How to make money from mining in 2023

The parameter is a random binary number. Miners calculate it by brute-force method. Manually, a person can not perform such work quickly. But the equipment for mining cryptocurrencies makes millions of calculations per second.

Relevance of mining in 2024

According to Google Trends, from January to October 2022, the popularity of mining digital assets was declining. This is explained by the fall in the rates of most cryptocurrencies. Mining stopped bringing high profits. But it is still possible to make money from crypto mining. However, beginners should be prepared for high energy costs and relatively low income.

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Part of cryptocurrency miners do not sell the obtained coins immediately. Miners wait for the increase in rates to increase the final profit. This technique allows you to earn more on crypto mining, but does not provide for a monthly withdrawal of income.

Types of mining

In 2023, cryptocurrency is mined in several ways. The characteristics of the types of mining are collected in the table.

Profitability and risks

The profitability of mining depends on the equipment used and the amount of costs for the assembly of farms. Also, the profit is affected by the complexity of the selected cryptocurrency networks. The higher the parameter is, the more difficult it is to mine coins.

Cryptomining has pitfalls. Before you start mining coins, it is worth considering these risks:

• Decrease in quotes. When the exchange rates of cryptocurrencies fall, the profit of miners also decreases. Therefore, sometimes the cost of equipment maintenance can exceed the profit. But this rarely happens.
• Increase in the complexity of networks. When this parameter increases, it becomes more difficult to mine cryptocurrencies. Therefore, the efficiency of the same equipment periodically changes.
• The transition of the blockchain from one consensus algorithm to another. In such a case, the equipment can become useless. But this usually only affects ASICs. Transitions are rare. In 2022 only Ethereum developers decided to move the network from the Proof-of-Work (PoW) algorithm to the Proof-of-Stake (PoS) mechanism.
• Hardware failure. In the process of crypto mining, the mining equipment is heavily loaded. Also, the equipment often works around the clock. All this reduces the life of the equipment.

Prospects for mining in the future

Experts believe that the concept of mining cryptocurrencies using the Proof-of-Work algorithm will “live” for a long time. New networks usually do not use PoW. But many older blockchains are not going to change Proof-of-Work to other algorithms.

The last bitcoin will be mined in 2140. PoW mining is likely to last at least until then.

Many Proof-of-Work networks have a halving mechanism. This is a systematic halving of block mining rewards. For example, after halving bitcoin, the price of the coin increases dramatically. Therefore, the average profit of BTC miners also increases.

How to start earning from mining

Starting crypto mining is the last stage. There are 5 more steps to follow before you start mining:

1. Choose a cryptocurrency.
2. Buy equipment.
3. Choose a mining pool.
4. Create a secure wallet.
5. Install and configure a miner (a program for mining coins).

Choosing a cryptocurrency

First you need to determine the coin for mining. From this depends on the choice of technique. Looking for an asset should take into account the following criteria:

• The complexity of the network. The lower it is, the easier it is to mine cryptocurrency.
• Theprice of the coin. The higher the rate, the more profitable the extraction.
• Potential profitability. The greater it is, the better.

Necessary equipment

Part of beginners do not understand how miners make money. Effective cryptocurrency mining requires video cards or supercomputers. Some digital koins can only be mined effectively with ASICs:

• Bitcoin (BTC) 2022 – in the table.
• Dogecoin (DOGE).
• Dash (DASH).
• Zcash (ZEC) and several others.

The best video cards and asics in October 2022 are collected in the table.

Choosing a mining pool

Collaborative cryptocurrency mining platforms allow customers to receive guaranteed profits for hashrate contributions to finding new blocks. However, pools take away a part of the profit in the form of commissions. Usually, the fees do not exceed 2%. But sometimes pools can charge even more than 7%.

Cryptocurrency platforms for co-mining use different algorithms for the payment of rewards. For 2023, there are 2 main schemes:

• PPS. Miners consider the scheme to be fair. But it does not take into account the result of the work. Therefore, miners get a fixed profit for finding blocks. The income depends only on the hashrate shares invested. The PPS scheme provides for high commissions. The fees can reach 7% and higher. Commissions are needed by mining pools to provide reserve funds.
• PPLNS. Users consider the algorithm to be less fair. It takes into account the result of the work of miners – the amount of time spent. If miners take a long time to calculate blocks, their profits increase, and if fast – the income decreases. But PPLNS provides for small commissions – 2% on average. Pools with this payout scheme do not need to provide reserve funds.

