The world saw the most significant 1-day drop in mining hash rate since November 2017 on the 19th of April, 2021. The hash rate on the bitcoin network halved, causing havoc in BTC price as it crashed. Importantly, this is not unconnected to the power outage in Xinjiang. On the day of the power outage, the Bitcoin Hash Rate was down to 20%. Miners in Xinjiang powered a significant amount of the BTC mining network. From this, it is apparent miners are an essential part of the Bitcoin blockchain. Are you interested in mining, either as a solo miner or on an industrial scale? This is an understandable guide to help you through the crypto mining operation as a beginner.
To better understand what mining cryptocurrency is all about for beginners, here is a brief overview of what mining is. The Bitcoin mining process is slightly different from the literal meaning of mining. It involves a wallet, Bitcoin mining software, and hardware. Although they share some similarities, actual mining involves digging and searching for natural resources, while bitcoin mining is the process by which new bitcoin is entered into circulation. Instead of “digging,” a Bitcoin miner consistently and works by computing complex mathematics, verifying each transaction added to the blockchain. A crypto miner performs the auditor role in the bitcoin ecosystem. Bitcoin is a decentralized digital currency and doesn’t need a central authority to oversee its transactions; managing is shared between several miners on the network.
Getting paid as a miner involves meeting two requirements:
- You have to verify up to 1 MB worth of transactions. Why 1 MB? 1 MB is known as a “block” for miners. The 1-megabyte limit was set by Satoshi Nakamoto, the inventor of bitcoin. Once a miner verifies up to 1 MB worth of transaction, they become eligible to earn free bitcoin. Unfortunately, there is a chance a miner verifies up to 1 MB worth of transactions and still not get paid, which leads to the second condition.
- The second condition is known as proof of work. A new block is added or mined every 10 minutes to the blockchain by generating a valid hash. In crypto mining, to earn bitcoin, they must arrive at the correct answer or close to the complex mathematical problems.
While there might be doubts about Bitcoin mining profitability, the incurred cost is nothing to doubt. The difficulty in mining bitcoin has gone from problems the human brain could solve to problems high-speed specialized computers can solve. The cost of electricity needed to power the computers (Cpu, GPU, FPGA, and ASIC), the availability and price of the computers all need to be factored into the mining expenses.
Countries like China with cheap electricity control a vast amount of Bitcoin hash power. Notably, the difficulty of bitcoin mining increases as more miners enter the network. There is a need to keep up with the increment by using super-fast computers to make a profit. Some of the best hardware include Bitmain Antminer s9i, Avalon6, and Bitmain Antminer S7.
What is a Mining Pool?
The first mining pool, Slush, was launched in late November 2010 under the name Bitcoin Pooled Mining Server. The idea of cooperative or pool mining started as a strange idea, but that didn’t deter Slush. Today, Slush has mined over 1.2 million bitcoin, grown to 1,148 pages, and captures about 9.8% of the bitcoin network hashrate. Slush also boasts of over 8,500 miners and a hash rate of more than 5 EH/s.
Mining Pool, in clear terms, is the process that involves the pooling together of resources by miners to share their computing power over a network and split the reward equally according to the number of resources or work each miner contributed to mining a block.
The idea of a mining pool was birthed as the difficulty of mining increased. The solution was to bring miners to contribute resources (hardware especially) to generate more blocks quicker and consistently receive rewards. Mining difficulty has moved from CPU mining to GPU mining, FPGA, and now ASIC miner.
How does the mining pool work?
The primary mechanism or concept behind the mining pool is the Share concept. Share is regarded as a potential block solution; it could be a solution and otherwise also. It is used to estimate a miner’s contribution to the pool to find a block. The miner reward systems include PPLNT, PPS, PROP, and several others.
Mining pool methods
In Mining pools, there are schemes like; B stands for block reward, and D is for current block difficulty.
Standard mining pool methods include; Pay-per-Share, proportional, Bitcoin pooled mining, peer-to-peer mining pool, and solo mining pool.
