What does it mean to "mine bitcoins"? Why do they do it? How profitable is it to mine bitcoin now? What is cryptocurrency mining in simple words? How to start cryptocurrency mining? What does bitcoin mining mean.

Content

The only way to issue bitcoin (btc) cryptocurrency is bitcoin mining, which is the creation of new blocks by performing a certain mathematical task using a specialized program installed on a computer. There are several ways to get the popular digital currency, each of which has its own advantages and disadvantages.

What is mining

The process of creating virtual coins got its name because of the laboriousness comparable to mining. The essence of mining is to perform calculations of mathematical problems in order to pick up a certain value. The purpose of such operations is to obtain a hash - a bit string of fixed length. After the code is decrypted, another block of bitcoins appears, including cryptographic signature. This signature is formed based on the hashes of the previous blocks.

A sequence of bitcoin blocks appearing one after another form a chain of blocks (blockchain). The selection of digits that form the basis of the hash is carried out automatically. Bitcoin mining involves a reward in the form of btc coins, which go to the first miner to guess the hash. The amount of virtual reward is halved every four years. At the start of the system in 2009, miners could count on 50 btc per decrypted hash, now the reward is already 12.5 bitcoins.

Basic principles

The bitcoin mining process must follow certain principles in order to maintain the validity of the cryptocurrency and the security of the network. The main principles of extraction are:

• the difficulty of creating a currency;
• set average time to calculate one block;
• lack of a single inlet center;
• automatic increase in difficulty level as the number of miners grows;
• the amount of remuneration is set by the system and provides for a gradual decrease;
• mandatory confirmation by miners of a transaction between participants in the bitcoin network by including it in a block;
• autonomous self-regulation of the network.

Difficulty of mining cryptocurrency

Due to the constant increase in the number of miners of electronic coins and the steady growth of computing power, a mechanism is needed to compensate for this growth. As such a mechanism, the complexity parameter was provided, on which the amount of mined cryptocurrency per unit of time depends. The technical side of the concept of "calculation complexity" is described as the number of attempts required in order to generate a hash.

Types of mining

Earning bitcoins can be done in several ways, which involve the use of specialized devices or payment for the rental of other people's capacities. There are also shareware types of extraction. The methods differ from each other in the size of the required investments and the expected income from production. The most popular types of bitcoin mining are:

• using personal computer or laptop;
• using the GPU;
• using FPGA modules and ASIC chips;
• creation of farms for mining;
• cloud mining;
• bitcoin faucets, bitcoin games.

Bitcoin mining on a home computer

Cryptocurrency mining with a video card

The time when it was profitable to mine bitcoins using a conventional video card has already passed, as the mining process has become much more complicated and large computing power is required. With the increasing interest in bitcoin due to its increasing value, manufacturers of graphics accelerators and processors have been developing powerful video cards.

Mining farms

A large number of computers involved in the mining process are the so-called bitcoin mining farms. The principle of their work is the continuous execution of calculations. Hashes are generated using:

1. A large number of video cards - the most energy-consuming type of farms.
2. FPGA modules - economical in terms of power consumption.
3. ASIC processors - the asic device (specialized processors) is the most expensive, but at the same time its speed is maximum.

Cloud mining without investment

The principle of obtaining bitcoins using cloud mining is identical to the usual mining of electronic coins, except that not their own capacities are used, but third-party ones, rented. The amount of mined cryptocurrency depends on the rent charged. There are also free services offering their mining equipment.

How to start mining

In order to start mining the first coins, first of all, it is worth deciding on the mining method. The amount of the initial investment will depend on the method chosen. The general step-by-step algorithm for mining bitcoins looks like this:

1. Buy necessary equipment.
2. Install the selected bitcoin mining program on your computer.
3. Select a pool site.
4. Register a wallet to withdraw rewards.
5. Run software.

What are pools

To increase the chances of getting btc coins, specialized web services (pools) provide miners with their services, which consist in applying the maximum parallelization of calculations. This method of mining provides for pool participants to search for their own solutions without linking them with the solutions of others. The miners provide the pool with their computing power, and the pool for finding the block acts as a solo miner. When choosing a pool, you need to know the rules for the distribution of remuneration and the capacity of the pool.

Cryptocurrency mining software

You should start bitcoin mining by installing the software. Mining programs are divided into two types: for processors and for video cards. It is necessary to choose the software based on the parameters of the available equipment. The most popular programs among users are presented below:

• name: Bitminter;
• characteristic: the application, which is also a pool, runs on video cards, has ASIC support, is compatible with all operating systems;
• pros: suitable for both beginners and experienced miners, ease of installation;
• cons: no
• earning opportunities: the cost of coins mined in 24 hours is equivalent to $0.5.

A console client that is easy to use for both beginners and professional miners:

• name: BFGMiner;
• feature: console client that supports video cards and FPGA devices, support for scrypt, RPC;
• pluses: easy setup of pools, the ability to control the cooling elements of the computer;
• cons: high requirements for equipment;
• earning opportunities: an experienced miner receives 18 thousand satoshi per day.

