Everyone who is interested in Bitcoin, blockchain, and cryptocurrencies should have at least some basic knowledge of the underlying technical side.
Bitcoin and many other cryptocurrencies are based on the Proof-of-Work (PoW) algorithm (consensus mechanism). This is the basic underlying principle to secure the coin network and to verify broadcasted transactions. This is the crucial part to enable the network to be reliable and to function properly. People mining a coin are trying to receive a block reward as a sort of payment for their distribution to the network. They use their hardware (ASICS, GPU, CPU) and electricity to provide hash rate to the network. The higher your total percentage of hashing power compared to the overall hashing power is, the more rewards you will collect.
Most of the points in this short summary should be somehow familiar, as we talked about the general principle in Chapter 1. Now I will try to provide you with all the information needed to start mining on your own.
I got interested in mining, as Litecoin was climbing to new heights. I tried to collect as much information as possible to build up my first mining rig. There were only a few and quite technical guides available, which basically led to many hours of trial and error. When I started a few years ago, new coins were being created literally every day. I used to spend on bitcointalk, searching for the most promising new project and writing down the genesis date. As with the ICO projects nowadays, there were a lot of scammy projects then. There were even some services where everyone could launch a new coin, with no technical knowledge at all. For a few hundred dollars, they would create you some basic project in no time. At that time, many projects were launched with a large premine (coins reserved for the creator of the project), some even with more than 10 percent of all the coins. Most of the projects were never really alive, since no one was going to mine, with so many coins in the hands of the founder. Most projects were copycat initiatives bringing nothing new to the space. It was an attempt to make some money without the cyperpunk interest of developing something new.
You will recognize this scheme as fundamental part of the whole crypto universe (as with paid masternode coins or ICOs at the moment). Nevertheless, I had some really nice time back then and treasure some great memories. Taking part in the mining process very early has important advantages. Sometimes, new projects are launched with some reduced block reward for the very first blocks to reduce some sort of premine, as not many people are able to take part with the first block.
Back then, many projects were literally slaughtered during the first mining period, as some people with a lot of hashing power were applying their all their power to the newly launched project. As the difficulty often needs a defined period of blocks to be adjusted to the hashing power, they were able to collect a large number of coins in a very short period. They could literally mine the projects for a few hours or days and move on. Even though most projects died pretty quickly and weren’t even be listed on an exchange, some mined coins could turn into a real fortune. Since I had only one single rig with a moderate hashing power, I tried to select the projects that were as good as possible. I searched for projects with a reasonable coin supply, without premine, and with an experienced dev team at best. A new algorithm was always a good hint and a plus for the project, since it suggested that the team was seemingly capable of developing something new. I was generally trying to be one of the first to mine until another seemingly good project would come along.
Things are different today. You won’t find many new projects being launched as often. But it can still be very profitable to mine those new projects very early, with those unbeatable low prices. Even if you are experienced and not afraid to make some OTC (over the counter) trades before the coin is listed even on the smallest exchange, you will still most probably pay a premium.
(1) Accumulating a coin through mining and (2) speculating on a gain in value is referred to as specmining (speculative mining). This will require a higher level of dedication and experience, since it is important to select the most promising projects. It generally helps if you don’t rely on selling the coins you mine to cover the costs of electricity. New projects will need some larger time frame to establish themselves and get listed on an exchange. The first exchange listing can be great to lock in some early gains and to at least partially cover the costs to reduce your risk. Some projects may turn out to be very successful, and since you established a great entry with your mining, you stay relaxed, even if the price may be going down.
Of course, the process isn’t as simple as it sounds. Especially in the beginning, you mine a lot of projects that never get listed on an exchange. In my opinion, the chances to return your investment (mining gear and electricity) are still higher than with any other mining strategy.
Besides specmining, there are other ways to make money. You can consult various websites to look for the most profitable coin to mine. As the most profitable coins might switch pretty fast, you would be required to change your miner settings and wallets quite regularly as well. One way to make decent profit would be to sell those profitable coins almost immediately and reinvest the reward. This strategy can be very lucrative, but it requires a lot of time and a lot of attention on your part. Since you won’t be able to use the exchange account as a payout address (it might work but could lead to different problems), you will most likely end up installing various wallet clients to receive your coins. You should definitely be very careful with your security and maybe install all of them on a separate device (old laptop will perfectly do the trick) and not use your main computer. Now, let’s focus on the options you have in mining, in detail. First of all, you could simply cash out your reward to fiat, as you might need to pay off bills and electricity. As already mentioned above, you will be able to lock in higher gains if you are able to see mining as some sort of further investing, without the need to change your coins back into fiat. Without the need of selling your precious coins, there are two more options to consider. You might want to accumulate some of the top-tier coins with a lower risk level (the biggest extent should always be bitcoin but other coins like ETH, NEO, XMR … might be a good bet too). Why this option may be an easier way to start making profit, instead of directly mining ETH or even bitcoin, is discussed later on. As already mentioned above, you could use your profit to buy in on some other coins with a higher risk level. You could, for example, be interested in a coin only mineable with CPU, which would make it quite hard for you to accumulate at a decent level, as most GPU mining rigs are built using a slow and not very powerful CPU. Buying this coin with the profits made by mining and directly selling always the most profitable coin can be considered as another form of speculative mining. Either way, whatever strategy you choose, you should step into the mining business only after considering a few important points.
If you are more of an impatient type, mining in general might not be the best investment for you. If you have time to research and set up wallets and exchange accounts, and love to increase your knowledge, it might be the right thing for you. But since you could end up mining and accumulating some coins worth nothing more than the storage of your hard drive, it can be really frustrating too—especially, if you always have in mind that you’ve invested some decent amount of money into building your rig and you have some constant operating costs. Without the necessary serenity and patience, you may get frustrated very quickly and may end up with a mining rig that you don’t like using anymore.
Having said all that, even if you are very patient, you will sometimes get frustrated. Especially in a bear market. Everyone longer in the game has already experienced a bearish sentiment or will definitely experience it sooner or later. It’s just impossible to have a never-ending uptrend. Even if you are a permabull and bullish on crypto generally, you can’t escape the market cycles. Depending on your entry point, this can lead to a large loss of USD value of your portfolio.
I experienced it myself very early in the game. Even though I got a decent entry before bitcoin peaked at $1000 for the first time, I was too inexperienced to understand what was going on. Since I invested nearly everything I had, I was euphoric seeing my investment growing at an amazingly high speed. My mining plays paid out, and I thought my investment would reach new heights in the upcoming months.
Instead, a long-lasting downtrend set in. At some point, I wasn’t sure what to expect from bitcoin or crypto anymore. It was quite depressing, and even though I never really quit, it was hard not to. I spent less time on bitcointalk and reduced my mining operation to a minimum. A real bearmarket can be really difficult for every investor. But the thing that helped and kept me going was my “addiction” to crypto. I learned a lot about making some successful moves in the bearish market conditions. You should always try to see the positive side—even though it may be very hard—because sometimes even the worst bearmarket can lead to something positive.
