Cryptocurrency mining, or crypto mining, is the method of verifying transactions on a digital ledger for a blockchain using machines with extensive computing power. Cryptocurrency mining is something any individual or organization can do with adequate hardware and software resources, but the expansion of mining and increasing costs make it progressively difficult for newcomers.
This article looks at cryptocurrency mining, how it works, the best mining apps, and whether it’s a profitable business model in 2022.
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What is cryptocurrency mining?
Cryptocurrency mining is the process where specialized computers, also known as nodes or mining rigs, validate blockchain transactions for a specific cryptocoin and, in turn, receive a mining reward for their computational effort.
The Vehicle for Mining: Nodes, Rigs, and Pools
Blockchains require an expansive network of machines to verify and store transactions to support global cryptocurrencies’ overarching distributed digital ledgers. Rigs use the latest processors (e.g., GPU, FPGA, or ASIC) and do little else but serve as a node for the blockchain’s network. Using standard personal computers as mining equipment is not advisable, as most lack the computational power to handle mining-level processing.
With a fleet of nodes, or a pool, a group of individual miners can combine computational effort, dubbed hash rates, to win block rewards and split the earnings according to contribution.
Achieving Consensus Through Proof-of-Work
Blockchains require a protocol for achieving a decentralized consensus to verify the integrity of new blocks, and in crypto mining, this consensus mechanism is proof-of-work (PoW). By contributing computational effort to validating transactions, miners receive a predefined amount of the coin for their proof of work.
The protocol ensures the integrity of blockchain transactions and rewards miners for their expenses and effort, but it also deters threat actors who hope to manipulate the cryptocurrency. Crypto mining requires extensive processor power, creating competition and a barrier to entry for prospective nodes and mining rigs.
Read more: There’s more to cryptocurrency than Bitcoin: 5 other digital coins | TechRepublic
How Does Cryptocurrency Mining Work?
Cryptocurrency mining is how miners compete to prove their computational work in exchange for a block reward. After a series of transactions for a specific cryptocurrency, a block with associated cryptographic hash functions containing transaction data becomes visible to the blockchain’s P2P network.
Competing pools of nodes use their high-performance processing capabilities to solve a complex mathematical problem and prove the block’s integrity. After successfully establishing the block’s validity, the mining party cements the blockchain addition and receives the mining reward for allocating the pool.
How Do I Start Mining Cryptocurrency?
Individuals interested in mining cryptocurrency can own and operate a mining rig or purchase hash rate from a third-party rig, also known as cloud mining. Owning and operating a mining rig comes with the upfront cost of specialized hardware and ongoing operating expenses like electricity. Yet, it offers the most control and profit potential to miners.
By comparison, cloud mining doesn’t require an upfront investment and provides miners with the flexibility to invest what they can afford. In either case, new miners need some form of cryptocurrency mining software to participate.
Also read: How NVIDIA Got Creative with Crypto-Miners | eWEEK
What Is a Cryptocurrency Mining App?
Cryptocurrency mining applications are commercial or open-source software programs facilitating the mining of specific cryptocurrencies. Crypto mining apps serve as the platforms for mining pools, connecting interested miners with or without rigs, to combine hashing power and mine cryptocurrency. Mining software is essential for average miners with limited resources to participate alongside a mining farm effectively.
Learn more with our in-depth guide How to Mine Cryptocurrency.
What Is the Best Cryptocurrency Mining App?
Best Commercial Cryptocurrency Mining Apps
Launched in 2014 by Swedish company IntelliBreeze Software AB, Awesome Miner is a free and premium Windows or Linux-based application for managing and monitoring mining popular cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Litecoin. Awesome Miner has everything a prospective miner needs to get started, including options for cloud mining (Managed Miner), ASIC firmware, mining pools, and connecting an external ASIC rig. Additional features include native overclocking, GPU monitoring, and organizing miner groups by tags.
Cudo Miner is another premium option offering miner, mining, and cloud mining solutions compatible with Windows, macOS, Linux, CudoOS, and ASICs. Targeting personal device owners up to enterprise mining farms, Cudo Miner includes advanced features like auto coin switching based on profitability, multi-factor authentication (MFA), and advanced algorithm settings for customized mining. Cudo Miner currently allows mining of BTC, ETH, Monero (XMR), and Ravencoin (RVN).
Also read: Ethereum cheat sheet: Everything you need to know | TechRepublic
As a decentralized finance (DeFi) platform, ECOS goes beyond just mining with additional crypto investment tools for wallets, trading, and portfolio management. ECOS offers cloud mining contracts for BTC based on the forecasted BTC price, contract term, and hash rate (TH/s) for interested miners. With instant quotes and a profitability breakdown, ECOS is best for passive miners who want to participate in BTC mining without the existing resources or expertise to manage mining operations.
Geared toward mining the second-largest cryptocurrency, Ethermine, its predecessor Ethpool, includes over 125,000 miners that control more than a quarter of the ETH network hash rate. Using a Pay-Per-Last-N-Shares (PPLNS) payout structure, Ethermine offers instant payouts and more security for long-term investors. Miners can choose a mining geographic server (Asia, Europe, North America) and mining software for AMD or NVIDIA processors and Windows or Linux operating systems to get started.
While crypto mining once only involved BTC, MinerGate opens the door to a host of altcoin mining opportunities from nearly any device. In all, MinerGate offers ten coins to choose from, including ETH, LTC, XMR, Zcash (ZEC), and Bytecoin (BCN). Its pools support over 300,000 active miners with GUI applications for Windows, macOS, Linux, and Android devices. With automatic switching to mining the most profitable coin and hardware benchmark analysis, miners can easily manage mining activity.