For users with knowledge operating system MS Dos, having equipment with a powerful processor and video card, the DiabloMiner program is suitable:

• Name: DiabloMiner
• characteristic: support for such operating systems as Windows, Linux, Mac, installation of video cards of different series is provided;
• pluses: ease of setting the pool parameters;
• cons: not suitable for beginner miners;
• earning opportunities: powerful computer you can get a reward of 20 thousand satoshi per day.

The console client, easily adaptable to the user's requirements, is the Ufasoft Miner program:

• name: Ufasoft Miner;
• characteristic: it is possible to change the address of the pool, suitable for the extraction of cryptocurrencies such as bitcoin, ether, lightcoin;
• pluses: several modes of operation depending on the level of the user;
• cons: requires a lot of RAM;
• earning opportunities: experienced miners receive a reward of 18 thousand satoshi.

The CGminer program is more suitable for users with extensive experience in the MS Dos system:

• name: CGminer;
• characteristic: involves installation on powerful processors, when overclocking the video card, it increases MN / s to the maximum;
• pluses: it is possible to reprogram, easy to configure;
• cons: not suitable for beginners;
• earning opportunities: from 18 thousand satoshi per day.

50 Miner is a graphical shell for several of the most popular miners, such as Cgminer, Phoenix, Diablo, Poclbm:

• name: 50 Miner;
• characteristic: it is possible to use without installation, while all settings are saved in the configuration file;
• pluses: ease of authorization, compactness;
• cons: instability of work, a lot of RAM is required;
• earning opportunities: under minimum initial conditions, you can earn 15 thousand satoshi per day.

Is bitcoin mining profitable at home

To understand whether it is profitable to mine bitcoins at home, you should calculate the amount of investment required and predict how quickly they pay off. Given that since the advent of the process, which today is called mining, the situation on the cryptocurrency market has changed significantly, it is worth knowing the main factors affecting the economic feasibility of mining now:

1. The complexity of mining contributes to the constant growth of equipment capacity, which affects its cost. At home, it is difficult to provide a competitive level of mining speed.
2. The growth of the btc rate in relation to the official currencies attracts new participants to the network. If the bitcoin rate falls, the profit from their sale may not cover the invested funds.

How much can you earn from mining

Bitcoin mining has the goal of making a profit, so before you start mining cryptocurrency and wait for the computer to earn on its own, without your participation, you should find out what level of earnings you can count on. There is no single answer to this question, because the amount of income depends on many factors, such as:

• bitcoin exchange rate fluctuations;
• relevance of the chosen extraction method;
• equipment acquisition costs;
• the number of miners in the network;
• the cost of electricity.

You can calculate the approximate profit from mining using specialized calculators (for example, on the Russian information site btcsec), which take into account a set of parameters entered by the user. However, even in this case, it should be taken into account that if the bitcoin exchange rate changes on the cryptocurrency exchange, the results of the calculations will turn out to be irrelevant.

bitcoin mining costs

In order for bitcoin mining to be profitable, the income from it must cover all the costs associated with mining. The economic component of the costs includes the costs of:

• purchase of special equipment;
• paying bills for consumed electricity;
• repair and adjustment of capacities;
• pay for the lease of facilities.

Special equipment

The future bitcoin miner must take into account that in order to make a profit, it is necessary to have competitive equipment. Given the technological race caused by high demand, the cost of specialized equipment has increased significantly. In addition to the main elements (video card, chip, module), you will need software to monitor the temperature of the equipment and a cooling system.

Electricity costs

Bitcoin mining involves the operation of equipment for a long time, which leads to a large consumption of electricity. The higher the power of the processor and video card, the more impressive the electricity bills will be. In addition, the need to use cooling elements also leads to an increase in power consumption.

Depreciation of the power of a home PC

If you plan to mine bitcoin on home computers, you should take into account the fact that the load on the main elements of the machine will increase. Constant overheating of the processor and video card leads to a deterioration in their performance, and faster failure. The miner will often have to repair his computer and buy new parts, which will lead to additional costs, and downtime will negatively affect the profit received.

Pros and cons of mining

Before mining bitcoins, you should familiarize yourself with the positive and negative aspects that you will encounter in the mining process. The advantages of bitcoin mining include:

• Stable passive income. Bitcoins are mined without your participation. By setting special program you can mind your own business.
• It is not necessary to invest in btc mining. If you do not want to take risks by investing your money, there are free ways production, but in this case one cannot count on a large profit.
• Mined bitcoins can be easily withdrawn from the system (sell, exchange, pay for purchases).

Miners who mine virtual coins note the following disadvantages of bitcoin mining:

• Equipment failure. Mining use home computer leads to rapid heating of the video card.
• Large power consumption. Increasing the level of mining difficulty requires increasing the speed of mining, which has become possible with the advent of new technologies. Powerful devices are energy-consuming, so bitcoin miners have to pay large bills for the electricity consumed.
• High degree risk. Investing money and time in bitcoin mining is a high-risk investment, due to the fact that the price of cryptocurrency is unstable, and at any time the bitcoin exchange rate may fall.

Discuss

How to mine bitcoins - the essence of the process and where to start, types and profitability of earnings

While getting acquainted with bitcoins, many users have a question: cryptocurrency mining, what is it and why does it exist. To simplify the description, this term refers to the extraction of virtual coins using special devices. The word “mining” is the English “mining”, which means “mining” in translation. And, accordingly, miners of digital currencies are called miners.

