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Crypto-mining basics

In this article I am going to give you the basic principles to get started mining digital currencies.  First up, my three rules:

  1. Don’t mine Bitcoin (mine other currencies).
  2. Spend as much as you can on the graphics card.
  3. Don’t spend any money ever on anything that is not a graphics card.

Bonus rule

  1. Keep it simple.

What is wrong with Bitcoin mining?

The short answer is that Bitcoin mining is not for beginners.  Profitable Bitcoin mining requires some very special expensive equipment and the technical skills to use, monitor and maintain it.  You  also need to be near a cheap source of power, and, it helps to be in a cold climate.  The main producers, are purpose-built factory farms, and they are in Iceland and China (even when their owners aren’t).  The competition in Bitcoin mining is so fierce that you probably can’t make real money anywhere else.

However, there is plenty of opportunity with other currencies.  The original design of Bitcoin created an arms race for more and more powerful specialised equipment.  Other currency designs have learnt from this, and have factored in resistance to these problems in various ways.  You can make money mining this other currencies.

What is it about graphics cards?

The algorithms used are very mathematical.  Graphics processors (GPUs)  are made to do geometry.  This makes GPUs very good at the math required for mining.  Your graphics card will pay for itself in about 8 months to a year.  The other components don’t add to your revenue, so mining should never be a reason why you should ever pay for them.

You might need to have a computer to do something else.  Most people do.  And that computer might need to be new, but in this case you aren’t buying a computer for mining.  You are just adding a good GPU to an existing computer to do mining.

Maybe you don’t want a computer for any other reason, or, you want a dedicated miner.  In this case you should source all the rest of the components for free, or as close as possible.  Think of it this way.  You need the highest spec GPU you can afford.  But, you only need the minimum computer to put this GPU in to.  I personally have put together numerous machines from old components that other people were sending to the tip.  Most of these are cobbled together from the best parts of several machines, but some are complete and working, just old.  All of these recycled machines are from components 5-10 years old.  Many are low end.  All were free.

Keeping it simple

Over-complicating a mining operation would be an easy trap to fall in to.  You just need the most basic rig, and you just need to keep it going.

If you are starting out, all you really need to do is make a computer from whatever parts you can find, or, acquire an old computer that someone else has finished with, if you don’t want to actually make it yourself.  Then, add a graphics card if it doesn’t already have a good one.

You also need some software to make the computer actually mine.  For simplicity sake, you want something that does all the work of optimising what currencies to mine and when to switch, and converts it all to Bitcoin, so you can get paid all at once.  I am recommending Computta to do this.

Posted in Computta