Cryptocurrencies operate on decentralized peer-2-peer (P2P) networks, meaning they’re able to function without the need for a “middleman”. Mining is an essential part of the ecosystem, as it allows each blockchain transaction to be verified. As well as this, mining creates new blocks, which increases the size of the network.
Crypto miners complete cryptographic tasks to verify transactions and add blocks, which prevents rogue nodes from adding erroneous blocks. If you can afford the technology needed to become a crypto miner, it can bring in passive revenue. Below, we discuss five ways to mine Bitcoin.
CPU Mining
A computer’s CPU is responsible for processing actions made by software, which means a CPU can be used to mine Bitcoin. However, given the increase in hash rate on the network, using a CPU has become much less profitable. That being said, for coins like XMR (Monero), the CPU is still the way to go.
GPU Mining
We’ve already established that the growing demand for blockchain networks means that CPUs weren’t strong enough along, which is why GPU mining was introduced. Essentially, just like when playing a game, the GPU can boost the processing power of the CPU. The first GPU software for mining crypto was released in 2010, but it soon became just as obsolete as CPU mining.
FPGA Mining
Mining costs continued to rise across many different coins, meaning that crypto miners were in search of an alternative to GPU. This is when the field-programmable gate array (FPGA) emerged. FGPA miners were able to set up their system to my specific coins efficiently, and they could also be edited with specialist knowledge.
The beauty of FPGA mining is that it’s much more energy-efficient than GPU mining, which meant that miners were seeing a return on their initial hardware investment within two years.
ASIC Mining
As time rolled on, crypto mining became much more competitive, so the search began for cheaper alternatives to FPGA. Eventually, miners began migrating towards application-specific integrated circuits (ASIC), which are designed to complete proof-of-work (PoW) calculations at much faster speeds than both CPU and GPU.
To get started, ASIC miners need to have a decent power supply, a solid internet connection, an IP address, an access router, a crypto wallet, and a mining pool. Although this sounds simple, there is a minimum threshold for entry, with ASIC-capable devices costing upwards of around $12k.
Cloud Mining
One of the most off-putting parts of crypto mining is the investment in hardware. However, thanks to the introduction of cloud technology, anyone who wishes to get involved can do so without the enormous investment. Essentially, instead of buying an ASIC machine, crypto miners can simply rent one from a hosting provider. The major appeal of cloud mining is that exiting is much easier, which is perfect for bear markets.
The crypto mining landscape has changed over the last decade or so, but it’s still just as relevant as it was in 2009. To get involved today, you can simply hire an ASIC machine from a cloud provider, meaning there are much fewer upfront costs.
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