Mining is the process by which new cryptocurrency tokens or coins are generated. It bears little resemblance to the work done by those who physically mine for precious metals like gold. However, the comparison does hold; digital currency miners use computers to solve cryptographic problems and receive a reward in the form of cryptocurrency.
Learn how to get started mining your favorite cryptocurrency and how to determine the costs you'll incur to do so.
- Becoming familiar with the mining process is a key factor when you're starting out.
- You'll need a cryptocurrency wallet, mining software, and mining hardware to begin mining cryptocurrency.
- The equipment you need can be very expensive; however, the more you pay for equipment, the more profitable it can be.
- Mining pools can help increase your profitability because they share the workload and have faster combined hash rates.
- Before starting, ensure you compare the costs to the time it will take you to recoup your expenses. Mining might not be worth it in the end if you never make up the costs to get set up.
Become Familiar With Mining Cryptocurrency
In cryptocurrency lingo, mining is the term for work done to open a new block on certain blockchains. The first miner to solve the cryptographic puzzle called the hash receives a cryptocurrency reward.
With that in mind, one of the first steps to take if you're interested in being a cryptocurrency miner is to learn which cryptocurrencies can be mined. Bitcoin (BTC), ether (ETH), Monero (XMR), and Litecoin (LTC) are examples of coins that can be mined.
The most profitable cryptocurrencies have become much more difficult to mine than in the past. Most have a mining difficulty that increases over time, and the number of miners with large-scale mining operations has taken over most of the hashing power of each cryptocurrency's network. Hashing power is how many calculations per second a network can complete.
Not every cryptocurrency can be mined because not all use a competitive reward system.
Some cryptocurrencies require expensive hardware to mine, and overwhelming demand for this equipment has caused the cost and effort associated with setting up a rig to skyrocket. Others may be more accessible in terms of the equipment that you need. The costs alone make it worth your while to take the time to plan how and what you'll mine.
What You Need to Mine Cryptocurrency
There are generally three basic components to a mining operation: the wallet, the mining software,and the mining hardware.
Cryptocurrency Wallet
You'll need a wallet for your cryptocurrency to store the keys for any tokens or coins your mining efforts yield. Wallets have a unique address allowing you to send and receive tokens securely. There are many types of online wallets, and there are even "cold storage" wallets that don't operate online. Decide which one is best for your needs before you start mining.
Mining Software
Most mining software is free to download and use and is also available for various operating systems. For popular cryptocurrencies like Bitcoin, you'll find that multiple types of software can be used. While many of these options will be effective, slight differences could impact your mining operation.
Mining Hardware
Mining hardware may be the most expensive component of a mining rig setup. You'll need a powerful computer, perhaps even one specifically designed for mining.
How Much Does It Cost to Build a Crypto Mining Rig?
It is possible to build a mining rig or purchase a prebuilt one with a much higher hash rate. The higher the hashrate, the more profitable mining can be.
Application Specific Integrated Circuit (ASIC)
An ASIC miner is a pre-built mining rig; these can be very expensive. For example, the Bitmain Decred Miner DR5 costs around $5,600. The DR5 has a much lower hashrate than many other miners—it mines at about 35 terahashes per second (TH/s). You can purchase higher-performing miners, but the price goes up significantly. The Bitcoin Miner S10 Pro mines at 110TH/s and costs about $5,900. From that point, miners are more than $10,000 with the Bitcoin Miner S19 XP Hyd. going for more than $19,800—but it has a hash rate of 255 TH/s.
Home Computers
You can build a computer capable of mining cryptocurrency, but you'll need specific hardware. Most graphics cards from Nvidia are capable of mining. However, some might not be fast enough to be worth buying for mining purposes.
The RTX 3090 Ti is one of the better graphics cards for mining. It costs about $1,700 and, depending on the mining algorithm, can hash up to 133 mega hashes per second (MH/s)—significantly less than one of the Bitcoin ASIC miners.
It is possible to build multi-GPU mining rigs, but it can still take years to recoup your expenses and begin making a profit. Keep in mind that you may still be unable to mine crypto profitably on your own with a multi-GPU rig.
You'll also need to purchase the additional hardware to build the computer, such as a power supply, motherboard, processor, memory, and drives. This might run you several thousand dollars, depending on the setup you choose.
Hash Rate
It's important to note that one mining rig, even the S19 XP Hyd., cannot outmine the mining farms and pools. The mining pool FoundryUSA accounts for roughly 23% of the Bitcoin network's hash rate, about 47 EH/s—47 million TH/s. You'd need 183,313 S19 XPs to keep up with FoundryUSA.