From the article you will learn: how promising is the mining business, what are its features, where to start and what experts think about the future of cryptocurrency. After studying the information collected, you will be able to make an informed decision: start investing in mining or earn in another way.

Where does bitcoin come from?

Let's watch a video explaining in simple terms where does bitcoin come from and how ordinary people mine it.

The concept and types of mining

So, you are interested in cryptocurrency and its mining. To understand the term, let's recall three important points of the previous article: "Bitcoin and other cryptocurrencies: what is it in simple words."

1. Bitcoin is an encrypted software code whose value is influenced by market demand.
2. The number of coins is limited and the issue volume is known in advance.
3. The release of cryptocurrency is not regulated by any state organization, so anyone can get it.

Mining is the extraction of an encrypted and limited in number cryptocurrency program code, the necessary combination for which is formed by selecting a set of numerical variations.

There are two ways to organize mining:

1. Solo mining. You independently acquire equipment, find coins and leave all the income to yourself.
2. Work in pools. The bottom line is that many users unite in a virtual pool, connect their equipment to it, jointly mine and divide the cryptocurrency according to the share of participation.

The video below contains answers for beginners to the basic questions on cryptocurrency mining, the basic principles of mining and how to get started.

Business Perspective

To assess the situation, we need to analyze three fundamental factors: cost, time, and the amount of cryptocurrency available. Let's look at the numbers and try to draw a conclusion.

Price

The first cryptocurrency was released in 2009 and cost less than a dollar.

1,309.03 BTC = $1

Until 2013, the value of bitcoins increased and reached $600. In 2014, there was a price collapse, and the cryptocurrency fell by half.

In 2015 and 2016, there was a new growth, and for one coin, users gave $1,000. In March 2017, Bitcoin hit an all-time high and was valued at $1,238.

It is now April 2017. The average cost of one bitcoin is at the level of $1200.

8 years have passed since the introduction of cryptocurrency. During this time, its value has increased from a few cents to the cost of an ounce of gold.

Time

It is now April 2017. The emission of the last bitcoin is scheduled for 2140. This means that you have 123 more years at your disposal.

Quantity

A total of 21 million bitcoins have been developed. The main part will go into circulation by 2033. In 2017, more than 14 million coins were mined: you can see the exact figure and follow the updates here: http://bitkurs.ru/stats. Less than 35% remained unextracted. The mining algorithm periodically becomes more complicated and therefore is not uniform in itself.

conclusions

We analyzed three key factors that affect the value of a cryptocurrency. In 2017, the development of the mining business looks like a profitable direction that you need to enter immediately. How much you can earn in the future, no one can say for sure. An increase in the cost of coins, increased competition and technical difficulties with decoding the program code are expected. These moments scare away solo miners, but if you approach mining as a business with a business plan, then this is essentially one of the most innovative and promising areas.

Earning scheme

Theoretically, starting a cryptocurrency mining business is not difficult. For this you need:

1. Purchase special equipment containing a miner - a program for performing computational operations;
2. Join a pool or organize solo mining;
3. Get rewarded.

All the complexity rests on the cost of the equipment needed to start. In 2009, it was possible to calculate a block of bitcoin code using paper and a calculator. Therefore, most of the operations took place on the processor of a home PC.

Since 2011, the demand for cryptocurrency has increased, and the complexity of calculating the code and the power of a home PC has ceased to be enough. In simple words, the cost of electricity for the operation of the computer has ceased to pay off through the extraction of coins. Therefore, users began to use processors on a video card, which in a short time grew into giant farms. Farms are huge assemblies of computers connected to hundreds of graphics cards. The larger the farm, the more profitable it is to maintain and, accordingly, the higher the production efficiency. Higher business profitability.

To understand why at the present stage you will not be able to earn money without investments on the machine in this business, look at what a professional farm looks like. It is located in China and generates 3% of all bitcoins in the world.

Now compare it with a home farm in Russia. Estimated profit: $182 per month.

The smaller the cryptocurrency, the more sellers offering equipment to receive it. To see this, visit Avito.

Investment risks

For novice investors and businessmen, we highlight three main points:

1. Not a single cryptocurrency unit has a physical value. This means that the value of virtual money at any second can be repeatedly overestimated or dropped to zero.
2. It is difficult and expensive to mine the popular cryptocurrency. At a minimum, it will be required professional equipment. You can immediately forget about solo mining.
3. It is pointless for small and medium investors to start investing in the search and development of a new currency. Back in 2015, there were over 2,000 variants circulating on exchanges, each with an equal chance of disappearing or repeating Bitcoin’s success.

If we combine all of the above factors, we get a very negative scenario: an investor can purchase expensive professional equipment, choose bitcoins as a mining object, receive a sufficient number of coins in his wallet, but due to a drop in user demand, he will lose all invested capital.

See what the bitcoin/dollar chart looks like. Note the sharp rise in the cryptocurrency in 2013 (1 BTC= $1110) and subsequent depreciation in 2014 and 2015 (1 BTC= $220).

