Cryptocurrency miner - what is cryptocurrency mining?

Cryptocurrency digging is a topic that interests many people. From everywhere we hear about the changing prices of BTC, ETH and other digital currencies. At the same time, you hear much less about how to mine them. What is cryptocurrency mining about? How to start the adventure of digging cryptocurrencies? Is it possible to start the adventure of digging using a laptop? Is digging in the cloud a good idea? What is a cryptocurrency miner? And finally, the most important one - is cryptocurrency mining profitable?

Cryptocurrency mining - what is mining?

Before going into specific information about how to start your adventure with cryptocurrency mining, you first need to understand what this process is about. Below we describe in a simplified but understandable way what the essence of cryptocurrency mining is. To understand this process you need to refer to how the blockchain on which bitcoin and other cryptocurrencies are based works.

How does the blockchain network work?

The fundamental principle of blockchain networks is distributed networking, i.e. the operation of the system without a central unit. This means that there is no single central computer, server or any other central technical infrastructure that would provide the computing power needed to operate the network. By network operation we mean validating new blocks and attaching them to the previously created block chain. This process makes it possible:

  • Transferring cryptocurrencies between different addresses;
  • Issuance of new cryptocurrency units;
  • Ensuring safety.

The use of cryptocurrency diggers in blockchain

A piece of computer equipment called a cryptocurrency digger provides computing power by performing advanced calculations and thus enables cryptocurrency transactions to run smoothly. For the tasks that the miner performs, the user receives something like a reward, which is according to the Proof of Work (PoW) algorithm. How big the reward will be depends on the hashrate and hashpower, i.e. on the units of measurement of the computational power of the copier. You should know that the performance of a miner is described in hashes per second (H/s).

The greater the computing power of the miner, the faster the task is completed and the greater the reward for the miner. In summary, miners around the world compete with each other as to which one of them will solve the problem (referred to as hash) the fastest. The one who confirms a cryptocurrency transaction through successful computation is rewarded with a share of the cryptocurrency he or she is working for in a sense.

What are cryptocurrency miners? What is a bitcoin and ethereum miner?

To mine cryptocurrency in the traditional way, you need to use hardware in the form of a computer or a dedicated digger. The standard is to use kits consisting of multiple high-performance graphics cards. Two types of diggers can be found on the market:

  • ASIC - a type of integrated circuit that has been manufactured for a specifically defined task.
  • GPU/CPU - machines built from traditional graphics cards and a processor.

What are the benefits of an ASIC - Specialised Integrated Circuit?

Why is it worth digging cryptocurrencies with an ASIC copier? ASICs designed specifically for crypto mining consume less power than GPU/CPU, while the hashrate power is much higher compared to competing solutions. In addition, ASICs are valued for their smaller size compared to GPUs.

However, miners built on ASICs have a major drawback in that this type of device can only be used to mine one specific coin. So if you plan to mine BTC then you can no longer mine Litecoin using the same hardware. ASICs, despite their high performance, are used much less frequently than graphics card/processor combinations.

A GPU/CPU is a computer-like unit that is equipped with several graphics cards. With the help of such a copier, it is possible to mine various types of cryptocurrencies regardless of their type.

A standard cryptocurrency miner consists of the following components:

  • Motherboard - which has a lot of PCI connectors (to mount graphics cards);
  • Processor - in most cases an inexpensive unit will suffice;
  • Operating memory - 8GB is usually sufficient;
  • Power supply - special attention must be paid to this component. An excavator equipped with several graphics cards has a high demand for electricity;
  • SSD - almost any entry-level model will do;
  • Frame - Cryptocurrency diggers are encased in what is known as a frame (mining rig);
  • Graphics card - the key role in the comparison is played by the graphics card, not just by one card but by the whole set. As a rule, at least several graphics cards are used in one set. Of course, it is not uncommon to see large conglomerates containing as many as a dozen or several dozen graphics cards;
  • Risers - Risers are adapters and extensions which connect graphics cards to PCI slots. In case of sets built with several graphics cards, it is an element without which it is difficult to do without.

The most important of the aforementioned components are the graphics card and the power supply. The other components do not have a big impact on the efficiency in cryptocurrency digging. Assembling your own cryptocurrency digger is not much more complicated than assembling a computer. The most noticeable difference concerns the use of risers to connect graphics cards.

How to mine ethereum? How to mine bitcoin?

Equipping ourselves with hardware is, of course, only half the battle - to be complete we need software.

Operating cryptocurrency mining software is not a difficult task. It can even be considered a piece of cake, which is limited to downloading the software, creating a user account and literally a few intuitive clicks to start the digger. If you have any problems with the intuitiveness of use for most of the solutions mentioned above, you can find detailed instructions online.