I have to admit that I never had these thoughts in the downtrend, and I was just lucky at some point. But it may be a good example why the decision to fully quit crypto could have been a life-hanging one. At some point, one of my graphic cards that I used to mine became faulty. It was always overheating and shutting down the whole rig after just a few hours. Every time, I would manage to restart the rig and mining software, but it was clearly not the way to handle the problem. Since I was quite depressed about the bitcoin price and some of my mined bags, I was not motivated enough to reclaim my warranty fix it myself. As I read up on this problem, I found out that other miners were experiencing it as well. They found the solution by switching to another algorithm, which was consuming less power and producing less heat.
I decided to do the same and started to mine Darkcoin. It worked out well, and the rig was stable, producing a pretty decent reward. Generally, I liked the project—except for its name. The name may have been suitable in the world of crypto and video games, but I couldn’t see anyone using Darkcoin to pay for any real-life goods in the future.
As I needed to focus on my university degree, I decided to just keep my rig going and accumulate a large bag of Darkcoin. I actually even bought some more during a Poloniex dip, when I was trying to diversify my portfolio and invest in a handful of worthy projects (at least, what I considered worthy at that time).
The point is that there were actually less projects in existence, and it made the process fairly simple. Nearly all coins I bought back then turned out to be very successful picks. But the most profit I made was actually my bag of Darkcoin. Eventually, Darkcoin was rebranded and is now very well known as DASH.
During a certain price peak I traded more than half of my stash for a quite big bag of Bitcoin. Until that point, I never thought such gains within such a short period were even possible. At that time, I would mine a few Darkcoins a day, and then would trade them for less than a dollar. The electricity bill was really high, but I decided to stick to mining Darkcoin as my constant (and only) crypto investment. The mined coins would somehow cover the bill, but my savings would be depleted. Keeping less than a coin a day as a profit could certainly seem unreasonable. But toughing it out back then turned out to be one of the best decisions I’ve ever made. Just look at the DASH chart below:
If you are considering mining, I would advise you to keep as many of your mined coins as possible. Emergencies happen, but if you practice proper risk management, you shouldn’t find yourself in a situation when you really need to sell your coins immediately. Try holding your coins. Sooner or later, a moment when you really need to make a decision—an exchange listing or a lead developer quitting—will arrive. Otherwise, you may miss out on some really good gains.
Now that I’ve talked a lot about mining in general and about mining investment strategies, it’s time to get more specific. We will start with some very helpful and powerful websites:
Both are really helpful when it comes to selecting the most profitable coins to mine and generally provide tons of information. You would want to use them quite a lot, depending on your mining strategy, and it is really worth getting familiar with at least one of them.
Beginners may find <Whattomine.com> a little easier to use. It can be generally helpful in the process of choosing the right mining gear as well. You can add different commonly used GPUs to see the propagated hash rate and compare them to each other.
As you can see in the screenshot above, the first two rows (the area in the red rectangle) provide you with the option to select different GPUs. In the example above, three AMD Radeon RX 480 video cards are selected. The calculated hash rate in combination with the respective power consumption can be seen for each of the most common mining algorithms. The area in the second red rectangle may seem insignificant, but actually it’s quite the opposite, showing your everyday cost and thus being crucial in determining your profit. Take a close look at your electricity bill and see the kWh cost is, which is a very important piece of information if you plan to mine bitcoin. In many countries, you would be better off just buying it directly due to the high cost of electricity.
As you can clearly see above, the profitability of mining Bitcoin directly strongly depends on the country you are living in.137 The electricity prices above are based on the average in the country. It may not perfectly reflect your own cost of electricity, as there can even be large differences in the same country (e.g., certain U.S. states). But it should just give you a general idea about the mining market. Given the chart above, the price of $14,000 per Bitcoin would make mining unprofitable (e.g, in Germany). Hence, people who want to mine there need to find cheap alternatives—especially, since they need to make a certain initial investment to get the mining gear. Given the fact that cryptocurrency and mining are quite popular in Germany (still far from being mainstream though), you could ask yourself, “How do they manage to mine over there?” There is more than one answer to that question.
Some people buy property and contracts in the surrounding countries like the Netherlands, France, or Poland. This might have some advantages when it comes to electricity but also some disadvantages when it comes to security. You can control your rigs or ASICs remotely, but many other problems can’t be fixed from a distance.
Another major concern is security. Mining gear is especially expensive, since the reselling price is sometimes even higher than the original offering price (limited supply). That’s why people choose data centers or try to buy free slots in some factories with the high-level electricity consumption. Factories are subsidized by the state and pay way less for electricity than regular residents do. But those slots are mostly not offered to the public and are hard to get. So it’s all about getting creative in those countries. Apparently, some students living in dorms use the all-in contracts to mine cryptocurrencies. However, I wouldn’t advice this, since I doubt that it is even legal.
Many miners don’t need to sell their mined coins to pay any running costs. That’s why, most are quite relaxed about the Bitcoin price in general. They won’t turn off their mining operations, even though the price might fall to under $7,000, which leads to paying more than double the amount for mining compared to just buying the coins directly ($14,000 is the average cost paying the normal rate of ~ 0.25$/kWh per household, not considering an outsourcing of the mining operation. Overall mining prices of about 0.1-0.15$/kWh or below are still only achievable with special mining contract) They speculate that Bitcoin and the whole cryptocurrency space will grow even more, even after the meteoric rise in the past year. This is also one of the reasons why the overall Bitcoin network hash rate has been climbing, while the price has been decreasing in the year 2018. You may already recognize the following graph below:
The Bitcoin hash rate has been growing around 15 percent per month in 2018 alone. This is an especially important fact to focus on when it comes to mining. The hash rate can tell you various important things about the network or the project you are interested in. The hash rate can be seen as one of the indicators determining the interest and potential price gain of a project. A declining hash rate therefore might be one indicator that the miners are losing faith in the project. If you notice an accumulating pattern while researching for a project, you could have a look at the hash rate as an additional indicator, for example. But there is more to consider if you notice an increase in hash rate, as it goes hand in hand with an increasing difficulty. Although the ever-increasing hash rate is very positive for the Bitcoin network, it gets constantly harder to win a block as well (and at the end of the day, to get paid). That’s why you should always look at the difficulty chart if you mine, since it will determine your potential profit. You can check the charts at <coinwarz.com>, for example, as you see in the screenshot below.
Just search for your coin of interest in the respective field, and you will find some detailed information and graphs. You will find the information about only those coins that are listed on the website. That’s why, very new projects and other projects you are interested in may not be listed for a certain period. Nevertheless, the provided information is still very helpful.
The increasing difficulty—estimated to be around 0.45 percent over the past months138—shouldn’t be neglected. Keep that in mind, since most profitability calculators (especially for altcoins) don’t take the difficulty factor into consideration, which is significant if you plan to mine a coin for a longer time period.
Another factor that most (if not all) calculators don’t take into consideration is the events of block reward reduction. It is crucial to understand that calculators use a snapshot of the market for their calculation. Depending on the form of the reward structure of the project, the given block reward reduction can be a critical point of any project. If there is halving as it occurs with Bitcoin, there are a few important points to consider.
