The opportunity to make money is certainly the main motivation behind the sudden interest in cryptocurrencies and mining is a way of acquiring cryptocurrency and is considered another way to build wealth by some. As we dive in to discuss crypto mining, be mindful that this is no financial advice and the article serves only as a base to further research before moving into crypto mining.
Understanding crypto mining
Crypto mining or cryptocurrency mining is simply a process that involves the use of specially equipped computers to competitively solve mathematical puzzles, with cryptocurrency being won as a reward.
Why crypto mining?
Cryptocurrency mining is an important part of the whole cryptocurrency network as this process generates new units of a cryptocurrency and also confirms transactions carried out on the cryptocurrency network.
When miners solve these mathematical puzzles, they are verifying transaction information thereby making that cryptocurrency’s network trustworthy. By verifying information of transactions, double-spending is avoided. Double-spending can be explained straightforwardly here as a fraudulent act where someone can initiate modifications in the ecosystem to enable them to reclaim spent coins.
How do I make money from crypto mining?
Read to the end of this article, as I guide you through deciding on how you can make money from mining cryptocurrency.
Puzzle-solving plus sophisticated computing systems makes it sound all rosy and fun, but do not be carried away as crypto mining is certainly not a hobby. With the cryptocurrency reward that comes with mining, it may be seen as an easy means of money making but it is a very expensive venture with high chances of failure as there is no assurance of earning those rewards even after putting in a lot of money and effort.
These are the 5 basic steps to crypto mining
Get a machine capable of handling the blockchain algorithm and set up the mining rig
Create a crypto wallet to receive and hold your cryptocurrency
Join a network of pool miners, there are lots to choose from
Download mining software to connect the mining rig, the crypto wallet, and the pool
With everything set, including a source of energy and cooling system, commence mining.
But, there are two ways one can join in on crypto mining:
By doing it yourself; here you are to buy, put together, operate, and maintain all the necessary equipment needed.
Cloud mining is like a platform where you get access to mining equipment. They are service providers that buy, assemble and maintain the mining equipment while renting or outsourcing to operators.
One of the options above is way more capital intensive than the other. With the risks involved, you need to increase your chances of return on investment, and cloud mining has proven to be a fast and less expensive route to mining cryptocurrency.
Looking at the advantages and disadvantages of cloud mining over the option of doing it yourself will be a good way to start.
Some benefits of cloud mining are:
You don’t need experience or in-depth technical knowledge to get started
You won’t be spending heavily on hardware
Massive electricity costs will be cut out
There is not much noise and heat, and you will be saving a lot from cooling costs
You don’t have to worry about upgrading and maintenance of equipment
You will get technical support from the service providers
Risks associated with cloud mining
Your operations are transparent, therefore vulnerable
You are going to earn lower (as it is a service provider) compared to doing it yourself.
You are usually limited to mining only one type of coin
You don’t have full control
So you are not tech-savvy and lack the funds to set up your mining rig? If you strongly feel cloud mining is just right for you, then read on as I walk you through the process step by step.
Getting started with cloud mining
1. Choose a cloud mining platform that is perfect for you
Don’t just choose the first one Google shows you. Earnestly read through reviews, and see what other people say about them.
2. Register an account and verify your identity
Once you have chosen a platform, you will need to register an account and verify your identity. The platform should tell you exactly how to do this, so be sure to read each step of their instructions carefully. Make sure everything is in top shape before you proceed!
3. View your dashboard
After that, you’ll have access to your dashboard. View your dashboard and make sure everything looks right; This is where all the action happens, you can check on your current hash rate, manage payments and invoices, see your contract agreement details, etc.
4. Go to the hash rate calculator, here is where you consider the pricing options
Go to the hash rate calculator on your dashboard and enter the details of your hash rate purchase. Consider your pricing options as well. You figure out how much you’re going to need to spend for the amount of computing power (and cryptocurrency) that you want
5. Select contract details and confirm your order
Once that’s all figured out, select your contract and confirm your order.
6. Proceed to make payment
After that, proceed with payment. And then… we wait! Once the order is processed and paid for, we can move on to starting our mining process in earnest.
7. Go back to your dashboard
Go back to your dashboard and make sure everything looks good there.
8. Go through your contract agreement details once more
Read over your contract agreement once more, just in case there was anything you missed earlier.
Mine! It is time for some cryptocurrency mining action.
Amidst the advantages, one should not turn a blind eye to the major fact that cloud mining is highly prone to scams. You need to make sure you find a cloud mining site that is legitimate and trustworthy; and if your investment will be worth it based on their contract agreement.
Here is what you should consider when choosing a cloud mining contract:
1. Consider the proof of mining.
There are scammers out there who provide the service for some time before disappearing with your money. This is why you must pick a cloud mining platform that has a record of providing these services and also won’t hesitate to give you an online tour of the facilities.
2. Consider the financial return on investment (ROI) of your contract.
When you are considering a cloud mining contract, one thing you should look at is its profitability. How much will you be making off of this? What are the daily returns on your investment?
Sum up daily returns on the present hash rate of the contract, subtracting the fees. That’s how much profit you will make from paying for the cloud mining service.
The truth is that many contracts out there are not profitable, because they don’t take into account market rates. Scrutinize properly.
3. Consider the Reviews
A quick internet search will help greatly as we love to talk about ourselves and how we are wrong. Make sure you don’t get burned by someone else’s bad experience. The emphasis remains on review, never estimating the importance of people’s review of a product or service.
4. Consider the Mining Contract
Before you sign a contract, make sure you know what you are agreeing to. This is an important step that many people overlook because they just want to start mining already. Every contract comes with different clauses, pay attention to every tiny detail as a canny clause can mar you.
So, can I make a profit from crypto mining?
Cryptocurrencies are highly volatile and the profitability of mining at any moment is highly dependent on the value of the currency in question. Whether or not you will make a profit is impossible to predict due to this volatility.
Therefore, if you want to mine cryptocurrencies, your best bet is to build your machine (mining rig), but it is an expensive way to get started in mining cryptocurrencies.
Your fastest route and the easiest bet is to consider cloud crypto mining.
Cloud crypto mining services are very attractive because they are convenient, inexpensive, and don’t require any physical hardware or a high level of knowledge. For cloud crypto mining, it is important to find the right platform with good mining hardware and low costs.
The good thing is that cryptocurrency mining is possible on both hardware and the cloud. Both have their pros and cons; if you do your research well, you can make profits on either (just don’t have extremely high expectations).
Having discussed crypto mining extensively in this article and shown you several options available, I hope you learned enough to get started on making an informed decision about cryptocurrency.