It is also worth looking for tutorials in video form, which are published in large numbers on the web (e.g. on YouTube). Furthermore, it should be noted that as a rule, software manufacturers offer support for their users.

Examples of solutions we can use to mine cryptocurrencies are:

  • HiveOS;
  • NiceHash;
  • Minergate;
  • Minterstat;
  • Claymore;
  • Bitcoin Core;
  • BTC Miner;
  • CGMiner;
  • Ethminer.

In our subjective opinion, among the above-mentioned software, HiveOS and NiceHash are particularly frequently used. Both platforms are used willingly by users, as they are valued for their intuitiveness and efficient, trouble-free operation.

Of course, which platform you decide on depends largely on individual preferences and on your own tests. It is worth noting that some of the above solutions work on Windows or macOS and some on Linux.

What are the commissions involved in mining software?

Most solutions are paid (while there are also free ones that charge 0% commission and no flat fee). Examples of prices are e.g. USD 2 per post or 1% commission from the dug cryptocurrency. This means that, as a rule, these are not high fees. Prices, of course, vary and before deciding on a specific software you need to first look at the price list provided on the software manufacturer's website.

How to mine Ethereum? Check out our calculations.

We already know what is needed to build the excavator both from the software and hardware side, now let's consider what is the profitability. In order to show the profitability of such an undertaking, three calculations are used below.

The first example shows how profitable digging can be using a PC unit worth about PLN 11 000. The second example uses a typical cryptocurrency miner, which costs several thousand zlotys. Moreover, in the further part of the article we check how a gaming laptop from a very high shelf works as equipment for crypto digging.

CALCULATION 1 - Desktop computer equipped with RTX 3080 graphics card:

  • Purchase price of the equipment: PLN 11,000.00
  • Digging speed: 100 mH/s
  • Current consumption: 350W
  • Annual electricity price (rate 0.65 PLN kWh, excluding fixed charges): about 1 992 PLN
  • Annual revenue (24/7 operation): 9 211 PLN
  • Annual profit (not taking into account the cost of purchasing the device and tax): 7 219 PLN
  • How long does it take for the device to pay for itself? Approximately 1.5 years.

The purchase of a complete desktop computer (equipped with the RTX 3080 card, which is very popular among miners) costs about 11,000. The speed of digging is 100 mH/s, while the power consumption is about 350W. The estimated revenue (taking into account ETH prices from July 2021 and subtracting the cost of electricity consumption at a rate of 0.65 PLN 1kWh) is more than 7000 PLN.

Thus, this type of equipment pays for itself in about a year and a half after electricity costs have been deducted. The calculation does not include PIT on the earned income, which is 19%. The tax should be paid on those cryptocurrencies which were exchanged into fiduciary currencies (e.g. PLN). Also, the fixed fees for electricity were not included, which amount to approximately several dozen PLN regardless of whether we use electricity or not.

EXAMPLE CALCULATION 2 - a cryptocurrency miner equipped with 6 Nvidia GTX 1660 graphics cards:

  • Purchase price of the equipment: PLN 14,000
  • Digging speed: 120 mH/s
  • Current consumption: 720W
  • Annual electricity price (rate 0.65 PLN kWh, excluding fixed charges): about 4 555 PLN
  • Annual revenue (24/7 operation): 10 500
  • Annual profit (not taking into account the cost of purchasing the device and tax): 5,945 PLN
  • How long does it take for the device to pay for itself? Approximately 2.5 years.

Above is a calculation showing the use of a cryptocurrency copier that is equipped with 6 Nvidia GTX 1660 SUPER graphics cards and consumes 720W. When digging with such an ETH copier, a minimum speed of 120MH/s can be achieved. Assuming that the annual electricity charge will be 4,555 PLN, the annual profit after taking into account the costs in the form of electricity bill will be about 5,945 PLN.

The amount seems satisfactory, however, it must be taken into account that the purchase of such a device is a cost of the order of PLN 14 000. Therefore, the return on investment must wait more than two years. This example shows that using a copier, which consumes an amount of electricity slightly greater than a desktop computer, you can achieve quite satisfactory results.

It is worth bearing in mind that this result can be significantly improved if you find an excavator with similar performance at a lower price. By browsing through popular advertising portals it is sometimes possible to find equipment at bargain prices, so the payback time can be much shorter.

Cheap energy is the key to the success of cheap cryptocurrency mining!

In addition, looking for opportunities to reduce costs, it is worth using photovoltaic panels. Of course, the purchase of a photovoltaic installation is associated with a high cost of several or even more than ten thousand PLN.

It should be remembered, however, that the electricity produced, apart from being used to mine cryptocurrencies, can also be used for personal use. Planning such an installation in a well-thought-out way means that the outlay incurred on the purchase of solar panels can pay for itself in just a few years. This is why many cryptocurrency miners are eagerly looking at such a solution.