You can view the updates here by selecting BTCUSD. This means that price collapses in the past are not excluded in the future.

• The general advice is to strive for the maximum reduction in energy costs while maximum performance computer (farm). This is achieved by combining multiple video cards into one computer and common system cooling. There is also specialized mining equipment, called ASIC or Asik in Russian. Asics come with not only the hardware itself, but also the software. As a rule, everything is done on a turnkey basis - connect, install software and mine. However, asics are very expensive and it is better to start “trying” with several video cards.

• If you are going to mine bitcoin alone or make a small farm at home, then forget about bitcoin mining - it is not profitable. Concentrate on mining more "simple" cryptocurrencies, the difficulty of which is not so great. For example: litecoin, namecoin, darkcoin, etherium.

• Solo bitcoin mining can only become profitable if its rate rises significantly, for example, up to 5000

• When mining little-known cryptocurrencies, it is worth constantly monitoring their course and extracting only those that are getting more expensive (have the prospect of getting more expensive). And in any case, immediately after mining, exchange them for bitcoin or dollars. Since there are risks of depreciation of newly mined coins.

• When drawing up a business plan, you need to take into account the ability to buy at a wholesale price the most advanced video cards for mining and the ability to sell them when their power is not sufficient.
• Be careful if someone offers you cloud mining. These are projects that allegedly have huge and powerful farms and rent them out via the Internet. You pay for the use of the equipment and mine whatever cryptocurrency you want. The yield is high. But scammers are almost always hiding behind these services! At one point, you will pay for the rent, but you won’t be able to withdraw money or mined coins. Beware of cloud mining offers!

Expert forecasts

Most experts agree that in 2017 one bitcoin will be traded at the level of $1000-1450 per dollar.

2017 1 BTC= 1000-1450 $

Cliff Hai (the creator of the WEB BOT project) believes that in the spring of 2018, users will pay $13,000 for one bitcoin.

2018 year. 1 BTC= 13 000 $

2020 1 BTC= 5000-11 000 $

Jeremy Liu (Snapchat investor) and Peter Smith (Blockchain CEO) claim that Bitcoin will acquire its true value by 2030, when it rises in value to 500,000 per coin.

2030 year. 1 BTC= $500,000

But all these forecasts fade due to the fact that the bitcoin crypto rate is highly dependent on demand. And demand often depends on political reasons. For example, the state may prohibit the circulation of bitcoin and introduce criminal liability for its use. Investors will get scared and start selling it, and then bitcoin will become much cheaper.

Conclusion

Now you have learned what cryptocurrency mining is in simple terms and how to start mining it yourself. We cannot say for sure how profitable this direction will be, since we cannot see the future. The thing is that the views of experts and ordinary users drastically diverge. Therefore, you must analyze the information yourself and make an informed decision: go mining or move on to other investment ideas.

P.S. Friends, what do you think about mining? Please share your opinion and the history of your earnings in the comments below the article.

Thank you for your help in preparing the article exchanger MegaXchange.com - here are the most profitable bitcoin exchange rates!

Greetings friends, in this article, by the way, the first on this site about mining (the article is constantly updated), we will talk about how to start mining on a video card (GPU) and where to start. If you are too lazy to read, at the end of the article there will soon be a video on how to start mining for beginners. But first, I advise you to read the first 2 paragraphs on how to start mining for a beginner.

Mining start

This article deals with, as you understood above, about mining on a video card and step-by-step instructions. This mining guide is for beginners. We will set up mining, connect, install software, overclock the video card, and so on.

Mining getting started

What do we need to start mining from scratch

step by step mining

1. And probably the most important thing for mining on a video card is a video card (GPU), at least one, also more or less modern, about no more than 3-4 years old, and not a budget one. (It is also possible to mine on, hard drives And ). If you want to pick up a video card, then you are here -, there are selected best cards, compiled tables and top.
2. Naturally the computer system unit) or with the operating system installed (Windows x64). It's the 64 bit version
3. Decide on the currency that we will mine. Depends on the video card, in our example, the description will be mining ether eth. It is better to mine on Nvidia at the moment (12/28/2017) ZCASH - more on that below. Now broadcast.
4. Since mining is online, we need the Internet. Fast speed is not needed, but good ping is desirable, more on that below.
5. Select a pool (POOL) where we will mine ethereum (do not confuse with etherium). Next, select the miner program and configure.
6. Choose an exchange or a wallet where ours will drip and accumulate for mined ethereum coins, as well as services where you can transfer our earned coins to rubles and withdraw to a card.

Mining instruction start

And so let's start, you have a suitable video card and everything listed above in paragraphs 1, 2, 4 which are above and the drivers must be installed. If there is no video card, then read which article. If you do not have video cards and equipment, for more information about what kind of equipment you need for mining, follow the link -.

In our example, there will be Windows 7 x64 (by the way, ether mining is only on x64 bit operating systems), there are two video cards AMD Radeon Sapphire RX 470 4gb. The processor does not matter, in principle, as well as the amount of RAM, but it is recommended from 4 gigabytes. The easiest maning kit for beginners. UPD 3 GB and lower versions of video cards are no longer under go for mining ether, if you have 3gb or less, then you need to look for an alternative. There are other algorithms and currencies for mining, the list is .