Another full-fledged cryptocurrency platform, NiceHash, offers solutions for crypto miners, investors, and traders. Unlike other crypto mining platforms, which offer mining pools for specific coins, NiceHash leans into being a marketplace for hash power no matter the currency, consensus, or algorithm. Interested users can start by choosing GPU mining or CPU mining or linking an existing ASIC miner. With more than 600,000 daily users, NiceHash facilitates the sale of hash power for many other crypto mining pools.
One of the earliest mining organizations, Slush Pool, has been a dominant BTC mining pool with over 1.25 million BTC mined since 2010. While no stranger to BTC mining with more than 180,000 active workers in 2021, Slush Pool more recently enabled mining for Zcash (ZEC). As a Slush Pool participant, users access advanced features like node monitoring, API integration, and customizable payouts. Led by BTC mining company Braiins, Slush Pool continues to develop the latest features for improving security and efficiency.
Read more: The State of Blockchain Applications in Cybersecurity | eSecurityPlanet
Best Open-Source Cryptocurrency Mining Apps
BFGMiner is an open-source modular crypto miner software, written in C, for mining multiple cryptocurrencies, including Bitcoin. Using an existing CPU, GPU, FGPA, and ASIC processor, administrators can download and configure their mining rig for single pools, multiple pools, multiple blockchains, and single pools for a specific proxy.
Other convenient features included in the latest release (5.5.0) are low overhead and CPU usage, multiple failover mechanisms, caching of submissions during downtime, and discrete device data statistics. Users require technical skills to navigate and utilize this crypto mining software with a command-line interface (CLI).
Open-source ASIC crypto mining software CGMiner was also written in C and is compatible with Windows, macOS, and Linux systems. CGMiner’s latest release (4.11.0) is accessible under the GPLv3. It suits more seasoned miners and IT professionals comfortable with a CLI or an RPC or JSON interface for remote control.
CGMiner includes support for stratum and GBT pooled mining protocols, preemptive fetching, local generation of valid work, and a quick configuration menu. CGMiner offers a default failover strategy for multipool protocols and includes options for round-robin, rotate, balance, and load balance strategies.
A screenshot of CGMiner’s command-line interface and administrator view.
EasyMiner is an open-source crypto mining software optimized for the popular x86 and x86–64 architecture and compatible with the getwork (JSON-RPC) and stratum mining protocols. With round-robin SSD servers in place, EasyMiner boasts military-grade security for protecting miners’ crypto earnings.
As a lightweight program, EasyMiner is low on CPU and GPU utilization and allows miners to participate in mining sessions. Contributed work translates to shares earned and a portion of the coin earnings from the server-level block rewards. Other features include displaying data to administrators like total shares mined, hash rate, earnings, and more.
Compatible with Windows, macOS, and Linux machines, MultiMiner is an open-source application enabling cryptocurrency mining through GPUs, FPGAs, and ASICs. The mining engine used is the popular BFGMiner, yet the GUI is modern and user-friendly. With quick-start and automated mining features, MultiMiner is ideal for beginner and novice miners unfamiliar with the underlying technical processes at play. Features like load balancing, mining the most profitable cryptocurrency, and configuring policies for mining are available to administrator discretion.
A screenshot of MultiMiner showing the administrator view for configuring pools.
Is Crypto Mining Profitable?
Profiting from crypto mining has become increasingly difficult as more individual miners and commercial mining companies have joined the market over the last decade. Costs vary based on mining hardware and location, but individual miners’ profitability margins tend to be small.
As miners flooded the space, the cost of mining also increased dramatically. Hardware costs range from tens to hundreds of thousands of dollars, and the cost of needed electricity can be even more substantial depending on the geographic location.
While a decade ago DIY miners could buy a rig and start at home, today’s global crypto mining market is progressively run by companies and organizations choosing to pool mining and rewards. In October 2021, the U.S. National Bureau of Economic Research (NBER) released research that stated:
“We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miners control 90%, and just 0.1% (about 50 miners) control close to 50% of mining capacity.”
Bitcoin: An Example in Crypto Mining Profitability
In 2009, the first widely successful cryptocurrency, Bitcoin, awarded its first Bitcoin miner with 50 BTC, valued at $6,000. At the time, the computing resources and energy required to mine a single BTC were significantly less, allowing interested miners to pocket most of the reward.
As the Bitcoin protocol maintains a half-life of roughly four years, block rewards get cut in half, with the third and most recent reduction in May 2020 going from 12.5 BTC to 6.25 BTC. Though each block reward will continue to decrease, the rising value of BTC means dedicated miners can still be profitable. Pooling mining capabilities and earnings remain the dominant method for interested miners.
For reference, the value of 6.25 BTC as of November 2021 is approximately $360,000.
Also more: Numio Enables High-Speed Cryptocurrency Transactions | IT Business Edge
Is There an Alternative to Crypto Mining?
Most crypto coins use mining, or the proof-of-work protocol, as the consensus mechanism to generate the underlying distributed blockchain. The alternative method increasingly employed is the proof-of-stake (PoS) protocol. While mining is a resource-exhaustive process, staking instead requires holding cryptocurrency for an extended period to earn block rewards. Several coins consider the move from PoW to PoS to achieve more environmentally sustainable practices.
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