When choosing a cryptocurrency platform, you need to consider 3 characteristics:

• The mechanism of reward payment.
• The value of commissions.
• The reputation of the pool.

Wallet creation

Miners can use any cryptocurrency storage. But it is better to use secure wallets. Non-custodial storages have high reliability. Clients of such wallets are responsible for placing private keys themselves. No one else has access to them.

Algorithm of creating a wallet on the example of cryptocurrency storage Coinbase Wallet:

1. Download the application to your smartphone or tablet.
2. Launch the program.
3. Click on “Create a new wallet”.
4. Come up with and provide a username.
5. Click on “Submit.”
6. Save.
7. Create a backup copy.
8. Specify an account to use Coinbase wallet.
9. Give the program access to the account.
10. Think up and specify the access code.
11. Re-enter the password and click on “Continue”.
12. Read the privacy policy and agree to its terms.
13. Set up authorization in the application by biometric data (if your smartphone/tablet has this function).
14. Scan your fingerprint.

After the fourteenth step the Coinbase Wallet interface will be loaded. The wallet will be ready to work.

Installing and configuring the software

The algorithm of actions depends on the selected program. But beforehand, the user needs to:

• Register an account in the mining pool.
• Create a vorker.
• Bind a wallet to the account.

You can do this by following the instructions provided by the developers of mining pools. Usually the manuals are published in the Getting Started tab or similar.

Algorithm of installation and configuration of the software on the example of CGMiner for bitcoin mining:

1. Download the latest version of the program from the official website.
2. Install the software.
3. Open the folder with the software (software).
4. Create a new notepad in the directory and open it.
5. Click on “File” and then on “Save as…”.
6. Specify a document name and a .bat extension. The name should look like Document.bat.
7. Right-click on the batnick and select “Edit” in the list that appears.
8. Enter the command cgminer -sha-256 -o [server address of the co-mining platform] -u [name of the co-miner created] -p [password of the pool account]. Find the data for the -o parameter often on the websites of the selected cryptocurrencies in Getting Started or similar.
9. Save the file.

When the ninth step is completed, the configuration will be finished. After that, you can start earning money online from mining.

Mining

It is not difficult to start mining cryptocurrencies. Using CGMiner as an example, after setting up the program, you only need to run the created file with a .bat extension. Then cryptomining will start automatically. The results of calculations will be redirected to the pool. The platform will pay coins to the linked wallet.

Calculating the cost of mining

Mining cryptocurrencies often requires large investments. The amount of investment depends on the desired profit. But before you buy equipment, you need to calculate all the costs of assembling a mining farm. For example, do not forget about the need to purchase additional devices when using video cards – processor, power supply and other components.

Calculation of the cost of purchasing equipment for assembling a mining farm as of October 2022 – in the table below.

The equipment consumes electricity. Therefore, future energy costs must also be considered. The total electricity consumption from the example does not exceed 1.4 kWh. When working around the clock, the mining equipment will consume 1,008 kW in 30 days. If we take into account the average price of electricity in Russia, the monthly cost of powering the equipment will be $60, or ₽3629.

You also need to take into account the depreciation of the mining equipment. Sometimes the equipment needs to be repaired and cleaned. The work of craftsmen must be paid for. But it is difficult to calculate the exact costs in advance.

Conclusions

In 2023, the popularity of cryptomining decreased. The main reason is the general bearish trend in the market of digital assets. Nevertheless, some beginners are still interested in the question of how to make money from mining.

In October 2022, you can use for effective crypto mining:

• Video cards
• Supercomputers

ASICs are non-universal. Therefore, miners are more likely to use video cards. The more their application requires less investment. In the fall of 2022 to collect a rig of video cards of medium power costs about ₽300 thousand. The price of 1 bitcoin-asic often reaches ₽1 million.

Cryptomining is associated with investment risks. Over time, the amount of profit varies. Sometimes miners work at a loss altogether. But there is a technique to increase the average income. The method involves storing earned digital coins until the rate increases. Then you can sell the mined cryptocurrencies more expensive, but you can not withdraw profits monthly.

Frequent questions from users