Mining is the process of mining new cryptocurrency tokens. It provides cryptocurrencies with the advantage of decentralization – the absence of a control center (a government, a bank, or a separate group of people).Also, mining is one of the ways to make money from cryptocurrencies. In this review from ProstoCoin, you can find out what is the best way to mine tokens and which coins will bring the biggest profits in the next year.
Coins can be mined using:
video card;
processor;
ASIC equipment;
FPGA.
Graphics cards (GPU)
A GPU is a chip on a video card that performs cyclic computational operations to process graphic elements. Although GPUs don’t have the same hash rate as ASIC devices, they are more flexible to use. Firms such as AMD and Nvidia originally developed GPUs to improve graphics quality. However, they are now quite popular among those who want to mine cryptocurrency.
Not so long ago, it became unprofitable to mine top coins via graphics chips due to the increased complexity of the network and expensive electricity. For this reason, it is better to mine liquid and promising altcoins, which do not need large capacities, with the help of video cards.
video card mining
The good thing is that GPUs give you the ability to mine almost any token, albeit with varying efficiency. Also, the miner can quickly respond to changing market trends, quickly switching between mining of different coins. Cryptocurrencies that are based on Equihash, it is better to mine through Nvidia GPUs, as video cards of this manufacturer have an increased amount of RAM. For mining you can buy a video card Nvidia GeForce RTX 2080 Ti, which costs 86,590 rubles.
The advantages of GPU-mining:
The ability to mine almost any token;
fast switching to mining other more profitable cryptocurrencies.
Disadvantages:
Not the highest hash rate.
CPU
CPU is a central processing unit of a personal computer or laptop. Most are developed by Intel and AMD. When Bitcoin was first created, it was possible to generate 100 coins per day using a regular CPU. In 2022 it is not realistic to mine BTC with CPUs due to the widespread use of more efficient ASIC devices. It is better to prefer other cryptocurrencies such as Monero. When mining these koins, you can activate the Smart Mining feature. It automatically starts mining tokens if the CPU resources are idle. For mining, you can buy an Intel Core i5-7600K for 31,000 rubles.
Advantages of CPU mining:
small amount of capital required to start mining, compared to GPU;
the ability to use the Smart Mining function (only when mining Monero) to optimize mining.
Disadvantages:
Low profitability.
ASIC
ASIC is a kind of integrated circuits. Essentially, it is a chip designed to execute a hashing algorithm as quickly as possible. ASIC equipment performs computing operations for mining 100,000 times faster than the most powerful CPU. Such devices are designed for specific hashing algorithms. Consequently, a miner needs to buy a separate ASIC to mine different hashes.
mining on asics
There are several manufacturers producing such equipment. The most popular are Bitmain and Canaan. ASIC devices are not cheap. Equipment with an increased hash rate will cost 210,000 rubles.
The ability to execute trillions of hashes every second has several drawbacks. Due to the fact that ASIS equipment intensively performs computational operations, it produces a lot of heat energy. Consequently, if a miner plans to use such devices, he needs to take care of creating a cooling system. This requires the use of fans, and they create a lot of noise. In addition, due to the increased hash rate, ASIC devices consume a lot of power. For this reason, most of the miners who use such equipment live in states with cheap electricity.
ASIC-mining advantages:
Efficient mining of any cryptocurrency, including bitcoins;
high profitability.
Disadvantages:
high cost of equipment;
high power consumption.
FPGA
FPGA is a microchip which can be programmed to perform any calculations. Such equipment mines tokens several times more efficiently than video cards, while consuming the same amount of electricity. It is necessary to program the board from scratch, only in this case it will mine a certain cryptocurrency. The programming code must be written in Verilog or VHDL. The cost of FPGA-equipment starts from 250 000 rubles.
The advantages of FPGA-mining:
The ability to use any algorithms;
High level of energy efficiency.
Disadvantages:
high cost of equipment;
Difficult board setup.
What does the choice of equipment depend on?
Deciding on what is more profitable to mine and what device is better to buy for cryptocurrency mining, take into account the following factors:
Power. Characterizes the number of hash functions that the equipment performs per second. This parameter determines how many coins the device generates. The more power, the more tokens the miner will receive.
Encryption algorithm. Different tokens work on different encryption algorithms. The type of equipment you use determines what kind of coins you can generate. For example, you can mine any kind of token through a GPU. However, tokens for which there are ASIC devices are unprofitable to mine with video cards. In this case, ASIC equipment can only mine tokens intended for it.
Electricity consumption. When mining cryptocurrency, the equipment consumes a lot of electrical energy. Depending on the power consumption of the equipment, 10-100% of the profit is spent on the electricity fee. For example, with a graphics chip, a miner will spend 10-20% of income on the electricity bill. As for ASIC equipment, it becomes less energy efficient over time.
Cost of equipment. How much is spent to start mining depends on when it will pay off and whether it will pay off at all. The cost of the mining equipment starts with 10 thousand rubles (simple GPUs) and may reach 350-700 thousand rubles (modern ASIC devices).
Payback period. This is the period, after which the money invested in mining will be fully returned to the miner. It is unrealistic to determine the exact payback period. This is due to the fact that this parameter depends on the cryptocurrency exchange rate, the complexity of computing operations. A miner can only predict the current payback period if he takes into account the cost of purchasing the equipment and the cost of electricity.
A person who plans to engage in mining needs to carefully work out a scheme of earning, make a detailed calculation of investments, compare the investment with the approximate profit. There are general rules that can be followed to maximize the efficiency of token generation:
Monitor the market. Analyze news summaries about cryptocurrencies. The value of coins is largely dependent on the information background.
Consider several options. Make a list of tokens that are profitable for mining, so that if the market situation changes, you can quickly switch from one coin to another.
Optimize your costs. Try to choose equipment with an optimal cost to power ratio.
What is the best way to mine?
You should select the equipment for mining, taking into account the peculiarities of the cryptocurrency you plan to mine.