There are many ways to potentially earn cryptocurrency as a side hustle, and crypto mining companies tend to be the first option that comes to mind. But before you decide to try crypto mining, you need to know some basics about it, from what you need to get started to the differences between alt currency mining and Bitcoin mining.
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Introduction to Cryptocurrency Mining
No matter the cryptocurrency that you mine, the overall idea is the same. Cryptocurrency mining involves using a high-powered computer to solve cryptographic equations. By solving the equations, you verify the data blocks, adding records of transactions to the public blockchain. The process, in turn, creates new coins. Miners receive coins in exchange for their efforts.
Mining for crypto typically results in earning small quantities of cryptocurrency but doing so repeatedly. That repeated nature means that the profits can add up.
When most people think of crypto mining companies, they are thinking of Bitcoin mining. This was the first major cryptocurrency and most people’s introduction to the idea of mining. In the early days of Bitcoin, the average person could feasibly earn a profit from mining. Now, however, it has become a lot harder and requires a lot more energy to do so. Instead of individuals, a significant amount of Bitcoin mining is done by crypto mining companies, as they have the resources to keep up.
The idea behind Ethereum mining is the same as that of Bitcoin mining. Both follow a Proof of Work consensus mechanism that requires mining. That being said, it’s worth noting that in the next few years, Ethereum plans to replace Proof of Work with Proof of Stake, so Ethereum mining will not continue in the long term.
Alt Coin Mining
As mentioned, alt currency mining is a possibility for nearly any altcoin that has a Proof of Work consensus mechanism.
Is Crypto Mining Worth It?
Depending on who you ask, you may get a different answer as to whether crypto mining is worth it. When considering the potential profits, you also have to think about the costs of cryptocurrency mining. From the crypto mining rig to the excessive energy use, mining can come with high costs.
The answer will also depend on the value of the coin you mine. That point alone makes it hard to predict whether mining is worth it as cryptocurrency prices are volatile.
How Much Can You Earn with Crypto Mining?
Remember that the amount that you can earn by mining for crypto will depend on the crypto you choose as well as its current value. It will also depend on the equipment you use.
Some Bitcoin node operators, for example, say that they earn $4,500 per month just from that.
There are websites that track profitability of mining various altcoins that you can look at. For example, one said that as of June, you could earn up to $7 per day if you mine with a Nvidia RTX 3080. Accounting for average electricity costs, this calculation leads to a profit of $180 per month.
Risks of Cryptocurrency Mining
There are also various risks and potential downsides of mining cryptocurrency, including:
- It uses a lot of energy.
- Between electricity and your crypto mining rig, initial and continuous costs can be high.
- The ROI isn’t as good as it used to be.
- Losing access to your digital wallet (and therefore your crypto forever).
- Accidentally choosing a dishonest mining pool.
- The crypto you choose to mine dropping in value.
How to Start Crypto Mining
The average person doesn’t have the same resources or access to funds as crypto mining companies, but you can still get started.
Some cloud-based crypto mining companies are:
- Spondoolies Tech,
- Hut 8 Mining,
- HIVE Blockchain Technologies,
We’re not referencing any of these companies.
What Are the Requirements?
The most basic requirement for crypto mining is your crypto mining rig. At the least, you need a high-performance computer. If you want to mine Bitcoin, you will need an ASIC device to have a real chance. Mining Ethereum can be done by combining various GPUs. The amount of computer power you need depends on the altcoin you plan to mine.
Because crypto mining companies run their mining rigs all day long, the equipment can easily become overheated. You need to prevent this with fans and other cooling methods, especially if you plan to mine all day long.
You will also need to set up a wallet to store your cryptocurrency in.
It is also smart to start with a mining pool, but you can also choose to mine alone if you prefer.
How Much Should You Invest to Start Crypto Mining?
The biggest cost if you want to start mining cryptocurrency will be the rig. This could easily cost you $15,000 or more to start. However, there are also much more affordable options, such as mining pools.
To put the cost of mining equipment in perspective, consider that Idan Abada went viral for creating a mining rig that only cost $875. More importantly, reports say that even with that low cost, the cost of electricity combined with the Bitcoin price meant he was still losing money.
What Are the Alternative Ways to Earn Crypto?
When it comes down to it, you could choose to mine cryptocurrency, but it comes with a high risk, and you are unlikely to be able to get ahead of the crypto mining companies. There are also many scenarios where you could lose money, especially if you live somewhere with expensive electricity or the value of your chosen coin drops.
A good way to minimize risk is to look for an alternative method of earning crypto, such as Haru Invest. The Haru Earn crypto savings account lets you earn money on your cryptocurrency without having to lock it up. As of the most recent figures, you could earn up to 7.6 percent with Haru Earn. Or you can choose to lock up your crypto for your chosen period of time. According to the most recent figures, you could earn up to 15.2 percent on your crypto with this account.
Or you can increase the risk very slightly with Haru Earn Explore to multiply your potential profits. For example, the latest performance figures from the BTC Haru Earn Explore account were 0.6965 percent for the biweekly return, which is 16.95 percent annualized.