Bitcoin mining is one of the most discussed topics in the crypto space. The process allows you to contribute actively to the growth of a cryptocurrency’s ecosystem in exchange for rewards in the form of new cryptocurrencies. Mining bitcoin from home isn’t as lucrative as other cryptocurrencies, but there are some potential earning possibilities. Below, we’ll look into some of these nuances of mining. This article explores the simpler and nuanced aspects of home-based bitcoin mining in 2023.
An introduction to cryptocurrency mining
Mining, in the context of the crypto space, usually refers to bitcoin mining. However, the term isn’t exclusive to the leading cryptocurrency alone.
In its simplest sense, bitcoin mining is the process of performing a set of complex mathematical processes to verify transactions and obtain new units of the asset.
Mining in itself involves your ability to validate and confirm transactions and add them to the Bitcoin blockchain, thus contributing to the asset’s ecosystem. The transactions you confirm are in groups — also called a block. When a block is verified and validated, its transactions are added to the Bitcoin blockchain. Miners are incentivized to confirm these with transaction fees being distributed to them.
“Every smart person that I admire in the world, and those I semi-fear, is focused on this concept of crypto for a reason. They understand that this is the driving force of the fourth industrial revolution: steam engine, electricity, then the microchip – blockchain and crypto is the fourth.”Brock Pierce: Blockchain society
This sounds easy in theory, but in practice, it’s not. To obtain new bitcoins, you need to perform certain complex tasks successfully. These tasks entail solving mathematical equations — a process known as proof-of-work. They are very complex — a feature which makes it difficult for just anybody to solve them and get paid.
To adapt to these changes, miners have innovated and utilized various tools, including advanced crypto mining hardware, to speed up their processes. In the early days of bitcoin, it was feasible to mine using a standard computer. However, mining bitcoin from home has become nearly impossible with regular PCs today. Nonetheless, you can still mine other cryptocurrencies from home using specialized equipment.
Effective mining requires a significant amount of computing power, and PCs just can’t keep up. Instead, the mining space is now flooded by Graphics Processing Units (GPUs) and Application-Specific Integrated Circuits (ASICs). These provide greater computing power and a higher chance of validating blocks, but they are also very pricey. The higher your hashrate, the better you’ll do.
The different types of cryptocurrency mining
So, we now understand what mining is. The activity itself is split into quite a lot of variants. Let’s take a quick look at all of them:
CPU mining was the first form of mining, which was viable in the early days of cryptocurrencies. It utilizes your computer’s processors to mine, but it has lost significance.
The reason is simple. CPU mining is quite slow. With this method, you could mine for up to 18 months without seeing any significant revenue. Considering that you still pay for electricity and cooling all this time, it’s just not worth it. If you’re in this mining thing to make real profits, CPU mining isn’t the way for you to go.
GPU mining is perhaps the most popular mining method available. A simple Google search for “crypto mining” will show results for GPU rigs and devices. A standard GPU setup comes with a motherboard, a processor, a rig frame, and a cooling system. There are also graphics cards, which carry most of the mining activity.
GPU mining is popular for its relative affordability and efficiency. You will have to pay a pretty penny to set the rig up, but when it comes to computing power, it is pretty great overall.
ASIC mining is pretty much the higher end of the spectrum. It provides the most efficient mining operation, but it is also the costliest. Essentially, an ASIC is a device specially designed to conduct one task — in this case, it’s mining.
Thanks to the insane amount of computing power they produce, ASICs are the most efficient mining machines. However, they are also the most expensive — both to set up and run — so you might not want to go for an ASIC unless you live in a frigid environment with abundant cheap electricity.
Mining pools, incorporating various mining algorithms, offer an interesting solution for those looking to engage effectively in mining but who lack the funds for electricity and expensive mining gear.
As the name suggests, a mining pool involves individual miners coming together and combining their resources to mine. As opposed to mining by yourself, this is a pretty viable solution.
In a mining pool, you have individual miners combining their computing power. This way, they can get blocks faster and work on verifying transactions. When the pool eventually mines a block, each member gets rewards based on a formula. Most commonly, rewards are shared based on the proportion of resources that each miner contributes.
Mining pools are attractive because they help miners mitigate risk. Solo mining will most likely be more lucrative, but the mining space’s competitive nature means that it might take a while before getting any substantial rewards. With cryptocurrencies like bitcoin becoming more difficult to mine, mining pools are a great bet at the end of the day.
Cloud mining is the latest development in the mining space that is taking the industry by storm. This process involves paying someone (usually a large corporation) a predetermined amount of money to “rent out” mining rigs at their facility.
The rent will last for an agreed-upon period, during which the corporation transfers all earnings to your crypto wallet.
Most cloud mining firms have mining farms with hundreds of rigs stacked and working in tandem. They also have experts handling the mining process, so all you have to do is pay and sit back as your money works for you.