The graph above is printed in logarithmic scale, which is often used to predict the possible Bitcoin price long term.139 As you can see above, the proposed next halving will occur in mid-2020. There may not be some instant price action directly after the halving event, but it will have a major impact in general. Since the block reward is cut in half, it is 50 percent less profitable to mine with the exact same setting than it was only a few blocks before. If you review the table with the average cost to mine one bitcoin once again, given the fact that the Bitcoin price has not change at all, mining would get unprofitable in most countries. The halving is generally an interesting event to watch, as it may have effects on the whole cryptocurrency space. This is especially interesting if you keep the fixes and therefore limited supply of Bitcoin in mind. In April 2018, the 17 millionth Bitcoin was mined. Therefore, more than 80 percent of all Bitcoin have already been mined. Given the fact that most of them are likely to be lost and that the supply has been shrinking, the price will most likely be going up. Although I don’t think you will (or should) start mining straight away, it is a good example of considering all sorts of factors to mine effectively.
Various types of coin emission and block reward reduction schemes also affect the price, each in their own way. Some coins or projects even get abandoned after a certain point in the reward structure, since most miners that don’t mine Bitcoin directly always try to maximize their overall profit as easily as possible. Since their GPUs can be used in all sorts of ways (contrary to specialized ASICs), it is likely that they may just search for the next project to start with.
Before we have a detailed look at the different mining gear available, there is one thing I want to talk about. Sometimes, it might not be an easy task to determine whether the project has some premine or instant mining of the first blocks. It can therefore be very helpful to analyze the coin distribution of the project. This is something quite easy to do, since many block explorers will feature a “rich list.” As always, you can try to access the explorer via the official website or CMC. If you still have no luck (or it does not have a rich list feature) just ask in the social media channels. The explorer will list you the accounts or addresses sorted by the number of coins they hold. Some will even provide some graphical visualization. Depending on the explorer, some accounts may be labeled, which is helpful for distinguishing an exchange address, for example. But even if it’s not clearly labeled, you can click on some of the higher ranked accounts to get more information. For example, an exchange address will likely have a very high level of transactions. (This only makes sense if the coin is already listed on certain exchanges though.) If the coin is just launched, and you see some account holding a high percentage of coins—more than could be mined during the time with regular block rewards—it is likely to be some sort of premine from the dev. You will find some projects officially announcing a premine for some development/exchange listing fees.
Even though I understand that this can help push the project further, I personally dislike any sort of premine that is controlled by a single entity. At the end of the day, a few people are in control of a huge number of coins, which they can spend on everything they want. There are many very successful projects out there with no premine at all, and they are still doing very well. The community is always free to donate some coins or crowdfund some exchange listing if they really want to. Having a look at the wealth distribution of a coin and analyzing the block explorer can therefore really help you to avoid some bad projects that may first appear otherwise.
Now, it is time to have a look at the mining hardware available. Since things may change, depending on the time when you are reading this, I will try to give you a general feeling for what you need to consider when buying your gear.
It is rumored that AMD is likely to launch their next gen of GPUs in fall 2018 or Q1 2019. Nvidia is quite likely to launch their new generation of hardware in Q3/4 this year.140 This will definitely have a major impact on the GPU-based mining market and vice versa. Nvidia, for example, made an unbelievable $289 million from cryptocurrency miners in Q1 2018 alone.141
Before we start with GPU-based mining rigs, I will introduce the so-called ASIC miner (application-specific integrated circuit). It is probably the most famous one and is part of the Antminer series from Bitmain. Bitmain itself is a highly specialized mining/miner-producing company. It has a leading role in ASIC, chip production, and the blockchain industry in general. Depending on the algorithm, there are different ASICs offered:
SHA256 Antminer S9 (~14 TH/s)
Scrypt Antminer L3+ (500-580 MH/s)
X11 Antminer D3
Cryptonight Antminer X3
Equihash Antminer Z9
As you can see above, Bitmain offers a broad base of different ASIC miners. Since they are developed to mine solely cryptocurrencies, they are highly specific and offer very high rates of hash rates. In the very early days, it was profitable to mine Bitcoin even with some old laptop. This is clearly not profitable at all anymore, and ASICs made different mining options obsolete.
Besides Bitmain, there are different other ASIC chip-producing companies. But some, like Bitfury, don’t sell their mining gear to private buyers.142 Companies seem to be able to purchase large quantities of chips (the minimal order is rumored to be between $500,000 and $1 million.143, 144
There are a few other companies stepping into the cryptocurrency/miner business recently. Samsung, for example, was starting to manufacture mining chips early this year.145 They are supplying a relatively new mining company called Halong mining.146, 147 The produced ASIC called DragonMint T1 is propagated to be the most powerful and energy-efficient miner available (16 TH/s and 0.075J/GH to 0.098J/GH of the S9).148 Just recently, the Japanese IT giant GMO has stepped into the mining chip production industry. This is especially interesting, since they announced to be the first to mass-produce chips with a 7 nm architecture (lower numbers are preferred; as a reference, Bitmains Antminer S9 uses 16 nm chips).149 The resulting miners are likely to be very energy efficient and much more powerful comparing to the miner already in existence:150
SHA256 GMO B2 24 TH/s
GMO B3 33 TH/s
The proposed power consumption of the B2 will be at around 1950W, which is very energy efficient. They seem to be selling for around $1,999.151 The release of chips featuring the 7 nm architecture will have a major impact on the hash rate and in the end the difficulty.
There are a few other companies that announced ASICs for other algorithms too. For example, ASICs from Obelisk.152 They are producing specialized miners for DECRED and SIACOIN. More and more companies are producing ASICs focused not only on Bitcoin. Halong Mining, for example, is building a new DECRED miner called DragonMint B29.153
But the increased interest in the production of various ASICs is not necessarily a good thing. One of the key features of cryptocurrency projects is decentralization. This has a lot of advantages and is a very important, for some even the most important, aspect of nearly all projects. The development of ASICs has had a major impact on the decentralization of the Bitcoin network—or rather, on the process of centralization. This is a very important point because the decentralization of the network is crucial for the whole underlying idea and functionality. That’s why, it is preferable to have a strong network hash rate with as many miners and nodes possible in various geographical locations (which makes it harder to harm the network in any way).
Initially, Bitcoin was easily mineable by every CPU. This was a good precondition for a decentralized network, since everyone all over the world could participate and secure the network. The risk of a 51 percent attack, the biggest threat to the Bitcoin network, has been greatly reduced by equal distribution of the network hash rate.
But ASICs rendered every mining CPU useless and therefore shifted the mining to those specialized miners only. This can lead to a lot of problems, since the process of mining is getting more and more centralized. You always have to keep in mind that mining companies aren’t going to sell their devices directly to the public as long as mining on their own is even more profitable. And even if they do sell some devices in these new circumstances after all, it doesn’t mean that they don’t already perform a lot of mining on their own. This is really important for nearly every project/algorithm that ASICs are going to be produced for. As ASICs render most of the other mining gear unprofitable, it hands over a lot of power to the chip producing companies. This is one of the reasons it’s great for the entire crypto space that more and more companies are joining the mining business.
