This year, mining is no longer a way to make a quick and easy buck. In order for your mining project to be profitable, you need to think through all the details and consider all the risks. In 2022, due to the failure of leading cryptocurrencies, the income from mining decreased. However, now the situation with the profitability of mining is gradually leveling out. With the help of the mining guide for beginners presented in this article, it will be easier for you to understand how to start mining cryptocurrency from scratch in the created conditions.

Cryptocurrency mining: step by step

The concept of mining

Mining (from the English mining – mining of minerals, raw materials) is a process of mining cryptocurrency, which involves checking the transaction and adding it to the blockchain with the help of special equipment with sufficient computing power. 

Each transaction in the network must be validated and recorded in a block, which is further integrated into a single chain (blockchain network). This is what mining is all about – mining a new block through computationally intensive operations. 

To keep the blockchain functioning, these operations must be performed simultaneously by multiple miners. Without them, the blockchain will not be viable. Thus, the owners of powerful, in a certain way configured equipment, ensure the operation of the network, for which they receive a reward from the blockchain in cryptocurrency.

Fundamentals of mining 2023-2024 

First of all, you need to rely on analytics, which will allow you to choose the right cryptocurrency in the current market situation and the least expensive way to generate blocks to determine how much money you need to start mining. Next, calculate the payback period of your equipment investment and choose the optimal configuration. The average payback period for mining is 1-1.5 years. If the payback period of your project is shorter, it will be a clear indication that it is more than successful.

What cryptocurrencies can be mined

Any that are issued on blockchains with the PoW (Proof-of-Work) consensus algorithm. It is the mining that is the work that miners prove the execution of. PoW is the algorithm on whose principles bitcoin, the first cryptocurrency with the largest capitalization in the world, is based. Ethereum also worked on Proof-of-Work until September 2022, until it moved to PoS as a result of the Merge hardfork, which made a lot of noise in the market. 

The PoS (Proof-of-Stake) consensus algorithm keeps the blockchain alive through a steaking mechanism. This requires the user to block a certain number of coins that will keep the network node running. The reward is distributed according to the ownership stake.

Is it worth taking on Bitcoin and Dogecoin

Bitcoin mining has reached such a level of competition that today it is not profitable and makes no sense to mine it alone. The time of solo mining, when it was enough to have a computer with a video card and a desire to mine bitcoin, is irrevocably gone. With the complication of the network and regular halving this method has lost relevance and gave rise to the development of large-scale farms with impressive funding, as well as mining pools, which unite individual participants in a single farm to mine cryptocurrency. When joining a pool, miners receive shares proportional to their contribution to the processing power of the technique for mining a block. 

The meme cryptocurrency Dogecoin looks promising, which grew significantly in 2021, including thanks to the aggressive marketing of the head of Tesla and SpaceX, Ilon Musk. And after Ethereum’s transition to PoS in 2022, the DOGE coin became the second most market capitalized cryptocurrency on PoW after bitcoin. Despite the fact that Dogecoin quotes are unstable, it is still profitable to mine it, as the cost of hardware for its mining is many times cheaper than the technical support of BTC mining.

Profitable coins for mining today are also considered:

• Bitcoin Cash (BCH);
• Bitcoin SV (BSV);
• Litecoin (LTC);
• Monero (XMR);
• Zcash (ZEC);
• Ethereum-Classic (ETC);
• Verge (XVG);
• Peercoin (PPC);
• Florincoin (FLO);
• Vertcoin (VTC).

Mining equipment

On the technical side, mining can be divided into three types depending on the equipment:

• GPU-mining (via video card);
• CPU-mining (via a processor);
• ASIC-mining (using ASICs with settings suitable for certain algorithms).

In addition to the above technologies, there are more exotic ways of mining cryptocurrencies. These inсlude, for example, mining on hard disks. This method was chosen as the main method by the creators of cryptocurrencies Chia, Burst, Sia, Storj, FileCoin.

Before choosing equipment for mining, it is necessary to study the reviews of experienced users and get the most complete information about all the nuances of using this or that type of equipment and the software needed to run it. You should also study possible ways to optimize the equipment for its most efficient use.

Nuances that should be paid attention to

• Choice of cryptocurrency. Earnings on mining crypto directly depends on its quotes and fluctuates following them. It is important to choose a coin for mining taking into account your financial expectations. Perhaps you are more satisfied with a stable minimum income, rather than hoping for unexpected enrichment.
• Careful calculation of running costs. One of the main challenges of mining is its high energy consumption and its high cost. Calculate pessimistically how much your energy costs will cost you.
• Choosing when to invest in equipment. It is important to choose the time to buy equipment during the crypto market decline, before the digital asset grows in value and increases your profits in the future. 
•  Legal aspect. Stricter government regulation of the issuance, circulation and taxation of digital assets can affect the value of a project. As happened, for example, when Alibaba Group stopped selling coin mining equipment due to restrictions imposed by the Chinese government on cryptocurrencies.

You will not find unambiguous advice on how to mine for beginners in any one source, and you will have to make your own objective opinion. Before you choose the right strategy and make the first step, you need to gather maximum information: subscribe to specialized resources, communities or forums where current miners share their experience. Basic instructions on how to start mining a particular cryptocurrency can be found on the website of its developers. Then, having determined the equipment and current costs you can prepare a business plan and act. And we believe that you will succeed.

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