Money making machines?! An introduction to Cloud, ASIC and GPU mining.
Bitcoin mining? Crypto mining? Cloud mining? It turns out you really can buy a machine, or ‘rig’, that ‘mines’ money, or digital currency. Unlike trading, mining is a hands off, passive way to make money from crypto which explains why so many people are wondering how to get involved.
So how does it work?
Mining is the process in which the Blockchain ledgers are updated. Example: If Bob sent Sarah some cryptocurrency, this would be processed and recorded on the public ledger by mining rigs. In return for upkeeping the system of that particular coin or token, the owner of that mining rig will be paid a ‘thank you’ in the form of a small proportion of said coin or token. Essentially, you are being paid for providing the computer power. This can be extremely lucrative. It is these mining rigs that you can buy or rent to profit from this computer power rental system.
What are the different types of mining?
1. Cloud Mining: You pay for a contract with a company who own large mining farms. They generally use ASIC miners (see below) and they pay you in different coins, depending on the company. It’s common to be paid in Ethereum or Bitcoin. The company will take a chunk of your profits from mining. Think of this almost like paying an investment advisor to manage your money.
2. Application-specific integrated circuit chips (ASIC) mining: You can buy these machines and mine with them at home. These machines are designed for the sole purpose of mining one particular coin. Bitcoin, Dash and Litecoin are examples of coins which can be mined with ASIC rigs. There are a couple of big downsides to ASIC rigs. Firstly, mining only one coin is great when that coin first comes out. As more of that coin is mined, it takes longer and therefore becomes less profitable to mine them as the mathematical problems you need to solve increase in difficulty. To tackle this, a new machine will be released e.g. s6, s7 and so on. As soon as the next version comes out, the previous version becomes obsolete so your asset value is lost.
3. Graphics Processing Unit (GPU) mining rigs: GPUs are the graphics cards gamers use in their extremely powerful gaming computers. 1080tis are currently the most powerful card on the market. Because of their popularity with gamers, their demand and value stays high. There are several different cards but essentially, more power = more profit from mining. GPU mining rigs are the Swiss army knife of the crypto world. They can mine 100s of coins. You can actually install software which auto-mines, constantly scanning the market for the most profitable coin, mining that and automatically converting this to pay you in Bitcoin. This is the most secure, most profitable way to mine due to the retained asset value and flexibility of the equipment.
If you want to get into crypto but are on a very tight budget, cloud mining is less profitable than owning your own equipment but can be a good entry route. However, be extremely careful if this is the route you go down as there are many ponzi schemes out there and you will be contracted into anything of this nature. Make sure you go through someone you trust – see our “Getting into crypto” guide for more tips! This is why we sell the GPU mining rigs because of their flexibility and high asset value. You own the physical equipment and can always sell if you decide you’re not really into crypto. If you don’t have the cash to invest in mining machinery, see if you can get some friends together to spread the cost and work with us to benefit from affiliate discounts. That way, if your friends get into mining, you pay a reduced price! Then, if you want to get into trading crypto, you can use your mined Bitcoin to buy any coin you want or convert it to fiat and spend at your will!
Still got questions? Get in touch!
We’re always happy to talk mining! Give us a call on 0161 7628 728, drop us an email at email@example.com or message me on social @EasyCryptoHunter.