Cryptocurrency mining will celebrate its 10th year of existence in 2019. It’s certainly no fad, but it’s also far from being a popular practice. The very concept of mining with high-end computer hardware is starting to trickle into mainstream consciousness, though. If anything, the evidence is in the scarcity of Nvidia and AMD graphics cards and the inflated pricing that has washed through retailers worldwide. The pricing has caught the attention of PC gamers, leaving them puzzled and asking why it’s happening.
What you may not know is the technology surrounding mining isn’t just limited to consumer graphics cards. We’re beginning to see PC game platforms that allow you to mine when you’re away from your system, and exchange that digital currency for new games. There are even new Pokemon GO-style games hitting the app stores that are outdoor scavenger hunts with cryptocurrency as the ultimate treasure.
With that in mind, it seemed like the perfect time to start explaining this craze (I’m going to call it that because it shows no signs of disappearing) to gamers and hardware junkies considering riding the wave. It’s admittedly going to be a challenge! As John Oliver recently exclaimed during HBO’s “Last Week Tonight,” cryptocurrency is: “everything you don’t understand about money combined with everything you don’t understand about computers!”
You can mine cryptocurrency with your PC, but you can also build specialized mining rigs.
Pixabay (Creative Commons)
So I hope you’ll stick around for each new guide and explainer. Don’t hesitate to reach out via the social media links at the bottom of this article with questions or suggestions.
Should you decide to grab the knowledge and journey down the rabbit hole, I’ll be publishing guides for a variety of things like:
- What’s a mining pool and how do you choose the best one?
- What is NiceHash, and should you use it?
- Wallets vs Exchanges: How to safely store your cryptocurrency
- The risks of mining: profitability, power costs and GPU lifespans
- How to setup Awesome Miner + MiningPoolHub to mine the most profitable coins
- Mining with your graphics card versus your CPU
- Algorithms and coins: Choosing the best match for your hardware
- Using a stripped-down version of Linux called HiveOS for a dedicated mining rig
- TBD: Your suggestions here!
WHAT IS MINING, ANYWAY?
Bitcoin is making headlines in mainstream media on a daily basis, and deservedly so. It’s the grandaddy of all cryptocurrency and, with few exceptions, tends to dictate the profitability of all other alt coins beneath it. On a value-per-coin level, it’s worth far more than any other digital currency in existence — and there are more than 1000 of them. Stuff like Litecoin, Dogecoin, Electroneum, Ravencoin, Ethereum, and GRAFT.
I won’t delve too deeply into the history of Bitcoin or its hordes of both unique and flash-in-the-pan spinoffs, but I do want to point out that you can’t actually mine Bitcoin with regular computers anymore. It requires specialized and expensive hardware called ASICs. However, you can mine other coins and convert them to Bitcoin through a variety of exchanges and services. You can also earn Bitcoin by “lending” your computer’s processing power to services like NiceHash which pay out in Bitcoin. But that’s another rabbit hole for another time!
What is mining though? It’s somewhat misunderstood as the process of “finding coins” but it’s more complex than that.
Understanding The Blockchain
Blockchain technology is the foundation Bitcoin and other crypto coins are built on
Pixabay (Creative Commons)
Each of the hundreds of crypto coins in existence rely on the core concept of the blockchain. Cryptocurrency was designed to be decentralized, secure and unalterable. So every single transaction is encrypted. Once that encrypted transaction happens it’s added to something called a “block” until a fixed number of transactions has been recorded. That block then gets added to a chain — the blockchain — which is publicly available.
These transactions leave no trace of who is behind them, however, because privacy is also a pillar of cryptocurrency. The location of the transactions isn’t centralized, either, so that it can’t be manipulated or controlled by one person or entity.
Since these blocks are heavily encrypted, they’re sort of like complicated math puzzles that only powerful compute-capable hardware can solve. Enter your CPU, or your Radeon and GeForce graphics cards. The process of solving the math puzzles on these blocks and adding them to the public blockchain (think of it as a ledger) is roughy what mining is.
Miners verify the transactions, ensure they aren’t false, and keep the infrastructure humming along.
The reward for doing so — a miner’s fee if you will — is payment in that block’s coin. The payment is based on how much their hardware contributed to solving that puzzle. Where do the coins come from? By design, that’s exactly how the coins are created. The block is solved and coins and distributed fairly to miners. This increases the coin’s supply.
The Best Analogy: Google Docs
In 2016 William Mougayar wrote a brilliant piece explaining blockchain technology by leveraging something we all know about: word processing programs. He reminds us that when Microsoft Word was the only game in town, one person had to create a file, open it, then send it to another person to have it edited or updated. The similarity to banks is striking, and makes it clear why blockchain technology was created in the first place:
That’s how databases work today. Two owners can’t update the same record at once. That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again).
With Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people.
Imagine the number of legal documents that should be used that way. ~William Mougayar, Coindesk.com
The cool thing is that blockchain technology can be used for much more than financial transactions. It was designed to not have a single point of failure, and to be fully transparent. That’s why you see it rapidly emerging in the gaming space, too. It can be utilized for secure cloud storage distributed across thousands of computers. Physical objects could conceivably be given unique digital ownership or identities. Anything of value can be integrated with blockchain technology. The possibilities at this point are endless and reliant on the imaginations of developers.
The Basics of Cryptocurrency Mining
Ethereum is one of the other big players in the cryptocurrency space next to Bitcoin
Pixabay (Creative Commons)
We’ll dive deeper into this in the future, but the elements that go into mining on your computer involve specialized or consumer hardware and a combination of your graphics cards and CPU. The most efficient mining apps still seem to be command-line based, but there are some elegant ones with traditional graphics interfaces. In your journey you may stumble across names like ccminer, Claymore or XMR-Stak.
You’ll download the software you need to mine a specific coin and edit an executable text file with details like the mining pool’s URL to connect to, your wallet address and the name of your “worker” or PC. More advanced options allow you to adjust how hard your GPU or CPU works. The vast majority of this software works across Windows and Linux, although it’s more difficult to configure on non-Windows systems. What makes it more challenging is that these variables are formatted differently depending on the pools and the software.
Once the blocks I mentioned above are solved and coins are generated, the pool automatically pays the miners directly to their wallet, or to an online cryptocurrency exchange that holds many different types of coins.
I understand that this is simplifying things to the extreme, but that’s why an entire series of guides is needed! It’s a complex landscape to understand, but the core is simple: miners are people independently verifying transactions on the coin’s network, and when that happens more coins are created. Miners effectively keep the network running and increase the coin’s global supply.
Some mine to engage in a unique kind of hobby, or for sheer profit. Others do it because they believe in the principles behind a certain coin and in what the developers intend to do with it. The reasons you have are yours, but I’ll try to guide you through it.
Stick around, it’s going to get busy. ‘Till next time!
Was this helpful?
0 / 0