To explain why all of this is so important, we have to come back to the possible 51 percent attack once again. A 51 percent attack refers to a company, group, or simply everyone controlling more than 50 percent of the network’s overall hash rate. Holding so much power, the entity could harm the network in different ways and could even interfere with one of the underlying key features, the immutability of the network. It would be possible to prevent transactions to be confirmed or even render them invalid. Even double-spending Bitcoins could become realty.156,155
Although I always use Bitcoin as a reference and an example, this is a possible threat to many other coins out there too. A 51 percent attack on Bitcoin hasn’t happened yet, even though some aggregation of hash rate was frowned upon in the past. In mid-2014, one mining pool (GHash.io) crossed the 51 percent mark for a few hours.154 For the sake of the Bitcoin network and to prevent any harm, one big miner pulled their computing power from the pool.
This becomes especially interesting because Bitmain has been controling a lot of network hash rate over quite a long time now too. They officially own three of the biggest and well-known mining pools (Antpool, BTC.com and ConnectBTC). These mining pools alone controlled around 40 percent of the network hash rate in mid-2018. The direct involvement in other mining pools is unclear but might as well be possible. Even though the ownership of a mining pool is not to be equated with owning the hashing power directly, Bitmain’s infulence is undeniably high.155
At this point, it should get clearer why not everyone is happy about the development of ASICs. But not all dev-teams or core groups just lean back and let everything happen without any action. As Bitmain announced an ASIC (Antminer X3) specific to mine the CryptoNight algorithm in early 2018, the developer team behind Monero (XMR) was ready to take further steps. On April the 6, the Monero network hardforked to introduce ASIC resistance, rendering the announced Antminer X3 useless.157, 158
The screenshot above displays the tweet from Riccardo Spagni (lead developer of Monero) announcing the successful hardfork.159 This literally led to a fire sale of the CryptoNight ASICs. The ASIC-producing company Baikal, for example, sold their miners with the slogan: “Buy one, get Five.”160 Even though the miner would still be usable for other coins, using the same algorithm, a major source of profit and interest dissolved. The hardfork made sure that GPU mining is still profitable, which is a really good aspect in terms of decentralization. As I personally think that building a GPU-based mining rig is a good way to start mining in general, we will discuss this topic further on the next pages. Before we start, there is one thing to keep in mind. You can try out everything we are going to discuss even with your standard video card. Some of you might have some high-end graphic card built in already, which could be used to generate some profit.
7.1 How to Build an Efficient Mining Rig
Building your own mining rig to mine with graphic cards instead of some highly specific ASICs has many different advantages. Probably the most important one is the broad range of different algorithms you are able to mine. As already mentioned above, in favour of decentralization, many new projects are launched as CPU-only mineable coins. But even though many new projects are initially CPU-only, if the project seems to be promising, some capable developer or community members will eventually start developing a GPU-based miner too. It might take some time, but you can be almost certain that someone is trying to start using their GPU rigs. The projects will react to this development in different ways. Some will split the blockreward between CPU and GPU; others might do nothing and you will only be able to mine the coin with GPU profitably from there on. Nevertheless, it is one additional factor, that makes GPU-based mining rigs so interesting. The following specifications of GPUs and the hardware in general is based on the state of tech in mid-2018. Depending on the time you will read this chapter, the hardware might be already outdated and unprofitable to mine with. You can still use the general idea behind it and adjust the hardware respectively. There are some pre-built mining rigs for purchase on the market.161, 162 But for the sake of your personal experience and knowledge, I would strongly recommend that you build up your mining rig on your own. It is very helpful to have some basic understanding about the technical components of your rig in case you want to upgrade it or you run into problems. This is especially helpful, as you will have to set up your operating system and the mining software on your own as well. Now, let’s start with some specifications.
7.1.1 The frame
First of all, we will start with the case or frame for your new rig. Due to better cost effectiveness and especially ventilation/cooling, most frames look something like this:164
You will find various different manufactures out there if you search for it online. If you are talented to some extent, you will find some DIY (do it yourself) instructions online too. You will even find some YouTube videos with step-by-step instructions. A few years back, building your own frame was nearly the only option. It does not have to look nice or be expensive to do the trick. But even if you are looking for one to buy, there are cheap ones available. Some will feature additional fans (like the one above), which can be quite useful when it comes to air circulation and cooling.163 Even though most miners prefer open frames, you will find some server cases or closed ones too.
7.1.2 The motherboard
The search for the right motherboard can be quite annoying, to be honest. Especially, if you have to figure out some important points. As the time of writing, there were even some motherboards released that are built to be used for cryptocurrency mining. ASRock, Biostar, or Gigabyte, for example, offer such boards. Some that may be interesting are:
- GIGABYTE GA-H110-D3A
- ASUS PRIME Z270-P
- Biostar Tb250-btc
- ASRock H81 Pro BTC
Most motherboards intended to be used for mining purposes don’t feature the newest generation of CPU or other up-to-date RAM. It’s just not needed for mining purposes. All of them will be capable of handling a larger set of video cards, which is a really important point in choosing the right board. Most will easily handle up to six cards, but if you plan to add more, you might have to take the one suitable for your needs. Depending on your budget, you will find some boards featuring newer technological standard like the newest CPU socket or a M.2 slot for an onboard SSD as well.
Now, there are different ways to configure your mining rig, depending on your long-term plans. Some might like the idea that the purchased hardware could be used as a modern gaming PC if the mining operations are stopped for whatever reasons. But as most motherboards are focused on mining, even if they support some new technical standards, they are not the best when it comes to gaming. Most miner will therefore choose some cheap and slow CPU and RAM for their mining purposes. The underlying idea is quite simple: the money difference between a newest gen CPU and RAM can either be used to purchase an additional video card to mine with or to reduce the price of the initial investment. In case they need to stop mining, most will try to sell the whole mining rig instead of some single parts. This can even be more profitable, since you will always find some people out there who don’t want to assemble a rig on their own. As it most probably won’t make any sense to build a multiple GPU mining rig if you already plan to stop mining, I would go with the cheap CPU/RAM version.
As already mentioned above, even if you don’t spend the money saved in comparison to some high-end CPU and RAM on an additional video card, reducing your initial buy-in price will help you to minimize your financial risk. As I talk about cheap CPUs, an older Intel Pentium (2 Cores) will serve you well, for example, if it fits with your chosen motherboard. When it comes to RAM, you should have around 4 GB. Some slower ones with 1333MHz or 1600MHz should be enough.
