Mining cryptocurrency is the perfect method if you want to be involved in the blockchain for the long term. Today, we’ll tell you how you can make money mining cryptocurrency.
Things You Need to Know to Start Making Money by Mining Cryptocurrency
You need to first set up the basics before beginning mining cryptocurrency. The core components—hardware, software, and wallets—are described below.
This is arguably the most difficult part of setting up a mining rig. You need a powerful computer. There are ones specifically designed for mining available on the market as well.
You can use your computer’s CPU, but it is not recommended since it may damage your PC by overheating it. You can also use a GPU to mine cryptocurrency. A graphics processing unit is more powerful than a CPU.
ASICs are even more powerful than GPUs. They cost more too. The specific job of application-specific integrated circuits is to generate hashes. If you want to mine dogecoins, you can buy this mini doge miner.
After finalizing your choice of hardware, you need to buy software to go with it. Most mining software is available for a variety of operating systems and is free to download and use. There are plenty of options available for each type of cryptocurrency. They are all more or less the same but still do your research so that nothing ends up affecting your mining cryptocurrency.
You need to store the coins or tokens from your mining operation. Essentially wallets are encrypted online bank accounts with unique addresses that allow you to exchange tokens. There are several types of wallets available including software, hardware, and online.
Five Mistakes You Should Avoid while Mining Cryptocurrency
1. Mining Terrible Alt Coins
People are often tempted to look for projects that have some promise after watching one going off completely. You may be scouring Bitcoin talk forums, looking at altcoin announcements, and investigating projects. You may then put your GPU on it to mine a bunch of coins in the hopes to sell it later if it got listed on a very big exchange. There are several bitcoin faucets available online.
If you plan to do this, it will most probably be a huge waste of hash power and electricity. Most of these cryptocurrencies are either scams or end up not going anywhere. For a beginner, it is a good idea to stick to the cult favorites instead of taking such big risks.
2. Not Tracking Your Mining Income and Expenses
If you live in a country where you need to pay taxes for mining cryptocurrency, it will be a huge scramble trying to list all your income and expenses starting from your CPU or GPU to the software and so on.
Even if where you live does not require you to pay taxes for this, recording your transactions is a great way to have everything organized. You can look at where your break-even point (BEP) is, your return on investment (ROI), and how much you have invested over time in GPU mining cryptocurrency.
3. Not Stocking Up on Mining Essentials and Components During a Bear Market
Prices of frames, motherboards and processors can be sky-high when the market is recovering or has recovered from price declines. You may have to spend $300 for a motherboard and $100-$300 for a frame, and processors may be hard to come by.
So when prices are more affordable you should stock more of the essentials that you will need later, because there may be a bull run when you need them.
It’s not only about building new rigs, though. Your processor might go bad, and other mishaps can happen. It is always wise to have a backup. Only a couple of dollars more in the last bear market to get the core components can save you or protect you in the future.
4. Not Having a Fundamental Understanding of the Electrical Needs of Your Rigs
These include things like how much can MOLEX carry, how much can PCIE carry, if you can split the load on a single PCIE strand to power multiple GPUs and multiple risers, or what you can run off a 15 amp circuit compared to a 20 amp compared to a 30 amp. The cryptocurrency market may make you want to immediately jump in; however, you should always take your time to build up your foundational knowledge.
Otherwise, it may take a long time to set up rigs. You may be running around your home looking for circuits, running rigs to balance the load, tripping circuit breakers in your panel, and so on. All of this can be prevented if you have a good idea of what your rig’s power needs are as well as what your circuits can handle.
5. Not Having a Plan to Get All of the Heat in One Place and Exhaust it From Your House
Rigs sometimes release so much heat that your paint may start to soften. If you set up your system in your basement, the heat will rise, making your home hot. The electricity bills will be extremely high due to the air conditioning running.
You can opt for a grow tent set-up. It will keep your CPU cool, make your home have a livable temperature, and not make your air conditioner work overtime. It is a great way to get all of that heat in one place and send it out whether you are in an apartment, a condo, a bedroom, or a house. If you have a plan about heat management early on, you will be able to work in a nice cool place.
To Sum It All Up
Even if you don’t start making money from mining cryptocurrency immediately, which is typically the case, don’t be disheartened. You need patience and a strong grip on the fundamentals of mining cryptocurrency. Starting to mine is the right step toward being part of the changes cryptocurrency is going to bring to the world!