- Technically, anyone with a computing device
connected to the internet
can participate in cryptocurrency mining.
However, as a cryptocurrency gets more popular
and more miners join,
to ensure sufficient effort is expended during proof of work
the computer-processing requirements increase.
This means that most people
with an average computer, say a business laptop,
will likely be outprocessed by much more powerful hardware.
It's always possible that a lesser computer will get lucky,
but this likelihood shrinks over time.
In Bitcoin, for example,
the time for a new block to be ratified
is said to average out to around every 10 minutes.
In order to maintain this predictable cadence
the complexity of the hashing problem,
called a cryptocurrency difficulty, is calibrated
relative to the speed that computers
are solving the problem.
If solutions are being solved more quickly
complexity increases and vice versa.
Since the incentive for miners is to win the hashing problem
and pocket the crypto winnings,
it stands to reason that over time miners will introduce
more and more powerful computers to the network.
For a participant to consider
being a standalone blockchain miner
the basic calculation requires
that the money that can be earned from mining
must be higher than the combined cost
of purchasing hardware, maintenance,
and paying for ongoing electricity needs.
The good news is that although the big-name cryptos,
such as Bitcoin and Ethereum,
may be out of reach for an individual to mine,
with so many altcoins even those with a home computer
can still mine and get crypto rewards.
The basic requirements to be a miner
are some computing hardware, the blockchain software,
and an internet connection.
With that setup it's possible to earn
a little cash mining some low-cost cryptos.
You could, for example, earn $5 per day
mining with a basic $1,000 computer.
But to break even you're going to have to mine
for at least 250 days to pay back the hardware
and the $1 per day electrical and internet costs.
After that, your net profit per day could be for $4.
Sure, you're not going to get rich this way,
but this is just a fun example to illustrate how it works.
To increase your earnings will require a bigger investment
in computing-processing power.
High-performance home computers
for say computer-aided design or gaming
can be anywhere from 5,000 to $10,000 and more.
Computers with additional graphical processing units,
or GPUs, are great for fast processing,
and subsequently are perfect for mining.
They also consume much more power,
which will increase your electric bill.
If you're just wanting to experiment
or create some minimal passive income
you'll need to do the math
to figure out what makes sense financially.
So, what might the hardware requirements
look like to make some real money?
For this you're going to need what's called a mining rig.
Smaller rigs are made up of typical home computer parts,
like hard drives, memory, and central processing,
but with the addition
of graphical processing units, or GPUs.
A decent starting configuration might be six GPUs.
The rig can't be configured in the typical computer case
so a special housing unit is required.
They come with their own fans,
but you'll need additional cooling.
By the way, it's going to get really noisy.
All this processing capability requires
more power wattage too.
A standard computer uses around 500 watts.
This new rig is going to need at least 1200 watts.
Plenty of memory is required,
but there are no special hard drive requirements.
To increase processing more rigs can be built,
and they can be tethered together.
These mining rigs can easily fill a car garage,
and at the industrial level,
the scale of current Bitcoin mining, for example,
entire warehouse floors and large data centers
are being used.
Searching online for mining rigs
will provide you lots of options,
including do it yourself and pre-built.
Another option for hardware is an ASIC miner.
ASIC stands for an application-specific integrated circuit,
and an ASIC miner is a computing device
built specifically for the purpose of cryptocurrency mining.
To increase your own processing capabilities
without spending a lot of money on new hardware
you can also join a mining pool.
This is when multiple people combine their mining rigs
over the internet to jointly mine the same cryptos.
Another option is to use cloud mining.
In this setup you simply pay for the use
of mining rigs that are run by a provider.
Cryptocurrency mining can be a fun hobby,
and for many it has become a real money earner.
It's certainly not for everyone, and the risks remain high.
I'll discuss those next.