This method involves a guaranteed payout to miners for their contribution to the probability that the mining pool finds a transaction block. Each share is equivalent to the expected value of each hash attempt.
In this method, miners keep earning shares until the mining pool finds a block. After the block is found, each miner earns their reward.
- Solo mining pool: it is pretty unprofitable due to the time it takes to complete a block and continuously increasing difficulty. The total reward in a solo pool goes to the miner who finds the block.
A different type of mining pool is multipool mining, Multipools switch between various altcoins and calculate which coins at that moment are the most profitable to mine. Multipools sometimes automatically exchange the mined altcoin for a coin that is commonly accepted on the cryptocurrency exchange.
Finally, another thing about the mining pool is the transaction fees. Transaction fees on the mined block are paid to the mining pool. Depending on the mining pool, the fees could be shared between the miners or withheld from them.
Mining Pool vs. Cloud Mining
Cloud mining is a different process from the mining pool that involves paying an online service provider to mine for you and get the rewards.
How do I mine (600)
Get a mining rig
The first step in mining involves getting bitcoin mining hardware. Bitcoin mining started with a low difficulty solvable by ordinary computers, graduated to CPU, then GPU, and FPGA. Today bitcoin mining on these devices is not profitable, even if you gain from mining with them. The rewards would be insignificant for the time you spent. While choosing a bitcoin mining rig, you should concentrate on the performance (this is the hash rate), consumption of electricity, and price. An excellent graphics card for bitcoin mining would require enough power and memory. Going through hardware reviews of these machines from miners can also serve as a directional guide in which to buy. A hack to cutting electricity costs and installing a proper system is putting your hardware into a professional data center. A data center would provide you a low electricity cost, cooled area, and even security.
Getting a Bitcoin wallet
The second step is the essential part of getting a good bitcoin wallet. The idea of a wallet is to provide a means of managing your transactions. A wallet helps you to receive bitcoin and even sell after mining if you want. The wallet also provides its owners with unique bitcoin addresses. The wallet address functions like a bank account number and is a combination of different characters. If you plan to receive bitcoin from someone, you have to share your public key or address while your private key or address is used to send transactions. If you lose your private key, all your bitcoin in that particular address is gone forever.
What are the best wallets to use? Some wallets for beginners or even professionals include straightforward online wallets and software wallets. Beginners should use a software wallet. It is simple and easy to use; it can easily be downloaded to your computer to store your coins. However, the software wallet is of two types; full ones that download the whole blockchain or light ones that hold only essential transactions. You should pick the first one so you have complete control over your transactions. The second type relies on a third party and can’t be controlled thoroughly. Examples of wallets you can try include Exodus and Bitcoin core.
Bitcoin mining software
Of the several crucial components of mining, having Bitcoin mining Software tops the list. A cryptocurrency mining software is used to deliver the processing of the mining hardware to the rest of the network. It also receives completed tasks from other miners on the network. The qualities of a suitable bitcoin mining software include good usability, hash rate, low cost, and security. The typical cryptocurrency mining software interface displays speed, hash rate, fan speed and monitors the input and output of your hardware. The choice of your bitcoin mining software depends on what operating system your mining device operates on. Your mining app and Operating system have to be compatible in your search for Bitcoin mining software.
Best Bitcoin mining software for Windows
Braiins is commonly used because it is free and works effectively on the Windows operating system. Briaiins ability to increase the hashrate of your mining hardware to up to 17+ Terraashes per second is incredible and makes it one of the very best. Mining with Braiins OS working cost includes sharing 2% of your hashing power to their pool. Features on Braiins OS include pre-heating for faster mining, super-fast booting speed, and complete fan control. Braiins support hardware like Antminer s9 and s9j. Braiins OS remains a reliable crypto mining software for windows.