Internet fast is not needed, but with a good ping. If you connect via a cable, then of course it’s better than the Wi-Fi option, but Wi-Fi is also suitable (I’ll write about this later), you can also read -.

How to start mining

Choose a pool (pool) where we will mine Ethereum coins:

1.ethermine.org

Advantages of this pool:

• + Large pool power
• + Small and fair commission 1%
• +Good ping

• Pool on English language
• A bit incomprehensible site (for beginners), but we will describe here how to set it up using its example

2.dwarfpool.com/eth
pros:

• + for those who are in Russia, they have a server in Russia which is good for ping
• + a small commission of 1% which is not secretly overestimated
• + Good pool power
• + Easy miner setup

• - A little incomprehensible site (for beginners)

3. www2.coinmine.pl/eth/
Pros:

• + Honest small commission 1%
• + good ping
• + good power
• + Better protection

• - More complex customization manner
• - There are also difficulties with the site

4.eth.nanopool.org/

• + Simple site
• + Easy miner setup
• + Big power

• - There are rumors among miners and many claim that the stated commission of 1% is well underestimated

At the moment, I have chosen and will show the setting using example 1 - ethermine.org open the site in your browser

So the pool was chosen, now you need to select a wallet or an exchange in advance. What is a wallet, Ethereum Wallet? This wallet is located on your computer, coins are received on it, then from this wallet through the services they can be withdrawn to the card, which on present moments not profitable, it is more profitable to transfer to bitcoins, and then to a card in rubles, but this can be done on the exchange. But the wallet is much safer than exchanges, soon I will write an article on how to create
wallet.
But for beginners it is better to work with exchanges

1. Binance is a more professional exchange, a good alternative to exmo!
2. Exmo is a great exchange, especially for beginners, loves miners.
3. Yobit is a good Russian exchange.

There are many of them, but let's start with the simplest, then with the advent of experience you will switch to a more interesting exchange, I also advise you to read the list of good ones.

After downloading, unpack the archive with the miner to a place convenient for you, the folder into which you unpack, preferably what was named in Latin (in English). This is what the content should look like.

Now let's start setting up the miner and mining
Next file Start.bat, click on it right click mouse, and select edit. If the Run button appears, click it.

Here is the code for our file that we will run

and we need to edit it for your pool and your wallet (exchange)
-epool and after we specify the address of the pool, since we chose ethermine.org, we should succeed:

Epool eu1.ethermine.org:4444

(This is the address and port for mining, for other pools you can find out on the pool website)

Do not close text editor

If you do not have equipment, then I advise you to read -.

Also, if you do not want to suffer with setting up and buying equipment, there is a cloud mining solution -.

The video of this article is coming soon - how to create mining.
Mining in Russia is developing, so you develop with us in 2020, good luck to everyone in mining, now you are not a mining beginner !!!

If your card is less than 3 gigabytes, then you can choose a different algorithm, the list is .

Write questions in the comments.

You can also ask your questions on the forum, and be sure to get an answer -.

Hello! In this article, we will talk about cryptocurrency mining.

Today you will learn:

1. What is mining and why is it profitable;
2. How can I mine cryptocurrency;
3. What cryptocurrencies are profitable for mining.

What is mining

Let's start with a little theory block first.

Mining – the use of computing power for mining.

The very concept of mining appeared back in 2010, when those who mined cryptocurrency were compared with miners, and then the currency itself with precious metals. A special installation has to shovel a huge amount of data in order to find the necessary key and get a portion of the cryptocurrency.

How Cryptocurrency Mining Works

Let's look at the principle of mining based on the most popular cryptocurrency, since most other currencies are either clones or have similar working principles.

Mining is not tied to any centralized issuer. That is, the system itself is engaged in the release in automatic mode. But before telling how the emission takes place - the creation of new bitcoins - first a few words about the transactions themselves within the system.

In order to transfer money from one wallet to another, it is necessary not only to make a transaction, but also to receive confirmation from other users that this transaction should go through. And to get it, you need the user to collect 1 block of transactions. In order to collect a block of transactions, you need to get a hash from each transaction.

The computer's job is to figure out the hash for each transaction. The number of transactions in a block depends only on their volume - it is necessary that they do not exceed 1MB of information in total. Despite such a small amount, it takes a lot of time and computing power to sort through the hash.

For example, compared to 2015, mining difficulty has increased by 10,000! once. This resulted in the lack of opportunities to mine bitcoin on their own for almost all users.

Summarizing, we can say this: mining - search various options to build a hash combination for each transaction in a block. For example, the system adjusts the complexity of building transactions so that one block takes 10 minutes. Therefore, the more miners, the higher the difficulty.

After we figured out how bitcoin roughly works, let's look at why only 2 components are currently used for mining - chips on video cards and ASIC processors.

Initially, the bitcoin system had a “Mine cryptocurrencies” button. After clicking on it, the processor was activated and began to use power for mining. But then, they found that video cards significantly exceed the processing power of processors, and this button was removed.

Then it turned out that the chips on the video cards are much stronger than themselves, and over time, only they were able to mine top cryptocurrencies such as ether and bitcoin. This is how mining on processors is a thing of the past.