Is it profitable to mine cryptocurrencies on a laptop?

People starting their adventure with cryptocurrency digging very often wonder if buying a digger is necessary. Many people are afraid of buying equipment that is expensive and gives the impression of a machine that is complicated to use.

This raises the question of the profitability of cryptocurrency digging with a laptop. Below, we examine this with the example of a gaming laptop equipped with a laptop graphics card RTX3080.

EXAMPLE CALCULATION 3 - Digging cryptocurrencies with a laptop:

  • Purchase price of the equipment: PLN 10,000
  • Digging speed: 50 mH/s
  • Current consumption: 130W
  • Annual electricity price: approx. 740 PLN
  • Annual income: approx. 3 874 PLN
  • Annual profit: approx. 3134 PLN
  • How long will it take for the equipment to pay for itself? Approximately 3 years.

A high-end laptop equipped with a powerful RTX 30xx card costs around PLN 10,000. Of course, this is an averaged amount, because it is possible to find models a few thousand cheaper, as well as those much more expensive. The efficiency that such card is able to achieve is 40-50 Mh/s. As a result, a laptop connected around the clock 365 days a year is able to generate ETH worth about PLN 1750. This means that the cost of buying a laptop will pay for itself only after more than 3 years.

If we compare these results to the performance that standard cryptocurrency copiers allow, it is not a staggering result. It should be borne in mind that a standard copier has cleverly designed cooling. A laptop, on the other hand, is a compact device designed for completely different activities and can overheat or be damaged by heavy use. Many manufacturers are aware of this, which is why more and more often the warranty is not available if the laptop has been used for cryptocurrency digging.

However, it should be borne in mind that all of the above calculations are indicative and may differ significantly from actual data. The calculations presented in this article cannot be treated as a recommendation. Actual returns on investments may be affected by many variables that were not included in the above simulation.

It is important to bear in mind the investment risks and know that cryptocurrencies can offer very attractive returns, but at the same time do not guarantee them. A lot depends on the current price of the chosen cryptocurrency. For example, people who dug ETH in February 2021 could earn as much as 300% more than in December 2020 and thus the time of return on investment could shorten, for example, from the planned 1-2 years to just a few months.

This means that your final profits can be heavily influenced by whether the price of a particular cryptocurrency is currently in a bull market or a bear market. Investments in crypto need to be planned over several years so that momentary fluctuations in the exchange rate do not have a decisive impact on whether or not you can achieve your plan. In addition to intense fluctuations in the exchange rate, it is important to note that another risk is changes in the difficulty of digging up cryptocurrencies.

Digging Bitcoin today is much more difficult than it was a few years ago. The situation may change even more in the case of ETH. Currently, there are rumors that Ethereum 2.0 will be released, which will be based on the Proof of Stake algorithm and thus the profitability of digging Ethereum will be much lower than now. It is likely that at this point miners will be forced to find other altcoins to mine and accept lower returns than those included in the above calculations.

Which cryptocurrencies are suitable for digging?

To make the whole venture effective you need to consider which cryptocurrencies to mine. The above calculations are for ETH, as Ethereum is often the cryptocurrency of choice for miners. However, when preparing for Ethereum 2.0, it is worth checking what other altcoins are suitable for mining. The experienced miner is constantly on the lookout for bargain altcoins that offer above-average returns.

The table below uses the calculation for the RTX3080 graphics card mentioned earlier. The calculations are from (as of July 2021) and take into account the cost of purchased electricity (at a rate of approximately 65gr kWh).

  • Ethereum (ETH): $5.36;
  • Swap (XWP): $4.19;
  • EthereumClassic (ETC): $4.15;
  • Raveoncoin (RVN): $3.92;
  • Ergo (ERG): $3.77;
  • BitcoinGold (BTG): $2.84;
  • Expanse (EXP): $1.61;
  • Monero (XMR): $-0.94;
  • Sero (SERO): $-1.02.

From the above list, it is clear that profits strongly depend on the cryptocurrency chosen. The example of Monero or Sero, shows that digging some cryptocurrencies can even generate losses. Of course, the amounts that can be obtained from digging individual altcoins change practically every day. Therefore, at the moment you are reading this article probably each of the above mentioned cryptocurrencies has a different efficiency.

How to mine bitcoins? Is it still profitable to mine BTC?

BTC was missing from the above list. Is the most popular cryptocurrency no longer a profitable morsel for miners? At the beginning of bitcoin's history, miners received a 50 bitcoin reward. In 2012, the size of the reward was capped at 25 units, followed by 12.5 units in 2016 and 6.25 units on May 15, 2020. In other words, every four years the reward given to miners is halved. This process is called halving.

