As the crypto industry reaches new heights each passing year, more crypto enthusiasts are drawn to the crypto mining business as a way of making profits. It's a logical move, too: after all, why should you pay to buy crypto from third-parties, when you can make it yourself? In a way, mining has become the technological equivalent of growing your own organic tomatoes, except these tomatoes could end up being more valuable than gold. Tasty, right?
However, much like organic farming, mining cryptocurrencies requires patience, diligence and above all, resources. In this guide, we will cover the steps you need to take in order to put together a crypto mining rig and some drawbacks that you need to consider in order to decide if crypto mining would be a profitable venture for you.
What Do You Need to Mine Cryptocurrencies?
Crypto mining is an energy-intensive and competitive endeavor. The current popularity of cryptocurrencies guarantees that millions of people are vying for a limited amount of crypto tokens at any given time. Mining successfully under these circumstances requires you to make some hard decisions: which cryptocurrency you are going to mine, how much you can invest in mining, and finally, how much you are hoping to gain.
If your goal is to get some Ether or Bitcoin directly from the source, you need to buckle in for a bumpy ride, because mining difficulty steadily increases for these cryptocurrencies as more people (and companies) dip into the mining game. You might need multiple higher quality (i.e.: expensive) mining rigs to mine these digital assets and more electricity to keep them running.
However, if you are looking to mine less popular altcoins, you might get away with a smaller initial investment. Certain altcoins like Monero are both popular and somewhat resistant to industrial mining. If you are fine with mining less popular digital assets, you may earn steady profits from your venture, but you need to keep in mind that these assets don’t yet have the clout that Bitcoin has, and there is no way of telling if they ever will.
How to Build a Crypto Mining Rig
There are different kinds of mining rigs you can put together depending on your mining needs. If you want to mine popular cryptocurrencies like Ethereum and Bitcoin, you need specifically designed equipment: ASIC miners that are tailor-made to mine on an industrial level.
ASIC miners cost anywhere from a couple of hundred dollars to several thousand dollars. Obviously, newer (faster and more capable) ASICs cost more than the older models that you can buy secondhand online. But the cost of a mining rig isn’t the only thing that you need to worry about, as ASICs also require immense amounts of electricity to keep running and should be paired with proper cooling equipment in order to be able to function. All this adds up to a hefty electricity bill for crypto miners.
Another option is to put together a CPU or GPU mining rig. CPU mining is simply using a powerful computer to mine cryptocurrencies, and while you can’t depend on your computer’s CPU to mine Bitcoin, you can still mine certain cryptocurrencies that can’t be mined with ASICs as per their protocols. Without ASICs in the game, your CPU has a fighting chance.
GPU mining, on the other hand, can be a lot more profitable than mining with a CPU, but it is also significantly more expensive. GPU miners generally put together a mining rig by connecting several GPUs to a single motherboard. Powerful Nvidia (NASDAQ: NVDA) and AMD (NASDAQ: AMD) graphics cards are used for crypto mining so often that Nvidia actually released a GPU specifically designed for crypto mining.
Is Cryptocurrency Mining Profitable?
If you are wondering whether you can make a profit out of crypto mining, your best bet is to use a profitability calculator like what to mine or Slushpool’s calculator. These calculators help you parse the cost of buying and running mining equipment.
It might be hard to start crypto mining as we are still in the midst of a global chip shortage. But there are other ways of making a profit from cryptocurrencies. You can take the more traditional route and invest in cryptocurrency-related stocks that have increased sharply in the past years. And if you can’t mine crypto yourself, you could invest in growing companies like Riot Blockchain (NASDAQ: RIOT) or Marathon Digital Holdings (NASDAQ: MARA), which are building huge mining operations across the US.
Related: Why Bitcoin Will Fail
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