money What is crypto-mining and can anyone do it?
In 2016 a month’s bitcoin mining with a home computer would see approximately 0.1 BTC accumulated, or £2,479 ($3,428) at today's prices. However, it is impossible to profitably mine bitcoin with a home set-up today. Because of increased difficulty levels, after many years and many burnt-out graphics cards, a home miner would be lucky to accumulate 0.1 bitcoin.
Bitcoin mining from home is not a feasible enterprise and best left to major players, like Bitfarms Ltd. (BITF.V), recently listed on the NASDAQ. However, many other mining alternatives can give passive, if not a full monthly income. But profitability is dependent on mining equipment, cryptocurrency volatility and electricity prices.
In essence, cryptocurrency mining provides the two major functions that power this method of value transfer – one that does not need a centralised authority to record and verify transactions, and so has raised the eyebrows of the world's central banks. One function of the mining process is to add and verify transactions between users to the blockchain public ledger. The other function of the mining process is to produce new coins.
Read more: Could El Salvador's bitcoin adoption trigger a domino effect in Latin America?
It all began with the bitcoin open-source software released by the pseudonymous Satoshi Nakamoto in January 2009. The first block of the blockchain was mined by Nakamoto in the same month. This "genesis block" was embedded with the text, "the Times 03/Jan/2009 Chancellor on brink of second bailout for banks". Ever since, a cult-like mystique has surrounded the world's pre-eminent cryptocurrency, widely seen as the antidote to inflationary fiat currencies.
One interesting cryptocurrency that requires little effort to mine and is accessible with low-cost computing power is FoldingCoin (FLDC). Instead of mining by crunching arbitrary calculations, as with bitcoin, FoldingCoin uses your home computer to run protein fold simulations to help scientists fight diseases such as Alzheimer's and Parkinson's disease. The FoldingCoin price is currently hovering around $0.001 and set-up information is available on its homepage.
Next is an exciting, low energy intensity cryptocurrency called Chia, the brainchild of Bram Cohen, the creator of BitTorrent. Setting up a Chia "farm" at home is relatively easy and instructions can be found on the Chia homepage. A China "farmer" would need a computer with at least 16 GB of RAM and hard-drive space of at least 2 TB. With this basic setup, a coin could be farmed in about four months. Chia is currently priced at $318 (£228) per coin.
Monero is a popular cryptocurrency that is well suited to mining with a home computer in today's competitive environment. Its current price is sitting at $220 (£158). To mine Monero a mining application such as MultiMiner must be downloaded, and to collect Monero coins a miner must download the GUI Wallet. Monero can be then exchanged for a stablecoin pegged to the US dollar on exchanges such as Binance.
Read more: Why the UK banned Binance and what it means for your crypto assets?
Ethereum, the second-largest cryptocurrency by market capitalisation, and often reported as the most profitable crypto to mine per wattage, can be mined by joining an Ethereum mining pool, such as Mining ETH. When using a mining pool, you are outsourcing your home computer's processing power to other miners who are mining Ethereum, and so contributing to a pool’s combined power. However, Ethereum could be switching to the less energy-intensive proof-of-stake consensus mechanism, meaning that Ethereum may no longer be mined by the end of the year.
Crypto-mining from home requires either a high specification gaming desktop or a mining rig. When using a home-computer set-up, at least 16 GB of RAM is needed alongside plenty of hard-drive storage space, at least 2TB. Other essential hardware is a fast CPU, such as an Intel i7-10700Kf and a powerful graphics card, such as an NVIDIA GeForce RTX 2080 Super 8GB GDDR6.
If a mining rig is preferred, a mid-range device, such as the Bitmain Antminer Z9 full 40.8KH Equihash Miner, would cost around £3,000 ($4,153). Amazon testimonials claim this rig setup could see a profit of £60 per day.
