Most cryptocurrency users will be familiar to some degree with Bitcoin mining, the process by which the dominant cryptocurrency is minted by users, even if only in concept. However, as a result of cryptocurrency growing massively since Bitcoin's initial inception, wannabe miners of recent times often find that it is not financially viable to begin their own mining operations or pools for the tokens, as competition and hash difficulty have increased over time. This has led to a large swathe of crypto adopters looking to find new ways to profit from cryptocurrency mining in recent times by instead turning their focus to altcoins.
In this article, we'll discuss a brief summary of how mining works. We'll also go over the tools and equipment you may need to start mining altcoins. We'll also go over a brief summary of how crypto enthusiasts are finding the most profitable coins to mine currently to help you on your way to beginning to mine coins yourself.
What is Mining and How Does it Work?
"Mining" is, put most simply, the process by which new cryptocurrency coins are created. Of course, in the tech world this doesn't require you to use a pickaxe and break rocks to mine. Instead for mining cryptocurrency, the work is done by computer hardware, with processors, GPU's and software being utilized to crack incredibly complex math equations. These math equations are known as a hash, and for the majority of cryptocurrencies, a "proof of work" system is utilized for the creation of new coins. In this form of cryptocurrency creation, a "hash" is solved by a computer utilizing it's power to work out the math equation, which then validates and unlocks a block in the blockchain, allowing those coins in that block to be newly minted by the miner. There are of course other methods of cryptocurrency minting with the large variety of coins currently available - Ripple for example is one that famously uses a "proof of stake" method of creating new coins - However, for the purposes of this article we will be focusing on these "proof of work" coins as they are the focus of the majority of mining operations.
What Equipment Do I Need to Begin Mining Altcoins?
To begin with mining cryptocurrencies, the equipment needed for altcoins is largely the same as required for more mainstream coins such as Bitcoin and Litecoin.
You will need a cryptocurrency wallet to store your mined coins and exchange them when you're ready to turn them into FIAT. Which wallet you choose will of course depend on which coins you're mining as different protocols will work on different networks.
The main aspect of any mining operation that you'll need is a powerful computer. This can vary greatly according to your own needs and your particular budget for mining. Some users will simply choose to use their gaming rig as a miner to try and generate profits, while some more hardcore miners will create a purpose-built machine specifically for their mining operations. GPU mining is the most popular as it tends to be far more popular than CPU-based mining operations. When putting together a custom build for mining, there are several online resources and websites such as MiningChamber which can be used to check a GPU's efficiency for mining cryptocurrencies before you decide whether to purchase it for your new setup.
Additionally, an attractive option for cryptocurrency enthusiasts looking to get into mining are special made mining rigs. These are purpose built specifically by companies catering to cryptocurrency users looking for the most efficient way to gain a high hash rate and maximize their profitability. Two of the most popular companies known for creating these machines to sell to consumers looking to get into mining are Antminer and AvalonMiner, both of which sell multiple different versions to cater to different budgets.
How Do I Find Profitable Altcoins to Mine?
In the constantly changing market of cryptocurrency, it can definitely be difficult to choose which coin to even begin mining. Luckily, there are lots of resources for new altcoin miners to find the most profitable coins to mine. One of the most popular sites in the space is WhatToMine.com, which features a live and constantly updated list featuring the coins with the most profitable current dollar value for mining, allowing you to view the current percentage rate of returns on mining each particular currency at the current moment as well as over 24 hours, 3 days and 7 days. A lot of miners will also be most interested in speculating themselves. Instead of relying on the current profitability tables, bolder miners may look at finding up-and-coming coins they believe have high potential to try and mine early, risking the lower initial dollar returns in hopes of the coins value rising to give them a larger payday down the line.
You should now have the knowledge and resources to begin your journey into the cryptocurrency world of mining altcoins. While it can be cost prohibitive to begin, with the right planning, appropriate budgeting, power usage and a good coin pick and mining pool, mining altcoins can be a very profitable endeavour in 2023.