Can you make money mining bitcoins
Are you serious about mining cryptocurrencies? If so, you need to know how to make the best use of your money and equipment. Obviously, the big money is going into costly bitcoin ASICs. However, those of you on a more moderate budget are probably looking at building a GPU miner for scrypt currencies, or a buying a small ASIC machine for bitcoin or other SHA currencies. In that case, you have come to the right place. The process of mining digital currencies involves solving complex cryptographic puzzles.
Broadly speaking, there are two proof-of-work hashing algorithms in use today: Depending on your budget and the type of currency you intend to mine, there are two ways to go when setting up your mining system:. Mining requires electricity — lots of electricity. Consider the following two cases, for example: ASICs, on the other hand, can do far more calculations with far less power because they are highly specialised devices.
The mining efficiency of different systems can be compared by taking the ratio of the number of hashes it can perform in a second, divided by the power it consumes:. After the initial expense of your rig, the essential thing you need to know to calculate your ongoing profitability is the cost of your electricity. Check with your provider, or take a look at your last bill.
By joining a pool, you earn a share of the coins mined by all members of the pool and stand a greater chance of solving a block.
Miners earn a share of the rewards if the difficulty level of the blocks they solve is greater than the level set by the pool operator. That level is always somewhere between 1 and the difficulty level of the currency. Inevitably, the difficulty level of all currencies increase with time — a fact that will reduce the chances of your equipment earning coins or mining shares.
As a result, it is important to start with the best equipment you can afford, in order to mine profitably over the longest period of time. The volatility of the currency being mined also affects your long-term profitability. If the price suddenly drops, you will be faced with the choice of either selling at a low price or hanging onto your coins until their value increases. In the former case, you would have to keep mining for longer to recoup your expenditure on equipment and electricity.
Mining efficiency decreases as temperature increases, so make sure your rig has adequate ventilation and cooling.
Even a standalone desktop fan can help to keep your kit cool. When building a DIY mining rig, it doesn't make sense to save money by buying a cheap PSU. Any instability in the power supply could hit performance, or even cause a system crash that will lead to downtime, so do invest in a high-quality unit.
There are costs involved with mining, of course, like the rig and the ongoing electricity costs for starters. However, some extras are less obvious:. For assistance with some of the calculations miners need to make, there are several websites that provide profitability calculators. You can input parameters such as equipment cost, hash rate, power consumption, and the current bitcoin price, to see how long it will take to pay back your investment.
As a test, we entered the specifications of two mining systems into the calculators below.
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For our Scrypt GPU mining rig, we used the system described, and for our SHAS ASIC miner we used the specifications of a Butterfly Labs miner. Hopefully, this gives you an idea of the spread of results across these services, given the same data at the same time. I would like to receive the following emails: CoinDesk Weekly - Insights for the week ahead CoinDesk Daily - Our snapshot of the day's news. Blockchain — What is bitcoin?
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Watch Every Minute of CoinDesk's Consensus Conference Online. How to Calculate Mining Profitability. How do I start? Choose your currency The process of mining digital currencies involves solving complex cryptographic puzzles.
Beginner's Guide to Mining Bitcoins
SHA The SHA algorithm favours raw processing power. Scrypt The scrypt algorithm favours greater amounts of RAM and parallel processing ability, which is why GPU-based rigs are still the way to go.
Furthermore, ASICs for scrypt have yet to take off, so the difficulty level of those currencies has not been pushed up as dramatically as has been the case with bitcoin. The right rig Depending on your budget and the type of currency you intend to mine, there are two ways to go when setting up your mining system: DIY mining rig These can be built from your own PC, with as many graphics cards ie: GPUs as you can fit or afford.
While some people may use a standard PC case, many use unusual casings, such as beer crates, which allow for increased air flow around the components. A bonus of DIY systems is that you can carry out both CPU and GPU mining at the same time see our guide to mining altcoin. ASIC miners are usually more expensive than DIY rigs and are mostly produced in the USA, which means those of us in other parts of the world will have to spend a little extra to get them imported.
Power up Mining requires electricity — lots of electricity. The mining efficiency of different systems can be compared by taking the ratio of the number of hashes it can perform in a second, divided by the power it consumes: Problems to be aware of Spend to earn Inevitably, the difficulty level of all currencies increase with time — a fact that will reduce the chances of your equipment earning coins or mining shares.
Power problems When building a DIY mining rig, it doesn't make sense to save money by buying a cheap PSU. Here are some ways to minimise downtime: Get the best power supply you can afford. Configure your mining computer to automatically start mining on start-up, so that if the system crashes and reboots, it will automatically start mining again. This applies to DIY rigs and computers hosting an ASIC.
Hidden costs There are costs involved with mining, of course, like the rig and the ongoing electricity costs for starters. However, some extras are less obvious: Delivery and customs We imported a Jalapeno ASIC miner from Butterfly Labs to the UK.
What about the electricity of running any extra cooling system, such as fans or air conditioning? Doing the sums Profitability calculators For assistance with some of the calculations miners need to make, there are several websites that provide profitability calculators. How to Make a Paper Bitcoin Wallet. A Beginners Guide to Bitcoin and Blockchain Technology.
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