividends to find a site that uses an algorithm that assigns the hardest tasks to stronger miners, and easier tasks to weaker miners in the same pool, as this protects you if your hardware ages. Also avoid pools that have high thresholds for making payments.
- Make sure you find a pool mining operator or cloud mining site that offers stability and has robust security measures in place. It should offer a secure connection and demonstrate a history of resisting DDoS attacks, while inspiring confidence that it can repel any attacks from hackers.
- Beware cloud mining schemes that offer you a lifetime contract. The premise is that the costs will remain the same, while you will enjoy increasingly exciting returns. However, mining is constantly growing more competitive and difficult, so your investment will yield smaller amounts as the industry matures. Be on the lookout for all cloud mining sites that make bold claims about the returns on offer, while lacking transparency. Some are Ponzi schemes that will rip you off.
SlushPool is a great choice if you are looking for an established, trustworthy mining pool site. It was the world’s first mining pool, established by Marek Pataninus in the Czech Republic back in 2010. SlushPool is by no means the largest pool, but it boasts a slick interface, a user-friendly dashboard and a transparent, score-based method. The transaction fee is higher than some rivals, but overall it is a great option.
If you are looking for a cloud mining site, Genesis Mining is a reliable operator. It is known for swift payouts, excellent customer service and transparency. It shows its farms openly to the public, which has helped it build trust, and it also has an intuitive dashboard, offers easy navigation and provides a wealth of educational material. Genesis does not guarantee that you will earn a profit, but that is the volatile nature of cloud mining. The site offers you a safe and reliable way to purchase hashpower without having to worry about complex hardware and cryptocurrency mining software setup. Check out our Genesis mining review for more details.
How We Assess Crypto Mining Sites
Our team of experts conducts a thorough review of each mining site, focusing on a number of key criteria. We judge each site on its reputation, transparency, the strength of its security measures, the level of customer service it provides, the fees it charges, the payment conditions it imposes, the educational material and analytical tools it provides, and the general look, feel, usability and ease of navigation that the site offers. We look at the size of the pool, how long it has been established for and the reward type it offers.
This is a new and fast-moving sector and there are plenty of rogue operators. We therefore seek to find out how much information is available on each company in a bid to gauge its reliability. It is also important to explore how each pool distributes rewards – or example, PPS, FPPS or PPLNS – and how well it stacks up against rivals offering a similar service. We assess the different contract options and durations, commissions and conditions of withdrawal, and then compare it against the market. No mining site is perfect, so we weigh up the various pros and cons of each before delivering our final assessment.
How to Mine Crypto
You have two key options when you decide to start mining crypto. You can either invest in expensive hardware and join a mining pool, or pay for a cloud mining service that outsources the process for you. Many miners prefer cloud mining, as it requires a lot less maintenance, no start up cost, a constant hash rate, and efficient mining pool management. However, it carries a significant risk of fraud, you will lack control and you risk earning lower profits.
Buying hardware requires a hefty initial investment. You will have high energy bills, and the constantly humming fans may make your home hot and noisy. You may also be lumbered with obsolete equipment that has little resale value if and when you decide to sop mining. There are also transparency issues with some mining pools, and you typically have to accept a slender crypto payout, as you are sharing the proceeds with a large number of fellow miners. Yet many people prefer hardware mining, particularly those that enjoy assembling hardware and system building.
If you are interested in cloud mining, you simply have to choose your mining company, select a mining package, possibly join a pool within that cloud service, choose one of the best Bitcoin wallets in US and begin mining. If you want to engage in hardware mining, you should try to find the cheapest energy deal possible and ensure access to a powerful network connection. You then need to pick a good ASIC miner.
You can buy cheap ASIC chips, but the speed will be poor and you will not stand much chance of beating the competition. You need to find one that offers a high hash rate and efficient energy use. The Bitmain Antminer S19 Pro offers a hashrate of 110 TH/s and power consumption of 3250W, making it one of the best in the business. However, it costs thousands of dollars, so you need to factor that investment into your profitability analysis. It is difficult to make a success of mining individually, so you will probably want to join a mining pool. Select one that is established and reputable. Download the mining software and start mining.
Which Cryptocurrency to Mine?
Crypto mining profitability is determined by the price of the crypto, the reward on offer, the frequency of block generation, the difficulty of mining, the hash rate, equipment efficiency and the cost of electricity. Most mining is focused on Bitcoin, which is why so many people are keen to find the best Bitcoin wallets in US, but you can choose from all manner of altcoins, including Bitcoin Cash and EOS. Some coins cannot be mined, such as XRP and Binance Coin, but most can be mined. You can learn more about Binance Coin trading or EOS Trading if that interests you. The value of the cryptocurrency and its chances of future growth should play a factor in your decision. Halving is also important to consider: the first halving of Bitcoin SV crimped profits for miners in April 2020.
With that in mind, which coins are attractive for mining? Litecoin is interesting, because it can easily be exchanged on a number of platforms, it is not volatile and it allows for GPU mining, without requiring investment in an expensive ASIC chip. Some might like the stability of Tether. Monero also looks like an intriguing option, while smaller coins such as Grin, ZCash and RavenCoin are worth checking out if you want to look beyond Bitcoin. If you are looking at the best cryptocurrency to invest in, you might alternatively consider mining it.
You should think long and hard about whether the crypto market will enjoy strong growth over the next few years before deciding to start mining. Crypto mining is expensive, arduous, time consuming and only sporadically rewarding. However, if you feel that Bitcoin or any other crypto will go on a tear, your profits will also soar. If you decide to take the plunge, use our comparison tool and find a safe, reliable mining site that provides transparency, security, reasonable fees and attractive payment terms. If you need more advice on trading Bitcoin, you can find out more from our Bitcoin Trading and guide.