Slushpool is one of the oldest pools in cryptocurrency. It hashes roughly 10 EH/s, significantly less than FoundryUSA, but still very fast. You'd need about 39,000 S19 XPs to compete with Slushpool's hash rate.
So, unless you have the means to invest tremendous amounts of capital, you'll likely need to join a mining pool to see any results.
Join a Mining Pool
Essentially, a mining pool is a group of miners who combine their computing power and work together to mine. They share the profits proportionally to the amount of work each address was able to contribute to the process. As you might expect, mining pools offer advantages and disadvantages.
On the one hand, the cost and effort associated with the initial setup are much lower than if you were buying an ASIC or building a multi-GPU mining rig. On the other hand, though, you're likely to earn much less money from the process, as you'll split any mining rewards with a group of people.
Weigh the Return on Investment
The process of mining remains an exciting and potentially profitable one. However, there are several pitfalls. For example, many miners have spent a lot of money setting up their rigs, only to find that they cannot recoup the costs with their mining efforts. Ensuring you are armed with as much of an understanding of the mining world as possible will help protect against this possibility.
There are websites created that can give you estimates of how much you'll be able to generate using specific hardware. The operators of the mining pool NiceHash have put together an informative website that allows you to input your mining hardware and receive return estimates based on the equipment of users in their pool. This tool can help you determine whether you'll generate enough from your hardware to pay for it and continue earning and how long it will take.
How Long Does It Take to Mine 1 Cryptocurrency?
It depends on many factors. On average, it takes 10 minutes for the network to create a new block and receive the reward of 6.25 BTC. The reward goes to the miner(s) that solved the block hash and is split up according to pool rules. Ethereum's blocks are mined in a matter of seconds, with fewer ETH rewarded and split up among mining pools. With pools splitting rewards, it can take a significant amount of time to mine one full cryptocurrency.
Is It Easy to Start Mining Crypto?
It is relatively easy to start mining, as most mining clients are installable and have graphic user interfaces. You can sign up at a mining pool, enter the mining address you're given in your mining client, and begin mining.
Can You Get Rich by Crypto Mining?
Mining crypto is very competitive due to cryptocurrency's values. It was possible in the early days of crypto to mine several coins per year, but mining difficulty and competitiveness have increased so much that it is profitable only for those that can afford large-scale mining operations. However, making a few hundred dollars per month mining cryptocurrency is possible.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.
FAQs
You'll need a powerful computer that uses an enormous amount of electricity in order to successfully mine Bitcoin. It's not uncommon for the hardware costs to run around $10,000 or more.
How do I start crypto mining for beginners? ›
Once you're ready to start mining crypto, here are the steps to follow.
- Choose a cryptocurrency to mine. There are many cryptocurrencies you can mine, but not all of them use this method to verify transactions. ...
- Buy your mining equipment. ...
- Set up a crypto wallet. ...
- Configure your mining device. ...
- Join a mining pool.
You'll need a powerful computer that uses an enormous amount of electricity in order to successfully mine Bitcoin. It's not uncommon for the hardware costs to run around $10,000 or more.
How do I make my first crypto miner? ›
How to Build a Crypto Mining Rig
- Step 1: Attach the CPU. Attach the CPU to the motherboard. ...
- Step 2: Attach the RAM. Installing the RAM should be easy. ...
- Step 3: Attach the Motherboard to the Rig Frame. ...
- Step 4: Attach the Power Supply Unit. ...
- Step 5: Attach the PCIe Risers.
To mine successfully, you need to have a high "hash rate," which is measured in terms gigahashes per second (GH/s) and terahashes per second (TH/s). Aside from the short-term payoff of newly minted bitcoins, being a coin miner can also give you "voting" power when changes are proposed in the Bitcoin network protocol.
Is crypto mining easy? ›
Although mining is a competitive business, starting is still relatively easy. In the early years of Bitcoin, hobbyists could simply boot up some software on their computer and get started right away. Those days are long gone, but setting up a dedicated Bitcoin miner is not as hard as it may seem at first.
What is the simplest crypto to mine? ›
8 Cryptos You Can Mine at Home in 2023
- Monero (XMR) Monero (XMR) is one of the easiest cryptocurrencies to mine using a home computer. ...
- Litecoin (LTC) ...
- Ethereum Classic (ETC) ...
- Dogecoin (DOGE) ...