Best Bitcoin mining software for Linux
Hashr8 is commonly considered a cryptocurrency mining software developed by miners for miners. Hashr8 is designed to consistently monitor the performance of a rig and restart an operartion if there is an error. Its remote control feature also allows you to control your mining on the go. While choosing Hashr8, you get three options; Home miner, Pro miner, and Corporate miner. For years to come, Hashr8 remains a robust Bitcoin Mining Software
Best Bitcoin mining software for Mac OS X
Hive OS is one of many bitcoin mining software that can control both single and multiple rigs. It can be used to control GPU (an example is the NVIDIA GPU) and ASIC devices. With Hive Os, comprehensive monitoring of metrics like hash rate, electricity consumption, and a lot more is covered. Hive OS also has a unique feature that automatically detects and adds new rigs to its dashboard. The Hive OS Bitcoin Mining Software is reputable and strongly recommended for mac users.
Join a mining pool
After fully understanding that with the best mining hardware, you still won’t match mining farms’ mining power, it is necessary to join a mining pool. Choose a mining pool and register yourself on its website, and set up your account. After setting up your account, you will get a miner ID. In the next section, we will discuss some of the best mining pools you can use.
After the above requirements are fulfilled, you can start mining with your pool. For effectiveness and profitability, it is vital to stay abreast of news in the crypto world.
What pool is best for mining?
F2pool launched in 2013 in Beijing, and since then, it has grown into something huge, extending its root to several continents and countries. F2pool services are currently available in countries like the United States, Russia, Canada, and many other countries. F2pool controls about 17% of the mining market. It is the second-largest bitcoin mining pool in the bitcoin market.
Pros: The F2pool supports several cryptocurrencies like Bitcoin, Litecoin, and Zcash.
The registration and verification process is super fast.
Its longevity for almost a decade makes it reputable.
Cons: It has a high mining pool fee
F2pool deactivates accounts that are inactive over a long period.
Slush is the oldest mining pool in existence. Since its inception in 2010, it has managed to stay at the top of the mining pool ranking. Slush, over the years, has kept improving on their services and provides quite an outstanding level of security, customer service, and a moderate fee and share.
Pros: The slush interface is fascinating and easy to use, even for beginners.
It provides score-based mining, preventing users from being cheated and making sharing of rewards more effective.
Cons: User score drastically reduces once users stop mining.
The first block Antpool mined came in March 2014. Bitmain Technologies Ltd manages Antpool. Despite being owned by a hardware company, Antpool’s interface and functionality are smooth and easy to use. The registration process for the Antpool mining pool is free and straightforward. Antpool controls a significant 15% of the total hash rate of all mining pools.
Pros: It offers many security options against malware attacks, making it one of the safest mining pools you can find.
Cons: The rates are pretty high, and they sometimes charge undisclosed bitcoin transaction fees.
Poolin is a public pool that controls about 12% of blocks on the bitcoin mining pool. They are a multi-currency mining pool, and they allow the mining of several coins, including Bitcoin, Bitcoin Cash, Litecoin, and others. Poolin is a Chinese-based mining pool but is open to miners around the world.
Pros: They have extensive coin support. They support the mining of several coins.
Cons: Poolin charges up to a 2.5% fee.
BTC.com was launched in 2016, and it controls about 11% of all blocks on the mining pool. They are a public pool and open for anyone to join. BTC.com uses a unique payment method called FPPS.
Pros: They charge a low withdrawal fee.
Cons: They support a limited number of coins.
Bitminter was launched in 2011, and it has an audience of over 450,000 people. It is simple and easy to use compared to other mining pools. Although Bitminer seems to decline in recent years, it is still very much efficient in mining.
Pros: It has a friendly and easy-to-use interface.
It also supports various operating systems.
Cons: The mining rewards are gradually reducing due to the complexity of mining.
For practical mining, the need for a solid and robust mining pool, bitcoin mining software, and mining hardware cannot be over-emphasized. Getting all of these requirements right is necessary to ensure profitability in the mining market.