Now, the complexity of bitcoin mining is such that only ASIC processors, specially tailored for bitcoin mining, can cope with them on their own. It has long been impossible to independently mine bitcoins on a home PC.

Mining on video cards has become popular thanks to Ethereum. This cryptocurrency is quite expensive ($400+) and you can only use video cards to mine it.

There are not even special ASICs that would work with Ethereum, and they are unlikely to be. Simply because when mining ether, what matters is not how much information the processor can process, but the speed of processing. That is why it is still difficult to find something other than video cards that can work with this crypt.

If everything is reduced to a couple of words that will be understandable even to a simple user, then the mining process can be described as follows:

• Download and install the mining program;
• The power of the equipment is directed to the calculation of all possible options;
• If the option is correct, then the miner receives a reward;
• The higher the power, the higher the probability of finding the correct option.

That's the whole mining technology in simple words.

Main ways of mining

In mining, you can act in three main ways:

• Work in a pool.
• Assemble your farm.
• Use cloud mining services.

Let's look at each method in more detail. They involve different costs, profits and the necessary equipment to start. Let's start with the simplest - pool mining.

Mining in the pool

Mining pool- an association of several miners who direct the computing power of their computers in order to extract the currency.

Due to the fact that mining takes too much energy and requires large amounts of power, it is simply impossible for ordinary computers to be among those who find the necessary combination. While normal mining rigs go through a huge number of options, the home PC is quite limited in its capabilities.

This method is suitable for those who want to try out what cryptocurrency mining means, whether it can be profitable and whether it is worth it. This is an option for skeptics, beginners and those who do not have money for equipment.

You can even work on your home PC. You need to download a program that will automatically direct your computer's calculations, integrate with other users and increase the chances of success. In this case, each will then receive a share according to the contribution to production. That is, the more powerful your computer, the higher the reward will be.

Mining equipment: everything is quite simple here. A computer or laptop will do. Even home machines can bring at least some profit if you make them work 24/7.

How much can you get: everything is not as good here as in other ways. Maximum 1.5-2 dollars per day, and then, if the video card is powerful enough.

As you can see, mining without investment is not a myth, especially if you have your own home PC that has a good gaming graphics card. True, you won’t get big profits, since even the most “powerful” computer has a capacity of about 26 times lower than one farm.

Mining farm

Farm mining is one of the most profitable, interesting and mainstream ways to work with cryptocurrency.

At the end of 2016 - the beginning of 2017, many interesting videos appeared regarding mining, cryptocurrency and bitcoins in particular. This suggests that the topic is popular even in Russia, where people are increasingly skeptical about various innovations, leaving room for so-called stability.

But we will continue to talk about the risks that such promising investments inevitably pursue. No one knows what will happen even in a year, so carefully evaluate the prospect of such investments.

Buy or make a farm yourself

To give an opportunity to objectively evaluate all the prospects from the assembly and purchase of a farm, we will not say which is more profitable. Decide for yourself after looking at the pros and cons of each method.

Let's start with self-assembly of the farm.

Pros:

• Less investment relative to the purchase;
• Assembling the farm yourself, in the event of a breakdown, you can fix everything.

Minuses:

• Difficulty in installation for a beginner;
• Risks during tuning and overclocking;
• A large amount of time for delivery if you buy cards abroad.

Now to the issue of purchase.

Pros:

• You can get the farm right away, without wasting time on purchase / delivery and setup;
• Ease of use;
• Whole farm warranty;
• Professional setting.

Minuses:

• High price;
• Service charge;
• The risk of buying low-quality equipment;
• If you do not have enough knowledge on installing / configuring the farm, you will not be able to deal with breakdowns on your own in case of force majeure.

Profit from mining

We have already touched on this issue above, in the discussions of each method, but I would like to talk about it separately. We won't cover PC mining as it's just a way to try your hand at seeing if there's money in a niche and see if it's right for you.

First, let's talk about farms and why it is more profitable to do this in the CIS, unlike Europe. In Europe, high electricity prices are 3-4 times higher than in Russia. This means that the payback period, profitability and profit will fall very much.

Now about money. The farm pays off in about 150-200 days. Some sources give a lower figure, but this means that the authors use outdated data that is relevant at the end of 2016 and the beginning of 2017. Now mining has become more popular, mining has become more difficult, and revenues have dropped significantly.

So, one video card can bring from 80 to 180 rubles per day. Consequently, a farm of 6 video cards brings from 500 to 1000 rubles, depending on the configuration and overclocking. The cost of one farm is from 100 to 250 thousand rubles.

In total, we have income from the farm: 15-30 thousand rubles a month, with investments of 100-250. Not bad, promising and profitable. It turns out that for the first year you will have a yield (if prices remain the same) of about 100% per annum.

We have closed the issue with farms. Now to cloud mining. If we take into account the average returns of 0.7 - 1% per day of costs, we have the following indicators - for every dollar invested, we will receive 0.7 cents per day. Therefore, at a cost of 100 thousand rubles, we will receive 700 rubles per day, which is slightly higher than with independent mining.