- Zcash (ZEC) ...
- Bitcoin Gold (BTG) ...
- Vertcoin (VTC) ...
- Ravencoin (RVN)
Crypto Mining Salary
| Annual Salary | Monthly Pay |
|---|
| Top Earners | $100,500 | $8,375 |
| 75th Percentile | $77,500 | $6,458 |
| Average | $64,161 | $5,346 |
| 25th Percentile | $48,000 | $4,000 |
It's completely possible to make a profit from bitcoin mining. Whether or not it will be profitable for you depends on what you're willing to invest — plus a little bit of luck. Miners will continue to build the blockchain for years to come.
How much do Bitcoin miners make a day? ›
Bitcoin miners are currently mining around $20 million worth of Bitcoin per day. That's $600 million per month.
Generally speaking, if you're mining Bitcoin at home, you can make anywhere from $30 to $450 per mining machine each month.
How do I start solo mining? ›
For someone to mine solo, one must first create a full node and communicate directly with the blockchain. This is what mining pools actually do. Mining pool operators will set up a bitcoin node (or any other cryptocurrency's node) and act as a single miner. Only that this miner will have absurdly high hashing power.
Can anyone become a crypto miner? ›
Anyone can participate in the Bitcoin mining process, but unless you have access to powerful computers known as ASICs (that's “application-specific integrated circuits”), your chances of winning a Bitcoin reward are pretty low.
How long does crypto mining take? ›
In some cases, mining just a single bitcoin can take anywhere from 10 minutes to 30 days, depending on your hardware and software setup.
What are the 4 types of crypto mining? ›
Cryptocurrency mining processes
- CPU mining. CPU mining was the first type of crypto mining and relied on processors to mine currencies. ...
- GPU mining. GPU mining relies on video cards to mine different cryptocurrencies. ...
- ASIC mining. ASIC mining uses special devices that perform a single task using specific algorithms.
How Much Does a Mining Rig Cost? A typical ASIC mining rig can cost anywhere between $2,000 and $20,000. That is a broad range and it does not tell the full story of the quality of the product. It is important to understand that the price of a mining rig is not the only factor when buying a miner.
Is crypto mining still worth it? ›
Cryptocurrency mining is still profitable in 2023, but it may not be as rewarding as in the past. Cryptocurrency mining is still profitable in 2023, but it may not be as rewarding as in the past.
Is mining still profitable 2023? ›
Bitcoin mining is still extremely profitable in 2023. Bitcoin miners are currently mining around $20 million worth of Bitcoin per day. That's $600 million per month. A mining machine costs $2,000-$20,000, making it difficult for anyone but professional miners to mine.
Can you mine crypto on a phone? ›
Solo-mining of cryptocurrencies is not a viable concept if you want to use your phone or tablet for it. However, you can use a cloud service by renting computing power. This can come with a mobile app that provides a convenient personal account interface on the cloud service.
What is the most profitable crypto to mine? ›
10 BEST Cryptocurrency to Mine with GPU [Most Profitable]
- Comparison of the Most Profitable Coins to Mine.
- #1) Vertcoin.
- #2) Bitcoin.
- #3) Monero.
- #4) Ravencoin.
- #5) Haven Protocol (XHV)
- #6) Ethereum Classic (ETC)
- #7) Bitcoin Gold.
If you are looking for the cheapest crypto to mine, Monero and Ravencoin will be a good choice. Monero, for instance, can be mined on CPUs with normal computer hardware resources. Nevertheless, Bitcoin and Ethereum should be your top choice if looking for the most profitable cryptocurrencies to mine.
Which crypto doesn t require mining? ›
IOTA. IOTA uses the “Tangle”, an alternative form of technology that does not require miners. It is maintained by smaller devices and, as such, has lower energy requirements.
How much can 1 mining rig make a day? ›
Most Bitcoin mining rigs make at least 2000 USD every day on average. Some can make up to as high as 5000 USD daily. We recommend buying more efficient and robust mining equipment to maximize your daily income from Bitcoin mining.
Can I invest $100 in Bitcoin mining? ›
If you're looking into cryptocurrency for the first time, you may be wondering, “can I start by investing $100 in Bitcoin?” The answer is definitely yes. But before you make your first investment, there are a few things you should know about crypto.
How much profit do Bitcoin miners make? ›
Bitcoin mining is still profitable in 2023. Bitcoin miners are currently mining around $20 million worth of Bitcoin per day. That's $600 million per month. A mining machine costs $2,000-$20,000, making it difficult for anyone but professional miners to mine.
