What is Mining Cryptocurrency?
Mining cryptocurrency doesn’t mean you’re going into dark, cavernous mines with a pickaxe to mine a physical object.
But there is an element of “picking away” at something, doggedly, to mining cryptocurrency. Mining bitcoin just means finding new bitcoins and entering them into circulation or usage.
This article will go more in depth into what it means to mine for crypto and how to do it.
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What is Mining Crypto?
Cryptocurrency mining is the process where miners are validating transactions to prevent duplicate confirmations on the blockchain (distributed ledger).
Miner is a device that is solving mathematical problems. A miner is typically a computer with CPU (Central Processing Unit)/GPU (Graphics Processing Unit) or an ASIC (Application Specific Integrated Circuit).
The first miner (or computer) to solve the complex mathematical equation receives block rewards. On average, a new block of Bitcoin (BTC) is created every 10 minutes.
Is Crypto Mining Profitable?
Crypto mining is very profitable which is why it is extremely difficult to obtain GPUs (Graphics Processing Units) right now.
The crypto mining boom has contributed to the worldwide GPU shortage because GPU mining is more affordable than using ASIC miners.
Crypto mining with a current-gen GPU can pay off the price of the GPU within a couple of months depending on the model you have.
Is Crypto Mining Illegal?
Crypto mining is legal in more countries than not. Mining cryptocurrency is legal in the United States, Canada, UK, and most Western countries around the globe. In a small number of countries, it’s not legal.
Countries where Crypto Mining is Illegal:
- North Macedonia
How Do I Start Mining Cryptocurrency?
You can start mining cryptocurrency once you have a miner device that is a computer. You can even use your smartphone or a Raspberry Pi (a tiny, affordable computer) to mine crypto tokens. You can either mine solo or join an online crypto mining pool.
Do You Need the Internet for Mining?
You will need internet access for crypto mining to verify transactions on the blockchain. You don’t need to get high-speed internet speed since a dial-up connection is all you need to compute transaction data. No more worrying about gaming lag or interrupted streaming when you concurrently mine crypto.
Why is Mining Cryptocurrency Bad for the Environment?
Mining cryptocurrency is bad for the environment because the process uses a tremendous amount of electricity it takes. Especially since many power plants supplying that computer power run on fossil fuels which is linked to climate change.
Mining for Bitcoin uses more electricity than many countries combined use. Each Bitcoin transaction consumes nearly 1,200 kilowatt hours of electricity which can power a typical household for six weeks. Imagine the electricity costs each month. Moving toward green energy is a big win.
Is Mining Crypto Safe?
Mining Crypto is safe if you practice good security habits. Be cautious of cryptocurrency scams and frauds. The mining software uses malware to access your computer uses its resources to mine crypto. It is not advised to use your main working computer to mine in case of the event of hacking. Also, keep in mind that cryptocurrency has extreme volatility and it wouldn’t hurt to occasionally take profits.
How Long Does It Take to Mine 1 Bitcoin?
The average time to mine a new bitcoin is 10 minutes when a new block is created.
How Much Bitcoin Can You Mine in One Day?
Currently, 144 blocks are mined each day since each block takes 10 minutes to mine. Therefore, 900 BTC (Bitcoin) is available to earn in block rewards each day.
The amount of Bitcoin you can mine in one day is dependent on the computational power of your mining rig. Dedicated crypto mining facilities take millions upfront to set up and run efficiently. F2Pool and Poolin are the two largest mining pools responsible for the majority of the mining power. The average crypto miners’ best bet to earn consistent block rewards is mining pools.
Can I Mine Bitcoin on My Phone?
In theory, you can mine Bitcoin on anything that is a computer which includes a smartphone. However, mining is the process solving complex mathematical equations to process transactions.
A smartphone has less computing power and will be able to compete with other crypto miners (computers) with more computational power to earn reward payouts. The profitability of using your smartphone for Bitcoin mining is very low due to high mining inefficiency.
The more mining power you have the better, thus joining mining pools with others is beneficial for the combined total Bitcoin mining power.
Who is Bitcoin Owned By?
No one central authority owns Bitcoin just like nobody owns the internet. There is no government control or central bank to manipulate the decentralized digital currency of Bitcoin.
How Do You Join a Mining Pool?
Joining Bitcoin mining pools is usually the first step in the mining process. Mining pools allow individual miners to combine their mining rig’s hash rate (computing power) with other miners as a community to consistently lead to more frequent mining reward payouts.
Steps to Join Mining Pools:
- Choose a mining pool that you want to join. Each mining pool offers different payout percentages.
- Input the address of the pool into your mining software. You can also switch mining pools by simply replacing the mining pool address in your mining software.
- Connect a wallet to receive the pool payouts for solving complex mathematical equations.
- Configure your mining rig(s) to optimize performance to the chosen pool.
- Sit back and relax.
How Do You Cash Out Bitcoin?
To cash out your mined Bitcoin, you would need to transfer your crypto coins to an external wallet of a cryptocurrency exchange.
Once the Bitcoin transactions are confirmed and safely with the cryptocurrency exchange, you can convert the Bitcoin into a FIAT currency like USD and then withdraw the funds into your bank account.
There will be a transaction fee for every cryptocurrency transaction to support the blockchain technology. Please be advised, depositing the incorrect cryptocurrency to a specific address may result in the loss of funds forever. This is like you when never got your birthday cash from Grandma because she mailed it to the wrong address.
Final Thoughts on Mining Bitcoin and Other Cryptocurrencies
Mining Bitcoin and other cryptocurrencies are a great way to earn passive income. It’s a bigger positive if you’re using solar energy to power your mining rigs. Please consult with a professional financial consultant for investment advice and don’t forget about taxes associated with cryptocurrency mining.
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