How to mine crypto in 2023
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Cryptocurrency mining presents a way to earn crypto passively, without having to trade or time the market. All it takes is a computer and a power supply and this guide explains how to start mining yourself.
Can I mine crypto at home?
Copy link to sectionYou can mine some cryptocurrencies from your home PC or laptop but it requires some powerful equipment to get started. It can also be quite expensive, as crypto mining is an energy-intensive process.
It is perfectly possible to mine crypto yourself, however. The barriers to entry are larger the more popular the coin is but it is feasible to set up your own crypto mining station at home. Bitcoin is the most popular coin to mine but it’s also the most competitive and expensive.
How to mine cryptocurrency, a step-by-step guide
Copy link to sectionFollow this guide to set up your mining rig and to start mining crypto from your own home. Although you need some technical expertise, it’s easy to find the information you need online to get started.
1. Set up a crypto wallet
Copy link to sectionA crypto wallet is like a bank account that stores your coins securely. Each wallet has its own unique blockchain address, and you need that address in order to receive payment for your mining services.
Choose a wallet that can receive the coins you want to mine. If you want to mine Ethereum, then a wallet like MetaMask works just fine. If it’s another coin, use our advice on the best Bitcoin wallets or the best crypto wallets to help you pick one
2. Buy mining hardware
Copy link to sectionMining requires at least one computer or processing unit with a powerful graphics card. In mining circles these are often referred to by the acronym GPU, which stands for ‘graphics processing unit’. Most miners choose graphics cards that are manufactured by AMD or Nvidia.
If you want to mine Bitcoin then you need even more powerful hardware. That means buying equipment that includes a specific type of computer chip known as an ASIC. You also need to connect multiple units together to create a ‘mining rig’ in order to generate enough power.
3. Download mining software
Copy link to sectionIn addition to powerful hardware, you need to download specific software in order to mine. The software differs depending on which coin you want to mine; for Bitcoin you can use software like CGMiner or BFGMiner, for Ethereum it could be Minedollars or Claymore dual miner.
There are other types of software for other coins. The important thing is to shop around. Most software is free to download and much of it is open-source, so there’s no real need to pay for it unless it offers a particularly good service.
4. Join a mining pool
Copy link to sectionJoining a mining pool isn’t mandatory but it is highly advisable. Mining pools are groups of miners who pool their computing power together to solve block equations much faster. When anyone in the pool solves an equation, the rewards from these blocks are shared out according to how much power each person contributed.
This is significantly less risky than trying to mine solo. It can take a very long time for a single person to solve any equations, particularly when it comes to the largest coins. For Bitcoin, it’s almost impossible for a solo miner to be able to afford equipment powerful enough to compete on their own.
5. Start mining
Copy link to sectionThe best bit about mining is that it’s a largely passive process. Once your mining rig is set up and switched on, you can leave it running and get on with other things. When you want to withdraw your rewards, go to the mining pool and enter your wallet address.
Any rewards you earn will then be sent directly to your crypto wallet. Just make sure the computer is always switched on.
What is cryptocurrency mining?
Copy link to sectionIt’s the process by which new ‘blocks’ are added to a blockchain. Each new block is secured by cryptography and can only be added once someone has solved a complicated equation. ‘Mining’ is the act of solving that equation, and the algorithms are so complex that it requires a lot of computer power.
Blockchains incentivise mining by offering a reward to whoever solves the equation first. The reward is fixed and paid in kind; if you solve an equation on the Bitcoin blockchain, you receive 6.25 Bitcoin as a reward. However, most of the time miners combine into ‘mining pools’, which share the risks and rewards.
Which cryptos can be mined?
Copy link to sectionAny cryptocurrency that uses a proof of work blockchain can be mined. Bitcoin is the most popular example of this type of cryptocurrency but it isn’t the only one. Generally, any coin that wants to be used as a digital currency is built on a proof of work chain.
Some leading examples are Litecoin, Bitcoin Cash, and Monero. Ethereum can also be mined at the moment, although that’s going to change when the Ethereum merge takes place in 2022. Here is a list of the top 10 coins that can be mined:
- Bitcoin
- Ethereum
- Dogecoin
- Litecoin
- Monero
- Bitcoin Cash
- Ethereum Classic
- Zcash
- Bitcoin SV
- Kadena
Is crypto mining worth it?
Copy link to sectionIt’s worth it as long as the price of the cryptocurrency is high enough. When the rewards on offer are valuable enough that they exceed the cost of the hardware and energy required to mine, it’s a worthwhile endeavour.
How much can I make from crypto mining?
Copy link to sectionIt depends on how much computer power you can provide and the rewards on offer from each cryptocurrency. Your mining power is defined by the ‘hash rate’, which tells you how fast your setup can mine crypto.
To calculate how much you can make, you need your rig’s hash rate, the current block rewards for each crypto, your energy consumption and the current cost of electricity. Then enter the details into a tool like our Bitcoin mining calculator.
What are the risks of mining crypto?
Copy link to sectionThe biggest risk is that you end up paying a lot to run your own rig and fail to solve any equations. Similarly, if the cost of running your operation exceeds the value of the cryptocurrency, you can lose a lot of money.
This is a particularly pertinent risk when energy costs are high. Mining rigs need to operate 24 hours a day and consume large amounts of electricity. The hardware is expensive too, often prohibitively so if you want to mine Bitcoin.
The best way to reduce these risks is to join a mining pool. This is like how companies sell shares to fund their operations and spread the risk across lots of different people. You pay a fee to join a pool and earn a percentage of the profits based on how much computing power you provide.
Use the quick summary columns below to help you decide if crypto mining is worth it.
Benefits
Copy link to section- An efficient mining operation gives you a way to earn crypto while you do other things
- Mining pools provide a way to spread risks and generate steady income
- It can be a cost-efficient way to use spare processing power
- Smaller cryptocurrencies are much less competitive and can offer large rewards
Risks
Copy link to sectionWays to invest in crypto mining
Copy link to sectionIf you don’t have the expertise to mine crypto yourself, you can invest in companies that specialise in it. Below are some of the options available to you.
- Buy crypto mining stocks. Crypto mining companies carry out mining on a large scale. They normally set up powerful data centres in locations where there is relatively cheap electricity and mine crypto (normally Bitcoin) from there. Some popular mining stocks are Riot Blockchain, Argo Blockchain, and Marathon Digital Holdings.
- Invest in crypto mining ETFs. ETFs let you invest in a group of companies that are all in the same industry. There are now a few crypto mining ETFs that own a range of different mining stocks. ETFs are easy to invest in and mean that you can profit from the success of the whole industry rather than having to pick the right company.
Where to invest in crypto mining stocks
Copy link to sectionYou can buy mining stocks from any of the brokers below. These are the best stock brokers around that offer low cost trading and are ideal for beginners to get started with. Sign up now by clicking one of the links in the table.
77% of retail CFD accounts lose money.
FAQs
Copy link to sectionMore crypto guides for beginners
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