7.1.3 The PSU (power supply unit)
When it comes to choosing the right PSU, you should really take your time and remember some important points. The PSU is one of the most (if not the most) strained parts of your whole mining rig. It is really a bad and sometimes very costly mistake to only focus on the GPUs. You will find some detailed tests and information about different PSU online, but I will try to sum up the important specifications as well as possible. Depending on the number of GPUs you want to use in total, you will have to adjust the maximum capacity of your supply unit. Some will prefer using two units with a smaller capacity each, whilst others will prefer one really strong one. As a personal preference, I recommend the two-PSU option to spread the power and let each one run with a lower-load level. If you already have a preferred GPU you want to use, you can look up the maximum capacity needed for each card, easily. You will need to add some extra watt for the other components of your rig as well. Besides your GPUs, your CPU will most likely need most of the additional power. You will find the wattage number of your CPU in the manufacturer specifications (might be something around 100 watts). Note: It is good to oversize the maximum power of your PSU for different reasons, although your mining rig will almost certainly consume less than the calculated maximum amount. Your CPU, for example, will be close to idle most of the time, consuming maybe one third of the maximum power or even less. The same applies to your GPUs. They will never be idle (at least shouldn’t be) but depending on your preferred algorithm will consume way less than the maximum. There are several advantages in choosing a power supply, stronger than your estimated total power consumption.A PSU will run most efficiently at around 80 percent load. The overall rate on wasted energy/heat will be less, and it will be more cost efficient. Given the fact that the electricity cost will determine your profit, you should be really careful in choosing the right PSU. It shouldn’t surprise you at this point that a high-quality PSU will not be cheap. I can only advise you that trying to cut the cost at your PSU is a really bad idea. Always buy from well-known manufactures with a good reputation. Your PSU will run 24/7 too, and every downtime will literally cost you money. There are some PSUs offering nice features like a possibility to remotely monitor your power supply stats (LINK from Corsair, for example165). This can be really helpful, and some miner wouldn’t miss it anymore, but it’s nothing that you particularly need, especially for your first mining rig. Very important specs you should really focus on are as follows:
- 80 PLUS Gold certification or higher
- up to 90 percent efficiency or higher (typical loads)
- More than one year of warranty and support
- Quality Fan and especially Capacitors
- Reputable manufacturer
- PSU protection features (OVP, OCP …)
Some well-known PSUs include the following:
– EVGA SuperNOVA 1600 T2
– EVGA 1000 G3
– EVGA 750w G2
– Corsair HXi Series, HX1200i
– XFX PRO1050W Black Edition
Here is some additional information regarding the points provided above: The so-called 80 PLUS certification is really important, as it provides information about the amount of electric energy that is wasted. Here is an example: If the PSU provides 80 percent efficiency, even if 1000 watts are pulled from the wall, only 800 watts can be used in your system. To receive an 80 PLUS certification, the PSU has to provide an 80 percent efficiency or higher at 20, 50 and 100 percent load.166 An 80 PLUS efficiency table is displayed below:167
Even though an 80 PLUS Titanium certified PSU might have the best efficiency, it is not the best pick in most cases. Those few extra percent of higher efficiency compared to efficiency of a gold PSU, for example, don’t really justify the price. It doesn’t make any sense to spend extra hundreds of dollars just for a very few percent of efficiency. The points discussed above as well as the PSU examples should give you a good idea of what specifications are important.
7.1.4 The GPUs (graphics processing unit)
Now let’s have a look at the centerpiece of your rig, the GPUs. Choosing the ones that suit you best might be the hardest part of the whole rig-building process. The best or most profitable GPUs vary greatly over time, and the whole market undergoes huge changes as a new generation of cards becomes available. For now, the following list provides the most prominent ones at the time of writing:
– AMD RX VEGA 56 / 64
– AMD Radeon RX 570/ 580
– Nvidia GeForce GTX 1060
– Nvidia GeForce GTX 1070 / Ti
– Nvidia GeForce GTX 1080 Ti
At mid-2018, the Nvidia GeForce 1080 Ti is still the most powerful GPU available. This probably won’t change much until the propagated release of the GTX 2080 Ti. But even though the GTX 1080 Ti is the most powerful card available, it will most definitely not be the best card for you, especially if you are totally new to mining. The card is really expensive and has a very high level of energy consumption. As other GPUs provide a better level of ROI, the GTX 1080 Ti is not the one I would use to build a mining rig today.
Depending on the algorithm you are looking to mine, the RX Vega might be a good choice. It is more expensive than the RX 580 (factor 1.5-2) but has a very good mining performance, especially worth the cost if you plan to mine Monero. The hash rate is around three times higher than compared to the RX 580, which leads to a better cost/hash rate ratio. The card with probably the best cost/hash rate ratio is the RX 580. It is available for a great price and performs very well over a broad range of algorithms. Due to its popularity between miners, it is often sold out and is really hard to get, especially in a bull market. If you have the possibility to buy those at a decent price, I can only recommend using them to build up your rig. Another well-performing card is the GTX 1070. It delivers a great hash rate combined with a low power consumption. The price is generally quite high, and it is a very hard task to get your hands on them for a decent price. They might not feature the best price/hasrhrate ratio but are often considered to be a top pick. A cheaper but less powerful alternative would be the GTX 1060. It might be a good choice if you have high electricity costs. Choosing the right GPU is hard and strongly dependent on your budget and preferences. Remember that you can always use the provided websites (e.g., <whattomine.com>) to compare most commonly used GPUs. As the GPUs are the key part of the whole mining rig, their availability in your country will play a crucial role in the overall pricing of the whole mining rig. As an example, take a look at the chart below:168
The table above lists the most commonly used GPUs, followed by the corresponding price data. For better visibility, I’ve put a frame around each of the most important ones. The blue box features the MSRP (manufacturer’s suggested retail price). You will notice very quickly that most cards are offered at a premium compared to the manufacturers’ suggested price. The figures in the green box indicate the prices current as of July 2018. The figures in the red box are a snaphot of the GPU prices as of January 2018.
As you will notice, there is quite a premium compared to the MRSP. This was the result of different factors coming together. One of the major factors was definitely the general popularity of crypto and the high demand on mining gear. The second thriving factor was almost certainly the supply shortage of the most GPUs at that time. It is important to know that even the GPU prices undergo a high level of volatility, which can even follow the overall crypto market sentiment and cycles. That’s why the best point to start building a profitable mining rig can vary greatly over the years. It doesn’t make any sense to pay a double price for some of the cards, comparing to the MSRP. You will pay a large premium, which will make it even harder to reach the return on your investment within reasonable time. Especially, since even the crypto market won’t always go up parabolic. Try to get an overview of the whole market situation before starting your mining rig. Especially interesting is an announcement about the next generation of GPUs. Their release will almost certainly lead to increase in hash rate and difficulty. The MSRP prices will decrease for the now-older generation, which doesn´t necessarily mean that the resale price will adjust accordingly though. A new generation of cards won’t render your old ones obsolete. But as there will always be people buying the newest gear, you may have to reduce your propagated level of reward and therefore increase your time till you reach your ROI.
7.1.5 Additional hardware
If you already have chosen all the previous parts above, we will now come to some necessary but less complicated parts.