How many crypto millionaires are there? ›
The number of crypto millionaires can be estimated for two of the most popular cryptocurrencies, Bitcoin and Ethereum. There are now as many as 100,000 people who have $1 million or more stashed in bitcoin, according to the cryptocurrency data-tracking firm bitinfocharts.
How much electricity does it take to mine a Bitcoin? ›
The New York Times recently equated the total power consumed by Bitcoin annually to what's used by Finland in one year. The fact is that even the most efficient Bitcoin mining operation takes roughly 155,000 kWh to mine one Bitcoin. By way of comparison, the average US household consumes about 900 kWh per month.
Can you mine Bitcoin with a laptop? ›
So, can you mine cryptocurrency on a laptop? Yes, you can, but you have to keep a couple of things in mind. Firstly, don't expect any noticeable income from mining on a laptop. Secondly, laptops, by design, are not suitable for crypto mining, and prolonged mining will cause damage to the device.
How much does crypto mining device cost? ›
Comparing the Best Bitcoin Miner Hardware
| Bitcoin Mining Hardware | Hashpower | Price |
|---|
| AvalonMiner A1166 Pro | 81TH/s | $1,550 |
| AvalonMiner 1246 | 90Th/s | $3,890 |
| WhatsMiner M30S++ | 112TH/s±5% | $3,890 |
| WhatsMiner M32-62T | 62TH/s +/- 5 | $1,100 |
1 more rowApr 24, 2023
What is the best bitcoin mining program for beginners? MultiMiner is the best option for beginners, with an easy-to-use GUI and quick-start mining feature. Novices can get started with MultiMiner—no technical skills required. MultiMiner allows users to easily connect to a pool and begin mining.
While mining may have been relatively easy in the early days of crypto, it has become a highly competitive business. Still, anyone can theoretically make money from crypto mining. Here's a look at the costs involved in crypto mining and how much you might feasibly earn.
What happens when all Bitcoins are mined? ›
What Happens to Mining Fees When Bitcoin's Supply Limit Is Reached? Bitcoin mining fees will disappear when the Bitcoin supply reaches 21 million. After that, miners will likely earn income only from transaction processing fees rather than a combination of block rewards and transaction fees.
Can I start mining for free? ›
Yes. Libertex provides free Bitcoin mining to its users via a virtual miner. There are no hidden charges or fees to start earning with our virtual Bitcoin miner.
How do I start crypto mining for free? ›
Here's how to mining Bitcoin using an Android phone on the MinerGate application:
- Download the MinerGate application on the Play Store.
- Account Registration.
- Enter the app.
- Click the mining option.
- Choose the mining option you want.
- Start mining.
- Choose Bitcoin crypto.
Can I Mine Bitcoin Without Joining a Pool? Yes, you can. However, joining a pool is a much more profitable way to mine Bitcoin, especially since its difficulty increases with every coin awarded.
Is crypto mining hobby income? ›
Crypto mining as a hobby
Bitcoin, Ethereum, or other cryptocurrencies mined as a hobby are reported on your Form 1040 Schedule 1 on Line 8 as “Other Income.” It is taxed at your income bracket's tax rate. This approach to mining taxes is the simplest. However, hobby mining is not eligible for business deductions.
Do you need a license to mine crypto? ›
In most countries, it is legal to mine Bitcoin, as you can see in the map below. It's not surprising that mining is mostly legal, as Bitcoin's use itself is, too. As of June 2022, there are no countries in which mining is illegal, but Bitcoin itself is legal.
Does crypto mining use a lot of electricity? ›
Cryptocurrency has an energy consumption problem. Bitcoin alone is estimated to consume 127 terawatt-hours (TWh) a year — more than many countries, including Norway.
How many miners to mine 1 Bitcoin a month? ›
For example, based on the current hash rate it would take fourteen S19 Pros to mine 1 Bitcoin per month. Or, put differently, one S19 Pro could mine 1 Bitcoin in 14 months (not accounting for a rise in hash rate over time). This calculator is the easiest way to figure out how long it will take you to mine 1 Bitcoin.
How much crypto can I mine in a day? ›
Technically, you could mine as much as 900 Bitcoins per day taking into account the cryptocurrency's current inflation rate. Bitcoin's inflation rates halves every four year in a process known as the halving.
What You Need to Mine Cryptocurrency
- Cryptocurrency Wallet. You'll need a wallet for your cryptocurrency to store the keys for any tokens or coins your mining efforts yield. ...
