What is Mining?
If you have heard of mining, you probably know it is how people ‘get’ coins...
‘Mining’ is basically running a program on a computer that will run special computations – that’s all it is!
Mining is actually how these crypto payment systems run – people run mining software to actually ‘confirm’ transactions that are taking place around the cryptocurrency ecosystem - a person’s compensation for confirming transactions is a certain amount of ‘free’ cryptocurrency!
Get Rich Quick! But Not With Mining...
In reality, very few people are getting rich mining blockchain currencies:
- Large groups get together in ‘mining pools’ to pool their processing power, but this also divides up the payouts
- Large organizations have invested LOTS of money in advanced and expensive mining rig setups - you're basically competing against some major players
- It is not always profitable to mine cryptocurrencies when you take into account the cost of specialized equipment and even the simple cost of electricity required to run the computer you are mining with
Still Interested? We hope so! Mining can be alot of fun.
To get into mining, our humble advice is to get yourself into the mindset of treating mining like a hobby. Hobbies require some time, some money and usually a heck of alot of patience. And you choose what you want to put into it - and what you put into it, for the most part, determines what you get out of it.
It is probably best to think of ways of mining in 3 different categories:
- Cloud Mining - You basically pay a web-based service to mine for you. They own the hardware and run the software, and they pay you along the way. There is nearly zero hassle for you, cloud mining is by far the easiest way for anybody to mine
- Pool Mining - You run your own hardware and mining software, but you 'pool' your resources with a bunch of other people. Pooling makes your payouts smaller compared to SOlo Mining, but your payouts are more reliable and regular.
- Solo Mining - You run your own hardware and mining software, and it is all by yourself. Solo mining is generally recommended only for serious miners who have invested a substantial amount of time & money into mining. The payouts are generally higher than the other options, but, especially if you have lower grade hardware, you might go weeks to months in between payouts vs days or weeks between payouts for Pool Mining
Calculating the profitability of mining ahead of time is very difficult but we can give you a few data points from our experience. We also list a few really good profitability calculators you should consult that can give you a much better idea for your specific situation. It probably goes without saying, but no numbers you get from here or anywhere else are guaranteed, there are always variables and risks!
- A $1,000 contract with a popular cloud mining service would yield about .068 Ether per week (about $20/week at $300USD/Ether)
- Pool mining for a week on a $1,000 desktop computer yielded about .055 Ether per week (about $17/week at $300USD/Ether) *the desktop experienced some downtime and was not fully optimized for mining
- Ethereum Mining Profitability Calculator at Coinwarz
For the average consumer, it is much better to think of mining as a hobby as opposed to a steady source of income. You will probably make some money, but it may not be steady, and there are several risks involved. Treating it like a hobby will gear you up for some steep learning curves, get you excited about learning the intricacies of adjusting and tweaking your rig setups, and also keep mining fun - what's the point if you're not having fun, right!?