But the risks are higher here, there is no way to cancel your investments or simply sell a share. Therefore, the prospects of such investments are more doubtful.

As you can see, the investment is quite profitable regardless of whether you are running a farm or a cloud mining site. But you have to pay for such a profit with one, but an important indicator - liquidity, which is practically zero here. Similar indicators for real estate and in its infancy.

You will not be able to sell your stake in a company that provides lossless cloud mining services. This will not be of interest to buyers, because they themselves can spend such an amount and receive the same amount. And you will not be able to sell a used mining farm for the same money - it will not be in demand (unless, of course, you are one of those who can even sell snow in Alaska). Therefore, if you are looking for something that you can sell quickly and for the same money, you should not engage in mining.

Which cryptocurrencies are suitable for mining

The question of which cryptocurrencies are the best is now much more acute than 1.5 - 2 years ago. Then it was still safe to say that it was possible to mine bitcoins even on a home PC. And now it can not be obtained not only at home, but also on farms.

If you have a special installation on ASIC processors, you definitely need to mine bitcoins. Since they are simply made for cue balls. And don't even think about anything else. It still won't be any better.

For farms on video cards, the answer is ether. Since it is for him that such units are assembled. An alternative, if you do not want to work with ether, there are other, less popular altcoins. But contacting them is quite risky, so it’s better to think several times before changing a stable, familiar and promising broadcast to them.

If you want to try at home what real cryptocurrency mining is, then we recommend that you try your luck with Altcoins. Since you will not receive any income from Ethereum or Bitcoins in the pool. Alts remain the only option for effective earnings. Since at the initial stage it is still quite simple to mine them, and the price can rise significantly, in the future you can earn decent money even on a home PC.

As a result:

With special equipment, we mine cue balls and only them. With farms - ether (or promising alts, if you really want to take a chance). On a home PC - only altcoins (but not ether). As you can see, there is no unambiguously “most profitable cryptocurrency”: there is a profitable option for every opportunity and need.

Now about even more important - experts' forecasts regarding cryptocurrencies.

Forecasts of experts regarding the fate of cryptocurrencies

There will be absolutely no subjectivity here. Bare facts and assessments of more competent people. But people in two areas at once - finance and IT. At the same time, both have different views on the fate of cryptocurrencies.

Let's start with the more positive. The forecast of IT specialists regarding cryptocurrency in general and blockchain technology in particular is extremely positive. Specialists believe, and it’s hard to disagree with them, that the technology on which cryptocurrencies are based will be in demand in real business in the near future.

This is due to the fact that the prospect of all the processes that take place in the enterprise, affect each other, form a chain of data and be analyzed by machines is quite attractive. This will significantly reduce costs and, possibly, bring benefits to the company.

The simplest example is linking the blockchain to deliveries. Delivery takes place, the system processes the process, displays data on the receipt of goods, launches the money transfer mechanism, makes the necessary data public after sending, and then draws up a package of documents. This is how an automation program on the blockchain can work.

And blockchain is now a way to encrypt data. The data may or may not be anonymous, but it will be 100% secure. And no one can declassify them, which is also important.

So, the forecast of IT specialists for blockchain technology, as well as cryptocurrency, is quite positive. In the future, there will only be an increase in the use of technology, which will inevitably lead to an increase in demand for cryptocurrency as a derivative of this technology.

And now to the more negative. For a year now, there have been sentiments in the field of investing that bitcoin (and all cryptocurrencies DIRECTLY depend on the price of bitcoin) by all indications is another bubble that threatens to burst. There is a sharp rise, and revaluation, and constant currency speculation. Daily drawdowns of 1-2% have long been considered the norm, but from a financial point of view, they are one of the most obvious signs.

Cryptocurrency is highly overvalued. Just look at how much bitcoin jumped for Last year. A year ago, in October 2016, the currency was worth $600. Now the indicators have again broken through the 4000 mark and have already reached $4300.

There was already a slight decline in September, but it is associated with the ban on bitcoin exchanges in China. Speculation on bitcoins increases its value, but overheats this currency, and with it the entire crypto market. The whole situation is very reminiscent of the crisis in 2000 with IT companies, and in 2008 with the US real estate market.

The situation risks repeating itself, and many traders and investors seriously fear for the fate of the cryptocurrency. But the decisive word still remains with the leading central banks of Europe and the USA. If England, Germany, France and America come to the conclusion that the cryptocurrency can be used as collateral, the price of the cryptocurrency will inevitably rise. If not, then everything will go downhill.

Therefore, if you make money on cryptocurrency, follow the news carefully. Your earnings and the prospect of investments directly depend on the government of the leading Western countries.

How else to make money on cryptocurrency

Mining is not the only way to make money on cryptocurrency. You can also get cryptocurrency without mining - for this you need the very exchanges on which trading is actively conducted. Someone buys, someone sells, because of this, the price constantly jumps.

Market speculation in the crypto market is a paradise for those who understand financial performance. Fluctuations of 1-2% per day are a testing ground for making huge money by buying and selling bitcoins. Even within one trading session, you can significantly increase your capital.

But trading on top cryptocurrencies like Ethereum and Bitcoin will be difficult for those who are far from the financial markets. For such people, there remains the option of investing in Altcoins, which are only gaining popularity.