The fundamental principle of BTC is strong deflationary pressure, which results from the limited number of units (the maximum number of BTC units is 21 million) and precisely from halving. Unlike traditional fiat currencies, it is impossible to add any number of coins. The gradual reduction of the reward ensures greater stability of the cryptocurrency and protection against inflation. To date, around 18.5 million BTC has been mined which is a clear majority. The remaining 3.5 million BTC will be mined until 2140!

Many farms are organised enterprises subsidised by large investment funds. Huge farms the size of a football pitch have been known to use thousands of solar panels.

It used to be that digging the most famous cryptocurrency was the natural choice for miners. Today, however, there is definitely more focus on digging altcoins, which simply offer higher returns. It can be considered that digging BTC with traditional graphics cards is simply not profitable. Specialised devices such as Antminer are used to mine the most popular of cryptocurrencies.

Digging cryptocurrencies online - is digging in the cloud possible?

So-called online digging is more a proposition for users who cannot afford to buy expensive hardware or simply do not want to own a cryptocurrency digger for various reasons. In simple terms, cloud digging involves users investing their funds in a specialised cryptocurrency digging company.

The company should use the funds raised to purchase technical infrastructure. It then transfers part of its computing power to the user in a contractual form. Of course, this is done in the form of profit sharing. In other words, cloud mining is simply renting diggers.

The advantage of such a solution is that we do not have to worry about maintaining the technical infrastructure (equipment failures, service and cooling are issues that do not bother us). It is enough to deposit money like on a bank deposit and wait for profits to be paid out. Unfortunately, digging in the cloud also has its serious disadvantages.

Online mining has become a field for many abuses. Most of the companies offering this opportunity are simply scams, but nevertheless, not every cloud mining offer can be lumped together. Below are a few platforms of this type.

An example of a popular cloud mining app

The first example is Multiminig. It is a free software that supports over forty thousand diggers from all over the world. Each registered user gets one hour of free hash power. More processing power can be obtained by paying for a premium service or by recommending the platform to new users.

Example of a paid application that offers access to GPU and CPU for a fee

The MinerFarm platform charges a small fee of $5 per month for its cloud mining service. Users can use the GPU and CPU resources provided. Digging is done using ASIC devices.

An example of a simple cloud mining app that runs on a mobile device

Another example is the StormGain website. It is an app that is installed on a mobile device (running on Android or iOS). It is a simple app that simply needs to be installed to make small profits.

Interestingly, there are many more applications of this type but most of them do not offer much financial benefit. Rather, it is a type of platform dedicated to people who are looking for opportunities to make a little money rather than those who are looking for investment opportunities. The idea of digging for cryptocurrencies in the cloud cannot be dismissed out of hand.

However, we recommend extreme caution.

Rather, most of the more serious investors choose to buy a physical unit in order to dig themselves. Either way, cloud mining is an interesting idea that could still stir up a lot in the cryptocurrency market.

Bottom line - does cryptocurrency mining pay off?

Many people who have purchased equipment and become cryptocurrency miners have found that digging cryptocurrencies is not an easy piece of bread. A few years ago, cryptocurrency mining may have been considered a vein of gold, meanwhile, it is now a demanding field. Only those miners who have a lot of computing power can make profits.

The key is to buy the equipment at a good price, choose the right cryptocurrency and diligently work continuously according to the plan. Despite the fact that making satisfactory profits is much more difficult than a few years ago, there is no shortage of people willing to do so. Along with the increase in the exchange rate of BTC or ETH, there are almost proportionally more people who learn the secrets of cryptocurrency mining.

Profitability of digging and investment risk

In our opinion, indeed the situation in the cryptocurrency market is getting denser, but this does not mean that achieving satisfactory returns on investment is impossible. However, one has to be aware of various risks. Currently, the black cloud hanging over cryptocurrency miners is the entry of Ethereum 2.0. Nevertheless, it is likely that clever miners will find other altcoins suitable for digging.

Finally, we stress that every investment involves risk and it is no different in the case of cryptocurrency digging. Anyone hoping for quick and sure profits is unlikely to have the right approach to succeed in the investment field. No word of this text can be taken as investment advice. In any case, the cryptocurrency market offers many opportunities and is available to practically everyone.

Profitability of digging and investment risk

In response to too much demand for the cards and not enough supply, the manufacturer decided to release new cards with the designation LHR (Lite Hash Rate), which slashes the card's performance when cryptocurrency mining is detected, making it impossible for miners to use them.

Miners are not interested in limited cards, which are not a viable way to mine digital currency, but it is likely that in the long term the LHR will be skipped, making available cards with the Nvidia logo back to the miners.

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