There are a few ways to mine cryptocurrencies. Some may not be profitable, some may be somewhere in the middle, and some may be profitable. We will be going through each method, one by one.
Currently, there are four most profitable mining methods:
1. CPU mining is the first method ever and it was used by Bitcoin back in 2009. It was very profitable in 2009 and for a couple of years after that because BTC and other altcoins were on the rise. During the past years, the difficulty has risen and so has the energy consumption, making this method the least efficient. I am saying the least efficient because mining the majorities of cryptocurrencies using the CPU method it’s not profitable at all, basically a waste of time and electricity (unless the price rises again or you use renewable energy). Some new cryptos use CPU mining only (just like BTC did back in the days), and mining these new coins can be very profitable in the long term, however, it is also very risky because these projects may never see the daylight, resulting in money loss on the electricity bills.
2. Bandwidth mining is the second method. It requires multiple (or single) devices such as OrangePI connected to the internet through a router that makes use of your bandwidth (good internet is needed). This method is very energy efficient but the hardware needed may be between 300-700$ for each setup. Another con would be that not many Cryptos are using it at the moment. In the future, it could be better than any other method. Skycoin is currently using this method.
3. The third method is the GPU use of computation power, which is way better than the CPU one. There are even GPUs specially made for mining. The best GPUs used for mining are currently made by Nvidia and AMD. Again, mining is not as profitable as it used to be, however, it can be more profitable with this method. The best way to mine with this method is to find new strong cryptocurrencies, mine them and quickly sell for profit. This method would be the most accessible to the home user.
4. The fourth and last is the ASIC (application-specific integrated circuit) mining method which could be the most profitable one, but it’s the most expensive in terms of hardware and power consumption. With this method, the miner will be able to mine some specific coins only. The ASIC miners also lose a lot of their value in time, while the GPUs not as much.
Mining can be done via pools (mining in a pool of people and the block reward gets distributed among all of the participants) and solo-mining, which means you can solve a block all by yourself, will get you the whole reward.
The cost of electricity is also important. In a country, the cost may be higher than the other for example. Some big mining companies choose to mine in countries such as China or Iceland. Iceland is very cold, no extra costs for the cooling system while the hardware runs at maximum efficiency. The electricity is also very cheap. Each country has its benefits or disadvantages. Usually, countries with mostly renewable energy have the least expensive electricity. If someone is very serious about getting into mining they may want to consider building their own renewable energy system, which could generate free electricity. This often can be expensive, but having free electricity would make a huge difference because it would mean 100% profit and I am pretty sure it would pay off in time.
In conclusion, ASIC mining is the most profitable way to mine crypto but it’s also very expensive. Mining new altcoin coins may require GPU or CPU since ASIC mining is not supported (GPU mining is better than the CPU mining). Adding to, cheap electricity or free renewable electricity would be ideal.
Learn more about how to mine Bitcoin here.
Learn more about the easiest coins to mine here.
I am not a financial advisor and I am not giving guidance in what mining gear should one get or if one should get into mining. Please do your own due diligence while investing in Cryptocurrencies.