What are the Prerequisites for Cryptocurrency Mining?
Cryptocurrency mining can be very profitable if done right. Since the launch of Bitcoin in 2008, individuals have mined cryptocurrency to generate a passive income and stock up on valuable digital currencies.
With cryptocurrencies exploding in value over the last few years, many are wondering: “What are the requirements for mining cryptocurrency?”
Firstly, what is cryptocurrency mining?
Mining cryptocurrency refers to the act of receiving crypto in exchange for validating that crypto’s underlying blockchain. The process of validating a blockchain really depends on the way that blockchain’s distributed network achieves consensus.
In Proof of Work (PoW) systems, miners perform computationally extensive operations to solve a mathematical problem. The first computer to find the “nonce” and solve the hashing puzzle gets to write the next block of transactions and is rewarded with cryptocurrency.
In Proof of Stake (PoW) systems, miners are referred to as “stakeholders” because they don’t actually have to perform any work to validate the blockchain – they just need to hold a stake in the network’s cryptocurrency. Stakeholders are rewarded with crypto in proportion to the stake they own. They just need to keep their coins in that blockchain’s online wallet to receive crypto.
In this article, we’re going to focus on “true” crypto mining – or mining that requires some kind of work or physical contribution – as in computing power or hashing power in the case of Bitcoin and Ethereum.
So, what do you need to mine cryptocurrency?
Standard crypto mining requires both hardware and software. You’ll need a powerful computing device, an energy source, an Internet connection, mining software, and a crypto wallet.
The Hardware
The most important thing when it comes to mining cryptocurrency is to buy a special computer known as a mining rig that is capable of meeting the mining requirements for whichever cryptocurrency you intend to mine. Essentially, the rig has to be powerful enough to solve the hashing puzzle, and should be fast enough to compete with other miners on the network.
While a CPU (computer processing unit) could work, it’s a good idea to purchase a specially designed mining rig like an ASIC (application-specific integrated circuit) miner – a machine whose sole purpose is to mine digital currencies – or a GPU (graphics processing unit) device that is considerably more powerful.
If we look at the bare minimum requirements for mining a cryptocurrency like Bitcoin, we get specifications like:
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Disk space: 350 GB
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Download: 500 MB/day (15 GB/month)
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Upload: 5 GB/day (150 GB/month)
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Memory (RAM): 1 GB
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System: Desktop, Laptop, Some ARM chipsets >1 GHz
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Operating system: Windows 7/8.x/10, Mac OS X, Linux
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As you can see, Bitcoin mining can be done on a regular computer that meets these specifications.
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However, it’s best to choose a top-of-the-line ASIC miner from a company like Bitmain.
While ASICS are perfect for mining Bitcoin, Dash, and Litecoin, GPUs are better for mining cryptocurrencies like Ethereum and Monero.
What are the energy requirements for mining?
Power will be the main operating expense after purchasing your hardware. Electricity is charged on a per kilowatt-hour (kWh) basis. A small decrease in mining profits or increase in electricity cost can make a huge difference in mining profitability. Therefore, it’s crucial to choose an energy-efficient miner like the AvalonMiner 1166 Pro or the Bitmain AntMiner.
You’ll also need a reliable electricity source. Residential electricity costs are usually too costly for mining. Business electricity costs are better, so it’s worth considering renting a facility or office space.
There are also “hosting” options where you can install your miners in a location with cheaper electricity, usually for a fee. Many farms or places near running water are great for this purpose as they often have generators and renewable energy. You can also choose to run your miners at an Internet Data Center, which offer reliable and efficient power sources at fair prices.
Finally, you’ll need a reliable Internet connection for syncing your data to the blockchain. Thankfully, Internet speeds and bandwidth for mining cryptocurrencies are usually not too demanding.
Still, most miners should have an Internet connection speed of 1-10 MBPS to be safe.
The Software
Lastly, miners will need mining software. Mining software can be downloaded to your computing device to control mining parameters and interface with the blockchain network. Most mining software is free to use.
Depending on your device, there is a multitude of software that may fit your purpose. A popular option is BFGMiner, which runs on Mac, Linux, and PC, and can mine multiple currencies while being compatible with ASIC miners.
For GPU mining, people generally download compatible software that makes use of the device’s GPU in the same way other software interfaces with a remote mining rig.
Often times, mining rigs come with their own built-in software or firmware. You can choose to use this or download a separate software according to preference.
Lastly, you will need a wallet – a unique digital address – to store your earnings. Wallets can be “hot” (online) or “cold” (offline) and accept different currencies. You will need to connect your wallet address to your mining software so the network can reward your miner. Make sure your wallet is compatible with the currency you are mining.
That’s it for a basic rundown on crypto mining.
Additional Comments
Although it’s not a requirement, it is highly advisable to join a mining pool – or a group of individual miners pooling their computing power to increase the probability of solving the hash puzzle and thus the frequency and profitability of their mining operations.
Individuals receive a reward proportional to the computational resources they contribute to the pool.
Another option for those new to mining is to mine through a facilitator company that guides you every step of the way. Cloud Rush USA, for example, helps you mine Filecoin by providing the best mining hardware, software, hosting services, and connection to mining pools all from the comfort of your home. This option takes a lot of the stress out of mining.
As with any investment, do your due diligence and conduct thorough research before starting your mining journey. Good luck!
Mining Crypto Currency 2022
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Cloud Rush USA is a Southern California based cryptocurrency mining facilitator specializing in Filecoin mining plans. The views and opinions expressed on this Site are solely those of the author(s) and do not necessarily reflect the views of Cloud Rush USA or its employees. The content provided on this Site is for informational purposes only and should not be construed as investment, financial, or other advice.
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