Altcoins are all cryptocurrencies except bitcoin. And they are good because immediately after the issue they will cost 1-2 cents, and only after that they will begin to gain their popularity. In 2017, which is not yet over, most of the top Altcoins have shown growth of more than 2000%, which is simply amazing.

Therefore, if you do not want to engage in mining, investing in promising altcoins is the key to success. They may even be more profitable than spending money on mining. Most importantly, remember that no investment will be 100%.

Conclusion

In conclusion, a few things can be said. In Russia, mining has been and will be popular for another 1-2 years for sure. It is at this time that you need to use your funds to the maximum, mine bitcoins and earn. In 2017, you still have a chance to catch the outgoing train.

But meanwhile, investing in cryptocurrency is a big risk, so choose wisely. But still, if you want to earn money now and are not afraid to lose some of the funds - make up your mind, create / buy farms and earn money for yourself. This is a great source of passive income. It has been said about mining for 5 years that it is unprofitable. And people continue to earn huge money on it.

The essence of mining (from the word mining - mining) is the creation of crypto coins according to a special algorithm. A unique data set (or block) is generated on the computer, which confirms the validity of payment transactions. A block consists of the hash of the previous block's header, the transaction hash, and a random number. The chain containing all transactions is called a blockchain.

For each block found, a reward is due. It is different for different currencies. For example, for the oldest and most expensive cryptocurrency - (Bitcoin, BTC) - it is halved every four years. Since 2016, the reward has been 12.5 BTC (about 32 thousand dollars), in 2020 there will be its next decrease.

Ethereum block reward (Ethereum, ETH) - 5 ETH (approximately $1,540).

The success of mining depends on the computing power of the computer that the miner has. The more, the higher the chance of getting a reward.

What do you need for mining

1. We collect equipment

• Video card (GPU) - modern, not budget. And not just one, but several.
• A computer (farm) with an efficient cooling system, a motherboard with the maximum possible number of slots for installing video cards. The processor can be any, stably working. Recommended RAM- from 4 GB.
• The most commonly used operating system Microsoft Windows 10 Pro 64-bit. There are also OSes specifically designed to mine certain currencies. For example, ethOS for Ethereum.
• Internet with good ping.

2. Decide on a cryptocurrency

The choice depends on the graphics card you have. The most popular cryptocurrencies among miners are Ethereum, Zcash, Monero. Bitcoin and Litecoin are no longer mined using video cards: there are specialized devices for this, such as ASIC (Application-specific Integrated Circuit).

Examples of video cards used for mining:

• Nvidia GeForce GTX 1050 Ti/1050, as well as 1060, 1070, 1080 Ti/1080;
• AMD Radeon RX 470/480 and 570/580.

4. Choose an exchange or wallet where the mined cryptocurrency will be accumulated

There is only one advice here: use only proven services, for which you need to study the reviews.

What is cloud mining

This is an investment in the purchase or rental of equipment necessary for the production of cryptocurrency. Physically, it will not be in your home. Setting up, connection and maintenance is carried out by a specially created service.

The income from cloud mining is proportional to the equipment purchased or rented.

Pros:

1. At home, installing not one, but several farms, most likely, will not work, since the mining equipment is very hot. Remotely, you can use any number of farms. Or get by with very small investments (minimum contracts for some services cost a little more than a dollar).
2. This method is recommended for those who are not technically savvy: it will be difficult for them to assemble and configure the equipment on their own. Or those who do not want to spend time on this and be tied to the house or room where the farm is located.
3. Higher power compared to a home device.
4. The ability to mine bitcoins, as well as to mine several cryptocurrencies at once.

Minuses:

1. The risk of running into scammers.
2. The commission that is taken from the mining reward (it usually includes all costs, including possible equipment breakdown, etc.).
3. The risk of hacker attacks on the server, as a result of which you can be left with nothing.
4. Strong similarity with the financial pyramid. Logically, it is more profitable for services with their capacities to mine the cryptocurrency themselves, and not to give it to the side, albeit with a commission. Referral programs speak in favor of this statement: many cloud mining services promise rewards for attracting new customers.

Is mining worth it?

The attitude towards cryptocurrencies is still ambiguous, although their liquidity (ease of conversion into "live" money - rubles, dollars, and so on) is now very high.

The other day, the head of VTB Andrey Kostin said that bitcoin is a "speculative currency." Although representatives of the Central Bank have already voiced their desire to create a national cryptocurrency.

It is very difficult to find out how much the costs of creating your own farm will pay off.

It depends on the rate of cryptocurrencies, the growing complexity of their mining, the number of miners, which is constantly changing.

In general, the calculations made to date show that equipment worth about a thousand dollars can pay off in six months or a year. If you invest $3,000–$5,000 in building farms, you could potentially earn $50 or more a day. But this data can change dramatically (especially given the increase in the number of scammers).

To calculate the profitability of mining, you can use the online calculator.

Some experts believe that mining can be seen as an opportunity to earn a small additional income, but not as a way to quickly and surely get rich. Think of it as collecting gold dust, not gold nuggets.

Thus, to take risks or not, everyone decides for himself.