Mining cryptocoins is an arms race that rewards early adopters. You might have heard of Bitcoin, the first decentralized cryptocurrency that was released in early 2009. Similar digital currencies have crept into the worldwide market since then. Today, there is very much a digital gold rush where people can make a small profit by investing a few hundred dollars in equipment, and then spend months mining for digital coins before any return on their investment sets in.
Litecoins, Dogecoins, and Feathercoins are three Scrypt-based cryptocurrencies that are the best cost-benefit for beginners. At the current value of Litecoins, a person might earn anywhere from 50 cents to 10 dollars per day using consumer level mining hardware. Dogecoins and Feathercoins will yield slightly less profit with the same mining hardware but are becoming more popular daily.
Is It Worth It to Mine Cryptocoins?
As a hobby venture, yes, cryptocoin mining can generate a small income of perhaps a dollar or two per day. In particular, Litecoins, Dogecoins, and Feathercoins are very accessible for regular people to mine, and a person can recoup $1000 in hardware costs in about 18-24 months. As a second income, no, cryptocoin mining is not a reliable way to make substantial money for most people. The profit from mining cryptocoins only becomes significant when someone is willing to invest $3000-$5000 in up-front hardware costs, at which time you could potentially earn $50 per day or more.
Now, there is a small chance that Litecoins, Dogecoins, or Feathercoins will jump in value alongside Bitcoin at some point. Then, possibly, you could find yourself sitting on thousands of dollars in cryptocoins. Note: the emphasis here is on 'small chance', with small meaning 'slightly better than winning the lottery'.
If you do decide to try cryptocoin mining, definitely do so as a hobby with a very small income return. Think of it as 'gathering gold dust' instead of collecting actual gold nuggets. If your objective is to earn substantial money as a second income, then you are better off purchasing cryptocoins with cash instead of mining them, and then tucking them away in the hopes that they will jump in value like gold or silver bullion. If your objective is to make a few digital bucks and spend them somehow, then you just might have a slow way to do that with mining.
How Cryptocoin Mining Works
This brief tutorial below is written for beginning miners who want to keep up-front costs to less than a thousand dollars. This tutorial focuses on mining 'scrypt' coins, namely Litecoins, Dogecoins, or Feathercoins. The whole focus of mining is to accomplish three things:
- Provide bookkeeping services to the coin network. Mining is essentially 24/7 computer accounting called 'verifying transactions'.
- Get paid a small reward for your accounting services by receiving fractions of coins every couple of days.
- Keep your personal costs down, including electricity and hardware.
The Laundry List: What You Will Need to Mine Cryptocoins
You will need 10 things to mine Litecoins, Dogecoins, and/or Feathercoins.- A free private database called a coin wallet. This is a password-protected container that stores your earnings and keeps a network-wide ledger of transactions.
- A free mining software package made up of cgminer and stratum.
- A membership in an online mining pool, which is a community of miners who combine their computers to increase profitability and income stability.
- Membership at an online currency exchange, where you can exchange your virtual coins for conventional cash, and vice versa.
- A reliable full time internet connection, ideally 2 megabits per second or faster speed.
- A hardware setup location in your basement or other cool and air-conditioned space.
- A desktop or custom-built computer designed for mining. Yes, you may use your current computer to start, but you won't be able to use the computer while the miner is running. A separate dedicated computer is ideal. Tip: Do not use a laptop, gaming console or handheld device to mine. These devices are not effective enough to generate income.
- An ATI graphics processing card (GPU) or a specialized processing device called a mining ASIC chip. The cost will be anywhere from $90 used to $3000 new for each GPU or ASIC chip. The GPU or ASIC will be the workhorse of providing the accounting services and mining work.
- A house fan to blow cool air across your mining computer. Mining generates substantial heat, and cooling the hardware is critical for your success.
- Personal curiosity. You absolutely need a strong appetite for reading and constant learning, as there are ongoing technology changes and new techniques for optimizing coin mining results. The most successful coin miners spend hours every week studying the best ways to adjust and improve their coin mining performance.