5 Basic Steps to Start Making Money from Blockchain Mining
There are many ways to make money from crypto. Crypto investment is one such way. More investors are flooding the market by trading or holding cryptocurrencies in exchange for returns. However, there is another money-making medium that has stayed unexplored in crypto. It is called blockchain mining.
As a crypto investor or enthusiast, there are high chances that you would have heard about the mining concept. However, only a few people bother to find out precisely what mining entails and how they can venture into mining to make money. This article discusses blockchain mining and the steps you need to take to venture into the mining ecosystem.
What is Blockchain Mining?
Blockchain Mining is the process of creating cryptocurrencies on the blockchain. While this definition might appear simple, mining is often highly complex. It involves solving complex mathematical puzzles to validate transactions and add them to the block. There are two forms of mining: proof of work and proof of stake. The proof of stake method is not in use yet.
Miners act as auditors. Because the blockchain is decentralized, checks must be in place to ensure that all transactions are valid and that cryptocurrencies are not spent twice. In this case, mining helps to sustain the integrity of the blockchain. Miners are duly rewarded for their computational power, depending on the tokens they mine. For example, Bitcoin miners are rewarded with Bitcoin.
Steps to Making Money with Blockchain Mining
- Purchase Adequate Mining Hardware: Some years ago, mining could easily be conducted on a decent computer system. However, things have completely changed. Mining requires a high computational power that many computer systems cannot provide. It also requires constant electricity for it to be profitable. Basic mining hardware includes Graphics Processing Unit (GPU) and ASIC chips. It is vital to pick hardware that consumes less energy. This will ensure that your electricity bills are financially reasonable.
- Get a Crypto Wallet: As earlier stated, miners are rewarded with cryptocurrencies. However, your wallet has to exist to receive your crypto rewards. These crypto wallets can easily be downloaded.
- Join a Mining Pool: As a beginner miner, pulling enough computational power may be difficult. Given that your mining earnings are majorly dependent on the computational power you can provide to the network, your earnings may be minimal if your computational power is not optimal. This is why mining pools are helpful. These mining pools are groups of miners that agree to pool resources, share computational power, and divide earnings accordingly. These pools will ensure that you earn profits while maintaining minimal costs.
- Download Mining Software: Blockchain Mining is made possible through hardware and software. Downloading mining software is the last step toward kick-starting your mining journey. You can use software like Awesome Miner or CG Miner for a cryptocurrency like Bitcoin.
After starting your mining business, it is vital to stay current on the industry’s news. This is because some countries are looking toward banning or regulating blockchain mining. If this happens within your country, it would be helpful to find out ways in which you can comply with the law.