In theory, anyone with a computer can mine for cryptocurrency to make money. In 2010, shortly after Bitcoin was launched, you could mine up to 50 Bitcoins a day—$175,000 today—with a standard, single core CPU. But as the market caps of major currencies have swelled in recent years, mining has gotten more competitive and complex.
Mining plays a crucial role in proof-of-work cryptocurrencies such as Bitcoin, Ethereum, and Litecoin. Miners compete to solve a difficult math problem—known as a “proof of work.” The first miner who solves the problem gets to add new blocks of transactions to the blockchain and receives a reward in exchange.
Today, miners invest in specialized hardware, like application-specific integrated circuits (ASICs), and operate from parts of the world where they can run that hardware on cheap electricity. They pool together resources with other miners in hopes of maximizing profits.
If you're interested in learning about mining cryptocurrency, it's hard to know where to start. That's one of the reasons why we started Honeyminer—to make mining more accessible so that anyone can easily earn Bitcoin and other cryptocurrencies with their computer.
We still think it's important for anyone interested in mining to learn how it works under the hood. We put together this resource guide to help you decipher the ins and outs of cryptocurrency mining, from the basics of proof-of-work to the different types of hardware used to mine.
We'll keep it up-to-date with helpful and useful resources over time.
Under the Hood of Cryptocurrency Mining
In Bitcoin and other proof-of-work cryptocurrencies, mining is the process that validates new transactions on the network and adds them to the chain. It's a competition between miners to earn block rewards and helps secure the network. These articles and guides will help you understand the basics of how mining works under the hood.
- A Glossary of Cryptocurrency Mining Terms: There's a ton of jargon and mining-specific terminology out there and it can be hard to wrap your head around them. We put together this glossary of terms to help break down the key mining concepts you need to know.
- How Mining Bitcoin Works: Cryptocurrency miners engage in a form of “competitive bookkeeping,” where miners help assemble a record of every transaction on a cryptocurrency network. Read on for a simple, layman's explanation of mining cryptocurrency.
- How does Bitcoin/Blockchain Mining Work?: Understanding mining means learning about a number of concepts pulled from cryptography, from hash functions to nonces. This article gives a more technical overview of how cryptocurrency mining works.
- WTF is THE Blockchain?: Mining is a small—if vital—piece of the bigger picture of how blockchains work. This article provides a useful overview of blockchain technology.
- Intro to Crypto Mining: If you're thinking about getting started with mining, there's a lot to think about, from hardware rigs to profitability. This introductory guide will walk you through the key things to know first.
- Money, Blockchains, and Social Scalability: Mining cryptocurrency involves consuming resources in the form of electricity to find a cryptographic proof-of-work. That resource consumption helps the network scale without relying on institutions or trusted third parties.
Cryptocurrency mining is extremely competitive. The lion's share of profits often goes to miners who are able to select and afford the most efficient mining hardware. It's so important that the biggest mining companies, such as Bitmain, actually design and sell their own hardware. Here are some resources for understanding different types of mining hardware.
- The Brief History of Bitcoin Mining: How it All Got Started: While mining began with hobbyists using the CPUs in their personal computers, mining hardware has been considerably specialized. Read more for a brief history of mining hardware, from CPU mining to ASIC chipsets.
- The State of Cryptocurrency Mining: Like everything in cryptocurrency, the mining landscape evolves rapidly. This article gives an overview of the most important trends in mining hardware today.
- Bitcoin ASIC Mining Hardware Guide: Building a profitable mining rig means optimizing two key things: 1) price per hash and 2) electrical efficiency. This guide helps you build an ASIC mining rig based on the factors above.
- A General Guide to GPU Mining Hardware: This comprehensive guide provides a helpful overview of all the different parts you need to build a GPU mining rig, from graphics card and CPU to power supply.
- How to build a 6 GPU Mining Rig: Mining's complicated because you have to get This helpful guide walks you through the process of building a beast of a GPU mining rig, from selecting hardware, to assembling it on your own, to configuring your BIOS settings.
- An Idiot’s Guide to Building an Ethereum Mining Rig: If you're just getting started with mining, you'll probably want to build your own rig before investing in a more costly, pre-built solution. The following guide walks readers through the process of building an Ethereum miner.
- Power Supply Calculator: Even with the latest and greatest Bitmain ASICs, you won't turn a profit unless you fully understand your energy costs. This handy calculator helps you estimate the power consumption of your hardware.
Competition in mining has increased to the point where few miners go at it on their own. Mining pools are a way for miners to pool their resources together and share in the profits from block rewards.
- What are Bitcoin Mining Pools?: This article explains what mining pools are and how they work.
- Mining Centralization Scenarios: Large, industrial miners such as Bitmain have amassed a large percentage of hash power on cryptocurrency networks, leading to fears of mining centralization. This article breaks down mining centralization concerns around Bitcoin.
- Mining Pool Stats: This helpful resource gives you granular data around the different mining pools active across various currency, along with information around pool fees, number of miners, hashrate, and more.
- Comparison of Mining Pools: Selecting the right mining pool is key to making a profit when mining. This helpful chart compares Bitcoin mining pools across dimensions such as hash rate, payout schemes, and fees.
- Bitcoin Mining Pool Profitability: Mining pools all work according to different payout structures, and it can be hard to tell how much you're actually making. This website helps you compare rewards from different Bitcoin mining pools and calculate mining rewards based on real data.
How to Choose the Best Cryptocurrency to Mine
To select the most profitable cryptocurrency to mine, you have to weigh your hardware efficiency and electricity costs against the difficulty of mining various coins. Here are some tools that will help you mine at a profit.
- What to Mine Profitability Calculator: This helpful calculator shows mining profitability across a range of different currencies.
- BitcoinWisdom Calculator: The website above provides helpful calculators for determining the difficulty of mining Bitcoin and Litecoin at any given time.
We plan to update this wiki with information crowdsourced from the community. So if you have any feedback or information we should include, please reach out to us! If we use your suggestions we will send you a free Honeyminer T-shirt!