First of all, we need some sort of a hard drive. I would go with an SSD (Solid state drives) with around 120 GB storage capacity. You won’t actually need much, and since the SSD dropped in price massively, I would choose one over a traditional HDD (hard disk drive). PCI Express extenders/risers are easily forgotten but actually crucial. There are different versions on the market, but the USB 3.0 powered ones may be the best to choose.169
To prevent any form of disappointment, you should make sure that your bundle contains some additional power adapters. They will look like the one below, for example, but there are some other variations too:
In addition to the items above, you might want to buy some device to directly monitor your electricity usage (energy meter). It’s a simple device that you connect between the power outlet and the mining rig. There are various devices available—some “smart” ones, even controllable remotely via an app. One quite famous energy meter would be the “Kasa Smart Wifi Plug” from TP-Link, for example. But, as always, you can choose the one that suits you best.
One thing we haven’t talked about yet is how we are going to power up our rig. This is something many starters don’t think about, as it mostly seems self-evident. There are different ways to solve this. See the examples below:
You will find different variations very easily online. They are pretty cheap, and you just need to search for “ATX Power Cable Button Switch” or something like “Power Supply / Button reset Switch with Cables”. They are plugged into the motherboard directly, which should be a quite easy task. In case you encounter any problems, you can check the motherboard instructions or search for some explanation videos on YouTube, for example. In case you don’t want to use your regular mouse/keyboard and monitor to operate your mining rig (or you own a laptop, for example), you will need to buy some cheap ones too. As you won’t need them often, you won’t need some monitor with fancy features or amazing resolution. You might need some VGA-to-HDMI adapter to use an older model, but try to stay as cheap and basic as functional. The same applies to your keyboard and mouse. Some newer and also quite cheap alternative could be the usage of a small touch screen. Depending on your operating system, it could be as easy as plug and play. (Those monitors are mostly used in combination with tiny computer like the raspberry pi 3, for example). Speaking about the operating system, after we now finished the component list to build a multi GPU mining rig, we will now have a look at the most commonly used OS.
7.1.6 The operating system
There are two most commonly used operating systems out there when it comes to mining: Linux and Windows. Since this guide is focused on building your first mining rig with some basic knowledge, I will start with Windows. Even if you used only the MacOS in the past, you should be able to configure Windows quite easily.
The version we are going to use is Windows 10. Make sure to use this version, since there were a lot of issues when multiple GPUs were used with the previous ones. Because we haven’t included an optical drive to read DVDs, you will need to configure a bootable Windows 10 installation USB stick. This is nothing to be afraid of and is quite easy if you are already using Windows on your normal device. You just need to download the so-called Media Creation Tool from the official Windows homepage, which comes up as literally the first result if you google it. Next, click on “Create installation media (USB flash drive, DVD, or ISO file) for another PC.” Select the right language, architecture, and edition (Windows 10 should be chosen as default). Select your USB stick (USB 3.0 preferred) and hit Next to create a bootable USB stick. If you already own an ISO file or downloaded it before, you could use programs like Rufus or Etcher to easily create a bootable USB stick too. To boot from the USB stick, you will need to access your BIOS. You will most commonly open it up by pressing and holding the F2 or Delete keys during the startup process of your rig. The BIOS will vary, depending on your Motherboard, but it shouldn’t be too hard to change the boot order. Make sure to save your changes, and if everything is done right, you should be able to install Windows 10 on your SSD.
Some important points BEFORE you start up your rig for the first time: Plug in only one of your GPUs at first. And I prefer installing and configuring Windows without the ethernet adapter/Internet plugged in at first. There are a lot different settings that can be tweaked and adjusted in Windows. I will tell you some of the most important ones:
- Disable Windows Update
- Make sure to adjust hibernation settings
- (Select Never in all categories)
- Select High performance in power option
Download the following:
- The latest GPU driver
The last two programs are basic tools that will help you monitor your rig. Those are especially helpful if you want to fine-tune your settings or if you encounter any problems. You will further have to increase the virtual memory, depending on how much GPUs you are using. The virtual memory has to be at least the sum of all the memory of your GPUs combined. Follow the steps below to do so:
- In the search bar, type *This PC*, right-click on it, and choose Properties.
- Click on Advanced System Settings.
- Click on the Advanced tab. You should see Performance on the tab. Click on Settings.
- Click the Advanced tab followed by Virtual memory.
- Click change
- Uncheck Automatically manage paging file size for all drives.
- Check Custom size.
- Enter your GPU settings.
Rule of thumb:
Min: Sum of all GPU memory per card
Max: Sum of all GPU memory per card + one card
If you are using six cards with 4 GB each, you would set Min: 24 and Max: 28.
- Apply your changes and restart your rig.
Your mining rig should now be prepared to start mining. Before we have a look at the mining software available, we will discuss Linux as an operating system. You can easily skip this part if you are definitely using Windows 10.
Setting up a Linux OS is especially helpful if you are going to run multiple mining rigs, as it has some different advantages. It is easy to set up (if you know what you are doing) and good if you want to remotely control your rig via SSH. If you never worked with Linux before, it might be easier to use Windows 10 for your setup. But if you either prefer Linux, want to learn something new (Good!), or you just like the challenge, the crash course in the previous masternode chapter will definitely be the place to start.
Although there are Linux distributions featuring a graphical interface, this might be a very good point to get familiar with using commands. You will need to download a Linux version at first (I prefer 16.04 LTS, although the newer version 18.04 LTS might be equivalent in terms of mining software support at the time of your reading). Download it and create a bootable USB stick form the ISO with the help of Rufus again (like we already did in the previous example). You will now need to enter your BIOS and change the booting priority to USB. Save and exit your settings, followed by a reboot, which should start the installation. Follow the instructions and wait for the installation to be finished before continuing with the following steps.
At first you should update your OS:
*sudo apt update*
*sudo apt upgrade*
*sudo apt dist-upgrade*
If you want to remotely control your mining rig, use the following command:
*sudo apt-get install openssh-server*
It may seem very complicated to use Linux—especially if you take your first steps in networking. But as it is really comfortable to access your rig remotely, and you might end up with more than one rig in the future, it is definitely worth looking into it. I won’t go through the networking part in detail, as it would expand the book too much, and the options are limited on paper. You will find some detailed YouTube videos and guides online, which will make the setup basically copy and paste.
Now, it’s time to install the correct GPU drivers. As you will need to adjust some settings, depending on the GPUs you chose previously, which I can’t discuss in detail for every GPU available, it is now time to DYOR. You will find various guides for each card on Linux out there, where you need to only copy and paste the commands given. This knowledge is especially important, since the best performing settings or best drivers will vary over time, and I won’t be able to cover future releases.
7.1.7 The mining software
The best mining software will vary, depending on your operating system and the coin you want to mine. If you plan to mine Bitcoin, there is a pretty nice list providing information about the OS and the suitable miner (https://en.bitcoin.it/wiki/Mining_software). The most popular ones might be the following:
All of the above have their own pros and cons. Multiminer appears to be the most beginner-friendly software. It features a graphical user interface (GUI), which makes it very easy to use. I personally would recommend the CGMiner for Linux and Windows if you are comfortable with not having an GUI. It is one of the oldest and most reliable miners out there, which is often preferred due to a broad range of adjustable settings. As I don’t think mining Bitcoin directly is your first priority, we will now talk about different cryptocurrency miners.
