With the massive attention crypto has garnered over the last few years, you may have heard of “crypto mining”. It presents a fascinating way to earn passive income using your computing devices. You can then own crypto without paying for it. But how does crypto mining work and how do you build an effective Bitcoin mining rig?
What is Crypto Mining?
Crypto is decentralized. There is no central authority that can verify whether a payment is legitimate. To solve this blockchains came up with validation processes like Proof of Work (PoW).
Under PoW, blockchain users known as miners use their computing power to solve complex cryptographic puzzles. The first one to arrive at the solution gets to finalize the transaction and add a block to the blockchain. They are rewarded with crypto tokens for the service they provide.
What is a Crypto Mining Rig?
Crypto mining rigs are custom PCs built for the purpose of mining crypto. It includes all the elements of a regular PC – like RAM, a CPU and storage – but may require several graphics cards and high-wattage power supplies.
There are some important factors to consider before building a mining rig. Firstly, they do not come cheap. While the other components can come cheap, buying multiple high-performance graphics cards can push your costs to several thousand dollars. Additionally, their power consumption can be very high and cut into your earnings, so factor it in before making the investment.
How Do Crypto Mining Rigs Work?
The first step is putting the rig together. This involves choosing your motherboard, RAM, storage, CPU, power supply and most importantly, the number and type of graphics card you want to use. Be sure to choose the graphics card first as that can influence all the other components.
Mining rigs run specialised software that allows the computer to participate in the validation process. They then use their graphics cards to crunch long and complicated cryptographic problems to find the solution. There are many different options for crypto tokens you can mine, including Bitcoin, Zcoin and Bitcoin Gold.
Types of Crypto Mining Rigs
GPU Mining Rigs
GPU mining rigs use consumer-grade gaming graphics cards to mine crypto. These cards are not cheap, with each priced anywhere from $400 to $1,500 per piece. Putting multiple of these in a system allows us to effectively mine tokens and form an income stream.
These were mostly popular for Ethereum mining rigs, but Ethereum 2.0 shifted the network from Proof of Work to Proof of Stake. However, they can still be used for many altcoins and perform competitively.
Read more: Proof of Work vs Proof of Stake
ASIC Mining Rigs
An “Application-Specific Integrated Circuit” or ASIC is a specialized device built specifically to mine crypto. Most commonly, they are optimized for Bitcoin mining. They have greater mining power and energy efficiency than GPUs, but one unit could cost more than an entire GPU mining rig.
Cloud Mining Rigs
A cloud mining rig is a rentable PC you can access over the internet. This does not require you to buy or maintain any hardware of your own. Instead, you pay a monthly fee to access the system, while any returns you generate from it are yours. This is beneficial if you do not want to go through the process of building and maintaining a mining rig.
How To Mine After Building Crypto Mining Rig?
Choose a Mining Pool
After you have built your rig, it is time to choose a mining pool. There are hundreds of options to choose from, so your decision depends on the crypto you want to mine, platform rules and the number of users on the platform.
A mining pool is a software that allows users from around the world to combine their computing power to mine more effectively. It increases the likelihood of success, but the reward is split between thousands of users. Commonly, such mining pools distribute rewards based on the computing power you contribute.
Monitor your Energy Usage
It is crucial to monitor your energy usage. This is a significant recurring cost for many mining rigs and can significantly reduce your profits if not taken care of. To do this, you can use system monitoring software and observe power consumption over hourly intervals or a whole day.
Tune your Performance
GPUs sometimes consume more power than they have to. You can perform two actions to help reduce power consumption while maintaining performance. The first is undervolting, which reduces the voltage a card receives without altering its performance. Second, you can also try underclocking, which reduces both the electricity consumption and power of the card. It can be highly beneficial, especially for the longevity of your hardware.
Crypto mining is yet another unique income opportunity to come out of the crypto industry. It uses your computer hardware to earn crypto tokens for you. There are many different considerations before going all in and purchasing hardware for it. Your choice of a token can greatly influence the hardware you should buy for crypto mining.
Read more: 8 Ways To Earn Passive Income Through Crypto
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FAQ on Crypto Mining Rig
Are Crypto Mining Rigs Worth It?
This depends on the crypto token and hardware you choose. If your rig helps you generate income that greatly surpasses electricity costs while also recouping your investment, it is worth it. But this calculation needs to be made before you buy hardware, as your choice can also influence your profitability.
How Long Do Crypto Mining Rigs Last?
Crypto mining rigs typically last 2-3 years, based on wear and tear of the hardware and the obsoletion of technology. At this point, you may have to sell your mining equipment and upgrade to a newer generation to stay competitive in the market.
Should I Buy A Crypto Mining Rig?
This is highly subjective and depends on your electricity costs, availability of hardware and affordability. Consider these factors to determine whether you should buy a mining rig.