Cryptocurrency Mining At Home - How Hard Is It?

Bitcoin is probably the most well-know crypto "coin" - a purely digital contrivance to move wealth around. There are hundreds of other cryptocoins too, though (generically referred to as "cryptocurrency"). 

These "coins" (there are no actual physical coins) each have different monetary values when weighed against fiat currency, like our own US dollar, and presently the market rates are pretty volatile. Some coins might be worth a few US cents, others worth hundreds or thousands of dollars each. Bitcoin itself recently traded as high as $20,000 US per coin.

A current fad (one that I recently became involved in) is "mining" cryptocurrency at home, on a personal computer. You can use the number-crunching power of a personal PC to calculate block data for various coins, and actually trade the coins (or fractions of coins) produced for US dollars.

Sounds a bit like magic (or a scam), but it can and does work - at least for now. I would not be shocked if cryptocurrency eventually gets regulated to death, or at least to impotence. There are also some practical caveats - aren't there always?

1 - you need a modern (and increasingly expensive) video card (also referred to as a "gpu", or graphical processing unit), typically with 4GB or more of RAM.  You *can* mine with a 2GB card, but you may earn less by limiting yourself as to the types of coins you can mine.

2 - your electrical cost (dollars per kilowatt hour) will factor into the profitability of the whole venture. In my area, electricity is around 14 cents per kilowatt hour (from our electric bill) - so running a computer that uses 200 Watts for 24 hours would cost around 65 cents a day to run, something to bear in mind when considering how much (or even if) your mining is actually profiting you.

3 - it makes sense to dedicate a computer just for mining to maximize your potential profit - so if you don't have a suitable spare computer lying around, you would incur an upfront cost to buy or build one (like I did myself). So, your first few months of mining will really be to pay off the hardware, before you actually make a profit.

You could certainly use any recent PC on a part-time basis, perhaps just mining overnight for example (if it has a suitable gpu), but don't expect any big return on that scenario.

So, how does it actually work? (see links below for more information)

Well, first of all, you will likely not actually be mining Bitcoin. It now requires a special-purpose type of miner to handle it's complexity, and it's not worth it on a "normal" PC. You may choose to get paid in Bitcoin, but you will be mining something else (see further down).

You can either use a regular Windows PC, or a mining "rig" - a special type of stripped-down computer just for mining. I chose the former, and if the mining craze blows over I can still use the computer as a computer (or sell it on as a gaming PC, with that nice gpu in place).

A decent power supply is a requirement in your computer, since some of the high end graphics cards (gpus) can use several hundred watts on their own when working hard. If you put more than one gpu in your PC - which you can do in some scenarios - you might quickly find your system requiring 500 Watts or more when mining. Remember that electricity cost, too...

Depending on which gpu you have, you may want to mine different coins. The two main chipmakers for consumer gpus today are Nvidia and AMD, both may excel at mining a particular coin over the other. I have a couple of decent-but-not-exceptional AMD Radeon gpus, and I mine Ethereum. You might try something else, such as Monero or Vertcoin

The process of mining breaks down like this:

1 - assemble your hardware
2 - decide which coin makes sense for you
3 - establish a "wallet" for that type of coin (each type uses a different wallet)
4 - install and configure the mining sofware
5 - let 'er rip . . . and wait

The "wallet" is usually either an online wallet, or an installed app. Each type of coin requires it's own wallet. The wallet is where the mined coins or fractions of coins are delivered to, that's where you keep them. You should keep track of your digital wallet as closely as your real world wallet. From the wallet, you can exchange your collected coins for other types of coins, or for actual currency (cash).

The mining software can be either a command-line based software such as Claymore's miner, which might be a little intimidating for newcomers at first,  or it can be an installed app where you pretty much just click to stop and start mining.

There are quite a lot of choices in mining software, most of which is available for free - but note that there is almost always a cost involved via some kind of small fee attached to the mining process. Some point-and-click examples of mining software are Nicehash (which was recently badly hacked, but seems to have rebounded), Minergate and Winminer.

While you do need an reliable Internet connection to mine for cryptocurrency, the process does not typically incur a large amount of bandwidth. The mining PC can be used wirelessly (mine is) or with a wired connection.

It should be noted that few people mine "on their own" for cryptocoins of any type, just because of the practicalities of the mining process. Usually, you mine as part of a "pool" for that particular coin, where many "miners" work together to process the data (this is all handled by the software, so don't be too concerned about the complexities of it).

The computer itself does not have to be anything fancy, it does not need a lot of RAM, a fast processor or a large, fast hard disk - it's the gpu that does the work. Pretty much any Windows 7 or better PC from the last 4 or 5 years should work. The important thing is that it can support the (usually physically large) gpu and their power (and cooling) requirements.

I saved a little bit on the computer that I built by using an old laptop hard drive instead of a typical desktop PC hard drive. The laptop drive is slow, but it is also designed to use less power and so saves my operational overhead in that way.

The mining process is not fast, so be patient. It can be fun and interesting, but it's not quick. How much can you make? Quite a lot if you spent a bunch of money on a multi-gpu rig (!) Those types of setups can generate hundreds of dollars a month right now. For the rest of us, set your expectations a bit lower.

Personally, I have two regular PCs, one I had already and one I made. One has a decent gpu (8GB AMD Radeon 580), the other has a budget gpu (4GB Radeon 550). I mine for two types of coins; Ethereum and Siacoin - the latter is a low-cost coin and it so happens that the software I use (Claymore's Miner, mentioned previously) can mine for both coins at once on the same card, so I took advantage of that.

With both PCs running 24x7 mining for both coins, they currently generate somewhat over $100 per month after figuring in the electricity cost. This can and does change according to the trading value of the coins in question, and in the future will like be affected by the "difficulty" factor involved in mining a particular coin (as the difficulty inevitably creeps up, the number of coins you can mine in a given time goes down).

So, basically I get gas money - or I would if I was not paying off the hardware investment. After a few months it will be available as gas money, and maybe a six-pack every other month.

In summary, the process itself is not that difficult; the setup is straightforward with a little bit of reading and thought, and there is plenty of instruction available online. Please remember to set your expectations and to only use disposable income, please don't rack up a bunch of credit card debt for something like this.

It's a fun and interesting hobby, with some earning potential - but it's not a guilt-edge investment for the future, despite what some of the arm-waving YouTubers may tell you. The cryptocurrency market is shockingly volatile, so don't take anything for granted.

I tried to minimize my risk in all this by sticking to using "regular" PCs and not a purpose-built mining rig. At least I should be able to resell the hardware at the end of my adventure if needed.

Some links:

Whattomine - figure out your potential profit, given your gpu and electric cost

What to mine with Nvidia gpus

What to mine with AMD gpus

Mining software information

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