Depending on the algorithm the coin you want to mine is based on, you will need to choose the corresponding mining software. The best miner will once again vary, depending on whether you use AMD or NVIDIA GPUs. One of the most popular examples is the Claymore miner. The miner was released in 2016 and did become especially popular due to dual mining possibility.170 It can be used for both NVIDIA and AMD cards and is updated regularly. The miner is among the best, since it allows you to mine Ethereum + Decred/Siacoin/Lbry/Pascal/Blake2s/Keccak at the same time, without any impact on the Ethereum mining speed. (Some users report some reduction in speed, but it’s definitely still worth it due its dual mining capabilities.) It has a small developer’s fee, which is definitely a fair amount, compared to the additional reward you will receive. Before we start mining, we need to set up a wallet to receive our rewards. (Since we are going to dual-mine, you need to set up a second wallet for the other coin you are going to mine as well). I would advise you to use a hardware wallet at this stage or at least the general security measurements described in detail in the Chapter nine. (Please do NOT mine directly into an exchange account.) Now, it is time you choose a proper mining pool for both coins.
Choosing the Right Mining Pool
Even though solo mining is possible too, it won’t be the best way to go, since the chance of finding a block is mostly too low to be any profitable. (Unless you own a large quantity of mining rigs). A mining pool combines the delegated computing power to increase the chance of finding a block/reward.
There are some basic facts that help you find the pool that suits you best. You should always try to join a pool with a good reputation or, at least, a longer history of operation. The last point can be neglected sometimes if you are going to start mining the newly launched coin. Therefore, it is important to care about the other points in advance.
The payout threshold and frequency of the pool are very important. The higher the threshold or the lower the frequency, the longer you will have to wait to have your mined coins sitting in your own wallet. Logically, this point gets even more important if you are running a weaker device to mine. Even if the pool has the best reputation and a perfect history in the past, the main goal is always to have the mined coins in your own wallet as fast as possible.
Another important point is the fee structure of the pool. The fees are generally reasonable, as they need to pay operational and security cost as well. Try to compare some pool fees to get a general feeling about the fee structure. Some might have some hidden extra fees that should make you careful. Especially if the pool is the first and maybe the only one to mine a new coin, the fees can be considerably higher than the mean. It mostly won’t take too long for other pools to be prepared, which often leads to an equilibrium in the fee structure. There are some pools without a fee too, but as we know that a pool has to have expenses, this is mostly some kind of promotion.
There is an ongoing fight about the question whether larger or smaller pools are better for miners. In the end, it does not really matter for the regular user, in my opinion. Larger pools will hit blocks more regularly, which will lead to more steady payout rates. Even though some miners won’t totally agree with me here, the size of the pool somehow relates to its trustworthiness as well. If the miner would really have a scammy feeling about the pool, there is no real reason for them to continue using it. Although many points are speaking for larger and more famous pools, smaller ones have some advantages too. Bigger ones are more often the target for DDoS attacks or hacking attempts, for example. Even though smaller ones might not have the same level of security features as the larger ones, they are definitely worth considering. Especially if you have one of the underlying principles of cryptocurrency in mind: Decentralization. It’s best for the network to spread the computation power across different pools to avoid the slightest chance of a 51 percent attack.
One last difference to discuss is the personal preference of either joining a pool or beginning to mine without doing so. The advantage of signing up is clearly being able to see all your mining stats easily and summed up. Another plus point is that you can check whether everything is working as planned by signing in, even if you are abroad. If you decide to register, make sure to use unique passwords and email addresses (or at least create one email that you’ll be using for your mining pool registrations only). The advantages of not signing up are straightforward: it’s quick and easy.
So keep both pros and cons in mind and check the websites comparing different mining pools online. And now that you know how to find a proper pool, you can continue setting up your miner.
Configuration of the Miner
Since the Claymore miner doesn’t feature a user-friendly GUI, we will need to configure the miner according to our personal specification in a different way. If you did not already unzip the miner, it is now time to do so. Move the zip archive into a new folder in any directory you want. Unzip it and right-click on the file called start.bat to edit it. Your text editor should open up and you need to update your necessary mining credentials and different miner settings. I will use Nanopool, <https://nanopool.org> as an example, as it doesn’t need you to register, and they provide reliant pools for various coins. The provided settings you should copy into your start.bat file are provided below:
*setx GPU_FORCE_64BIT_PTR 0*
*setx GPU_MAX_HEAP_SIZE 100*
*setx GPU_USE_SYNC_OBJECTS 1*
*setx GPU_MAX_ALLOC_PERCENT 100*
*setx GPU_SINGLE_ALLOC_PERCENT 100*
*EthDcrMiner64.exe -epool eu1.nanopool.org:9999 -ewal YOUR_ETH_WALLET/YOUR_WORKER/YOUR_EMAIL -epsw x -dpool stratum+tcp://sia-eu1.nanopool.org:7777 -dwal YOUR_SIA_WALLET/YOUR_WORKER/YOUR_EMAIL -dcoin sia*
Always remember that even if it looks very messy in the command line, only one space is used for separation. Let’s have a look at the things we’ve copied in detail. The first three lines beginning with “setx” are used to configure your GPUs. You can adjust various options that can be found in the announcement thread of the claymore miner on BTT. The command line below the GPU settings will tell you various things:
EthDcrMiner64.exe: will start your miner
-epool: Ethereum pool address.
eu1.nanopool.org:9999 Our chosen mining pool
(based in Europe)
-ewal Your Ethereum wallet address
-epsw Password for Ethereum pool, use “x” as password.
-dpool Decred/Siacoin/Lbry/Pascal pool address
sia-eu1.nanopool.org:7777 Our second chosen mining pool
-dwal Your Decred/Siacoin/… wallet address or worker name
-dcoin select second coin to mine in dual mode. Possible options are *-dcoin dcr*, *- dcoin sc*, *-dcoin lbc*, *- dcoin pasc*, *-dcoin blake2s*, *-dcoin keccak*. Default value is *dcr*.
With these settings above, you could start mining Ethereum AND Siacoin (SC) in dual mining mode on the mining pools provided by Nanopool, after you’ve filled in your corresponding wallet addresses. This is only one of the possible examples provided in the original thread <https://bitcointalk.org/index.php?topic=1433925.0>. The thread is definitely worth stopping by if you want to use a different pool or add some other/additional settings. Make sure that all of your settings are right, save, and close the file.