Cloud mining is attractive because, like mining pools, it is pretty cheap. You don’t have to buy a rig, and you don’t need to concern yourself with the mining process itself. Just make your payment, and the mining firm does the rest.
What you need for mining bitcoin at home
If you’ve chosen to conduct either GPU or ASIC mining, then you will need to get your gear and set it up at home. Generally, starting the mining process will include the following steps:
Calculate mining profitability
Whatever cryptocurrency you choose to mine, you need to do some research first. You want to ensure that the asset you’re looking to mine is worth it.
An asset’s mining profitability usually rests on factors like:
- Current reward system: How many tokens will you get for mining?
- Miner’s hashrate: What is your desired miner’s compute power?
- Mining difficulty: This is a number that represents the difficulty of mining an asset at any given time based on the amount of mining power active in the ecosystem.
- Electricity cost: Consider how much you pay for electricity per kilowatt-hour.
- Power consumption: Discover how much power your mining device will consume
- Pool fees: You will most likely need to mine through a pool. So, factor in their fees.
- Asset price: How much will you earn? Compare that with your total outlay.
Get a miner
When you’re through with the calculations, splurge on a miner. Look through hardware reviews to see the best miner for you. Some of the top miners available today include:
- Bitmain Antminer s19 Pro: Comes with a 110 TH/s hashrate and a power consumption level of 3,250W.
- MicroBT M30S++: Produces 112 TH/s in hashrate and consumes 3,472W in electricity.
- Bitmain Antminer T19: Provides 84 TH/s in hashrate and consumes 3,150W in power.
Get a wallet
You will also need to have a wallet, such as air-gapped wallets for enhanced security, for the cryptocurrency you’re looking to mine. This is where your rewards will be transferred when you successfully contribute to the validation of a block.
Join a mining pool
It is usually recommended that you join a pool when you mine cryptocurrencies like bitcoin. If you want to, consider the following:
- The pool’s reward method
- Charges for mining fees and withdrawals
- Frequency of finding a block/ the pool’s track record
- Ease of withdrawal
- Pool stability and transparency
Get a mining software
Lastly, you need mining software. This is the program that controls your mining activity. Many pools have their specific mining software, while others don’t. Most mining software is free. So, don’t bother about the outlay on that end. Just get one that makes you comfortable, and you’re ready.
The best cryptocurrencies to mine from home
Now that we understand how mining works, let’s look into the cryptos that can be mined from home. First of all, let’s get rid of the elephant in the room. Can you mine bitcoin from home and turn a profit? Mining bitcoin on a personal computer at home is not viable.
The increasing mining difficulty and the growth of ASICs specially designed for bitcoin have made it impossible to mine bitcoin from home. When people talk about bitcoin mining from home in 2023, what they’re really doing is to mine other cryptos and then convert them to bitcoins. Besides that, you can’t mine bitcoins at home and turn a profit.
However, there are other cryptocurrencies that might be the right choice for you.
ZCash is a privacy-focused digital asset in operation since 2016. If you’re a home miner, zcash (ZEC) works with a GPU. This privacy coin uses the Equihash algorithm, making it ASIC-resistant.
Note that you will need appropriate mining software to mine Zcash. You also need to download the ZCash blockchain and set up a wallet. ZEC is a popular asset that is traded on large cryptocurrency exchanges such as Binance, Coinbase, Gemini, and others. Check here for more information on Zcash mining.
Ether is the second-largest cryptocurrency by market cap. It is very liquid and is currently enjoying a significant rally. This is another digital asset that can be mined from home using a powerful GPU. One way of mining ether easily is by joining a mining pool. Pools make it easier to generate regular income. Going solo and waiting for the chance of finding blocks once in a while is not quite as reliable.
Ethereum mining is about to take on a new meaning as the Ethereum blockchain — on which it is built — is gearing up to move to a proof-of-stake (PoS) mining mechanism. So, you might want to steer clear of this one if long-term mining is your aim.
Monero is a privacy-focused asset, like Zcash. It’s also a large-cap cryptocurrency with billions of dollars in market cap and considerable liquidity.
One of the best parts about mining is that its blockchain also resists the use of monero-specific ASICS, thanks to its use of the CryptoNote hashing algorithm. So, you can mine it with a CPU or a GPU at home.
Monero mining is also easy to set up. You can use a GUI version of the wallet’s software to set up your mining operation, so Monero mining is ideal for complete beginners.
Mining can still be profitable
Cryptocurrency mining is an interesting activity that can be pretty lucrative if you’re smart about it. Although bitcoin mining is the most popular mining form, it is far from the only one. Mining can also be done at home, although you need to consider the asset you’re looking to mine and the investment that will go into setting up your mining operation.
Getting an advanced bitcoin mining setup is always advisable if you’ve got the capital. If you don’t, then you could try joining a mining pool or mining some other asset.
Frequently asked questions
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Top crypto platforms in the US | December 2023
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