- Mining Software. ...
- Mining Hardware. ...
- Application Specific Integrated Circuit (ASIC) ...
- Home Computers. ...
- Hash Rate.
There are only about 2.6 million bitcoins left for mining and purchasing in over ten years. Many experts believe that miners will take another 120 years to mine the remaining bitcoins. Due to bitcoin halving, for every four years, mining of the remaining bitcoins will become two times slower ...
What do crypto miners use? ›
For Bitcoin BTC -1.2% , miners use ASIC computers which are powerful, tailor-made machines for mining. For other cryptocurrencies like Ethereum ETH -0.4% , miners can get away with powerful gaming computers.
How much does it cost a month to run a mining rig? ›
Monthly Price Per kW to Price Per Mining Rig
Typically, prices range from $80-$140 per kW per month. This includes the space, power, internet, cooling and security. You will want to get your cost per kW per month. Next, you will want to calculate your total power demand.
How much is a mining rig in USA? ›
Costs for an average ASIC mining rig range from $2,000 to $20,000. That is a wide range, and it does not accurately reflect the product's quality.
Is it worth investing in a mining rig? ›
A cryptocurrency mining rig will not only help you mine for coins but also give you a chance to make your coins grow at a faster pace than if you were just investing in it.
Can anyone start mining crypto? ›
Can anyone mine Bitcoin? Anyone can participate in the Bitcoin mining process, but unless you have access to powerful computers known as ASICs (that's “application-specific integrated circuits”), your chances of winning a Bitcoin reward are pretty low.
How long does it take to mine 1 BTC? ›
How long does it take to mine one Bitcoin? It takes around 10 minutes to mine just one Bitcoin, though this is with ideal hardware and software, which isn't always affordable and only a few users can boast the luxury of. More commonly and reasonably, most users can mine a Bitcoin in 30 days.
Can you make a living mining crypto? ›
It's completely possible to make a profit from bitcoin mining. Whether or not it will be profitable for you depends on what you're willing to invest — plus a little bit of luck. Miners will continue to build the blockchain for years to come.
How much does a mining rig make a day? ›
Most Bitcoin mining rigs make at least 2000 USD every day on average. Some can make up to as high as 5000 USD daily. We recommend buying more efficient and robust mining equipment to maximize your daily income from Bitcoin mining.
Technically, you could mine as much as 900 Bitcoins per day taking into account the cryptocurrency's current inflation rate. Bitcoin's inflation rates halves every four year in a process known as the halving.
How much does 1 Bitcoin miner make a year? ›
Crypto Mining Salary
| Annual Salary | Monthly Pay |
|---|
| Top Earners | $100,500 | $8,375 |
| 75th Percentile | $77,500 | $6,458 |
| Average | $64,161 | $5,346 |
| 25th Percentile | $48,000 | $4,000 |
It now costs Bitcoin (BTC) miners at least $17,000 to produce one BTC in the United States versus the $5,000–10,000 range a year ago, according to Bitcoin mining data resources Hashrate Index and Luxor.
Is crypto mining taxable? ›
Taxes on Crypto Payments, Staking and Mining
If you earn cryptocurrency from mining, receive it as a promotion or get it as payment for goods or services, it counts as regular taxable income. You owe tax on the entire value of the crypto on the day you receive it, at your marginal income tax rate.
Do mining pools report to IRS? ›
Any Bitcoin or other cryptocurrency that you earn for your work mining may be reported to the IRS on Form 1099-NEC by the payer or mining pool. The person who mined the crypto then reports this amount as business income, even if the payment is made in-kind rather than as a cash payment.
How many computers does it take to mine 1 Bitcoin? ›
Statistically speaking, a solo miner looking to generate 1 BTC per day would need to contribute just over 0.11% of the total Bitcoin hash rate. As we previously mentioned, this is equivalent to around 149.2PH/s or the combined output of 2,334 Antminer S17e mining units.
How many Bitcoins are left? ›
There will only ever be 21 million bitcoin. Presently, almost 19.5 million bitcoins have already been mined, leaving just over 1.5 million left before the full 21 million have been brought into circulation. The bitcoin protocol periodically reduces the number of new coins miners earn in a process called halving.
How many people own 1 Bitcoin? ›
Volatility - the price fluctuation - of Bitcoin (BTC) from January 1, 2021 to November 14, 2022. As you can see, there are 633,008 addresses that have at least 1 BTC (1.68 million coins in total), which is 2.18% of all addresses out there.