Now, if you double-click the edited file, your miner should start up successfully. One thing that you should definitely do is set up some failover pools. This will guarantee that even if your primary named server goes offline, your miner will try to connect to one of your specified backup pools. To set those pools as a backup, you need to modify the epools.txt file (for Ethereum) and the dpools.txt file (for the second coin of your choice). The pool in your “start.bat” will remain your main pool, and the miner will try to switch to it after thirty minutes. Every listed pool will have three connection attempts before switching to the next one on your list. For example, it should look as follows in your epools.txt file:
POOL: eth-eu1.nanopool.org:9999, WALLET: YOUR_ETH_WALLET/YOUR_WORKER/YOUR_EMAIL, PSW: x, WORKER: , ESM: 0, ALLPOOLS: 0
POOL: eth-eu2.nanopool.org:9999, WALLET: YOUR_ETH_WALLET/YOUR_WORKER/YOUR_EMAIL, PSW: x, WORKER: , ESM: 0, ALLPOOLS: 0
Always remember to switch the wallet to the one you have control of. Try to add some pools to the list and save the changes (try to include backup pools from different providers).
Note: I used the Claymore Miner for educational purposes. You will have a broad range of different miners out there. Most projects are likely to provide the most popular ones on their websites or on their BTT announcement threads. As always, you can use CMC to easily find the information you need. New projects will provide some of the running and reliable pools in the first post of their announcement thread as well. Most won’t feature a GUI, which shouldn’t be a problem anymore, as you will just need to modify some files like we did in the example above. The needed changes can be found quite easily in the corresponding announcement thread or the website.
There is a broad range of really cool mining software out there. “Awesome Miner,” for example, lets you track and manage up to 10,000 miners.171 It’s been around for several years now, and you can still ask for support directly in the thread. Just take your time searching through the web, YouTube and bitcointalk, and I am almost certain you will find everything you need to successfully start mining.
In case your system overheats or restarts repeatedly, you can configure Windows to start up your miner automatically. (This will also work if you have a power outage and configured an auto-restart in your BIOS.) There are many ways to do this, but this one may be the easiest:
- Right-click on your mining software and create a shortcut (In the example above, it would be the “Start.bat”.).
- Press Windows + R on the keyboard.
- In the window, type *shell:startup* and hit Enter.
- Move the shortcut you’ve created into this folder.
If you correctly follow the steps above, your miner should automatically start up after a Windows reboot. This can be used to start up any program you might need as well. If you encounter any problem at any given stage, don’t be afraid to ask for help. Something that might be interesting for beginners or some gamers who want to rent out their high-end GPUs was just released a few months ago. It’s called Honeyminer and is very easy to use (https://honeyminer.com). The most profitable coin is analyzed automatically, and you will get paid in Bitcoin. See the simplified scheme below.
Since it is quite new, experienced miners will miss a higher level of information or flexibility (for example, you can’t decide to keep the mined coins instead of being paid in Bitcoin). Definitely noteworthy is the current fee structure. You will pay 8 percent for the use of one GPU and 2.5 percent for more than 2 GPUs. Currently, only Windows is supported, which will, apparently, be changed in the future (like additional options as well).
One very well-known miner in the crypto space, Notsofast,172 has just recently joined the project as an advisor.173 Depending on how everything turns out, I think the project can be very successful. It might not be the best choice for more experienced users at this stage, but that might change in the future.
Another way to rent out your computational power is using NiceHash, for example. As NiceHash allows you not only to sell hashing power but also to buy it, we will talk about this special case in the next section.
7.2 Cloud mining
Although NiceHash is actually more of a hash rate brokerage than a cloud-mining service, I will further get into detail here as well. In regular cloud mining, you buy the hashing power from the company, offering the cloud-mining service. By using NiceHash, you are actually buying some hashing power from user out there, willing to sell their computation power over the platform. If you have some rig or ASIC running right now, you could as well offer your hashing rig over there too by following a few simple steps. But is it worth it buying or selling hashing power in the first place? I always try to be as unbiased as possible and to keep my opinion to myself. But when it comes to cloud mining, I strongly suggest that you avoid it in general (being inexperienced at first).
I am not saying that it couldn’t be profitable though. But cloud mining was tightly connected with scams in the past. The reason for it is quite simple. Some company could easily fake some ASIC and mining rig farm photos and use an old and simple trick. They start with some minor amount of Bitcoin of their own and try to attract some investors for their long-running mining contracts. They will initially pay those investors with their own Bitcoin, letting them think they are actually mining something (although there is not even one mining rig working). As more investors are joining, they take their payments for new mining contracts, to further pay the previous clients. This concept is pretty old and might even work out as long as the inflow of new cash is higher than their old liabilities. That’s how some cloud-mining companies scam people rather easily.
In mid-2016, some victims of a cloud-mining scam even signed a petition to the FBI and different hackers, hoping to get more information about the loss of funds and the state of the market.174 Bitcoin Cloud Services (BCS), another cloud-mining company, turned out to be a Ponzi scheme as early as 2015.175 HashFlare, one of the big names in the cloud-mining business in 2018, has just recently dropped their SHA-256–based mining contracts176, 177—the action that doesn’t necessarily classify as a scam but that does raise fear and doubts.
And even if you don’t become a victim of a scam, there is still a chance of your losing money due to someone’s hacking the platform, which has nothing to do with cloud mining. NiceHash, for example, was a victim of a major hack in late 2017. About four thousand BTC were stolen, and the CEO left the company following the event.178 Even though the company compensated the user and relaunched the platform, there is still a high risk when it comes to using some cloud-based mining services.
So, to begin with, you will be better off just buying Bitcoin directly. Nevertheless, there are ways to earn money by buying some cheap contracts (especially if your own electricity price is very high) and by mining some newly launched coins, for example.
Now, if you are interested in mining, I would always recommend starting with your built-in GPU/CPU or some old gear first—especially, if you just want to try it out or do it for fun. If you really want to earn some coins, a mining rig is the way to go. Even though I don’t think cloud mining is worth it, Genesis Mining, <https://www.genesis-mining.com>, seems to be the most reputable and trustworthy company to deal with.
Now, that we’ve talked a lot about everything related to mining, you may find the following list of common algorithms and the corresponding coins helpful:
SHA-256: Bitcoin, Bitcoin Cash, Peercoin Namecoin, Crown, Terracoin, CureCoin
Scrypt: Litecoin, Dogecoin, ViaCoin, Syscoin
CryptoNight: Monero, Bytecoin
X11: Dash, StartCoin, MonetaryUnit
Blake256: Decred, Blakecoin, Vcash
Blake 2b: Siacoin
Dagger-Hashimoto: Ethereum, Ethereum classic
Lyra2RE2: VertCoin, MonaCoin
Equihash: Zcash, ZClassic, Komodo
Argon2i + SHA512: Arionum
Note: This list is far from being complete. But knowing some algorithms and the corresponding coins is something really helpful if you plan to start mining. At some point, you will know which algorithm or miner works best for you. This is especially nice if you plan to start mining newly launched coins. I would like to close this chapter with something I found to be really interesting. This may even help you understand mining in general a little bit more. It may seem unbelievable or insane, but you can actually mine Bitcoin with pen and paper. Here is a link to the article written about four years ago, <http://www.righto.com/2014/09/mining-bitcoin-with-pencil-and-paper.html> (which doesn’t make it any less interesting) and a screenshot of one pen-and-paper round of SHA-256:179