Looking to get started mining cryptocurrency? Kryptex makes it easy to get started in minutes!
Cryptocurrency mining, as explained by Benzinga’s Logan Ross, is the process of verifying blockchain transactions. People around the world contribute their computer’s power to a shared global computer in exchange for payment. Mining this way on the blockchain lets miners earn a network fee along with newly minted coins on the blockchain. Depending on the consensus model of the blockchain, typically proof of work (PoW) or proof of stake (PoS), the mining process will be different.
Just as a centralized bank uses its data centers to process transactions, many cryptocurrencies offer a decentralized process, verifying blockchain transactions and adding them to a distributed ledger on a blockchain network.
To keep a blockchain network going with PoW protocols, a miner of the next block on the network is rewarded in cryptocurrency. A PoW consensus system has been implemented in popular cryptocurrencies like Bitcoin, Ethereum and Dogecoin to ensure that only confirmed crypto miners mine and validate transactions. PoW also protects the network against outside threats.
Crypto mining is usually in reference to PoW blockchain ecosystems; however, other consensus mechanisms like PoS are used. The process of earning crypto on PoS blockchains is typically referred to as validating rather than mining.
Most Profitable Proof of Work Cryptos to Mine
Although you can use other types of software to mine cryptocurrency, this article focuses on application-specific integrated circuit (ASIC) miners. ASIC miners function as metal bricks with an intake and outtake fan specifically made for mining cryptocurrency on a particular algorithm. As more miners are introduced, mining difficulty increases because an individual miner competes with many more miners.
Benzinga’s top profitability crypto mining picks:
- Ethereum (Ethash)
- Litecoin, Dogecoin, DigiByte (Scrypt)
- Bitcoin (SHA-256)
Kadena: Going into the second quarter of 2022, Kadena mining is by far the most profitable. Since it is newer than other leading PoW coins and has seen relatively good price action, profitability can be tremendous. Buying a Kadena miner from a manufacturer’s website can be difficult because the company often mandates minimum purchases, which can exceed millions of dollars. You may have more luck finding a better deal in secondary markets where profitability is priced in. Although miners like the Goldshell KD6 can make over $115 a day including the average residential electricity rate in the US of $0.12 per kilowatt-hour, the machine costs over $65,000. A question to ask yourself before purchasing a Kadena miner is: “How sustainable is this high mining payout and when might competition lower it?”
Ethash: Ethereum is and has been the second-largest cryptocurrency by market capitalization and is currently being mined with the PoW consensus mechanism. However, Ether will soon only be mined through PoS systems. The Ethereum network is attempting to transition its network into PoS, rendering PoW miners useless for its protocol. It’s unknown when or if this will happen, but it’s definitely something to think about. An Innosilicon A10 Pro miner costs around $11,000 and brings in $23 a day with the average U.S. electricity rate priced in.
Litecoin: Mining Litecoin can be profitable. The network is not likely to transition consensus mechanisms. It is almost as time-tested as Bitcoin except that the Scrypt algorithm has less competition. The algorithm and category of mining machines are a good bet for safety and profit. The Bitmain Antminer L7 is one of the most profitable miners on the market. It can bring in close to $50 a day with electricity priced in and costs just over $25,000 on secondary markets. For personal mining at home, it’s probably best to get a more expensive machine because the electrical infrastructure to support many cheaper miners is difficult to set up and run and is expensive.
Bitcoin: Mining Bitcoin has proven profitable since its genesis block was mined in January 2009. Although the least profitable PoW token on this list, Bitcoin’s public acceptance and its place as the most popular cryptocurrency have cemented its value. At this point, investors and institutions have contributed so much money to this protocol that it is unlikely to go belly up. Bitcoin is commonly regarded as the safest cryptocurrency and is further regarded as a store of value rather than currency to transact with.
But which algorithm should you use for mining? Benzinga’s verdict: Scrypt (Litecoin, Dogecoin, DigiByte)
The Scrypt algorithm for Litecoin mining seems to be the smartest choice. Although Kadena has arguably more room for growth, the setup cost is volatile, and the algorithm is not time-tested. Scrypt and SHA-256 algorithms have a safer return because Bitcoin, Dogecoin and Litecoin are less likely to deviate significantly from one another. Buying Ethereum mining equipment is probably unwise in view of Ethereum’s goal of transitioning to PoS. Although SHA-256’s Bitcoin reward has shown itself to be safer than Scrypt’s reward, the two seem to be close enough in safety that taking the higher-paying algorithm is the better choice.
Mine Cryptocurrency With Kryptex
Kryptex, a Windows app that pays you for the computing power of your PC, can assist you in getting started with seeing mining rewards. It offers applications that can be downloaded and installed to enable you to start mining Bitcoin. Although this method isn’t as effective as having custom-built equipment for mining, such as an ASIC miner, it’s a good place to start.
Kryptex provides this service in a user-friendly manner, with a low-resource mode that allows you to continue using your computer while it mines. Although the convenience reduces potential earnings, once you get going, you may be inspired to try more intense mining endeavors.
Most Profitable PoS Cryptocurrencies to Mine
Dominant Layer-1 Token Annual Yield Rates for Staking:
- Polygon (MATIC): 18.5% -19.5%
- PancakeSwap (CAKE): 40% – 50%
- Axie Infinity (AXS): 72% – 78%
Yields from staking yields can be profitable in terms of earning more coins, but the token price fluctuates, changing your return in terms of fiat currency. Therefore, staking a token you plan to keep for a long time is, more often than not, the best way to determine which coins to stake.
Although most of the tokens listed are generally regarded as blue-chip tokens, you still face risk in buying them. Axie Infinity, for example, has garnered a lot of attention from its game on the Ethereum network, but your interpretation of if it’s a good game that has longevity matters more than the high current annual yield for staking. Staking rates should come second to what coins and networks you believe in.
Is Mining Cryptocurrency a Good Idea?
Mining PoW cryptocurrency with hardware takes a lot of work and research whereas mining via staking a PoS cryptocurrency offers more convenience. PoW offers a more time-consuming, hands-on approach but potentially yields better returns. PoS has few barriers to entry and yields smaller returns, but it could be the better choice to minimize your time commitment.
Mining crypto from either method should be accompanied by diligent research.
Is Cryptocurrency Mining Dangerous?
Cryptocurrency mining with hardware is not dangerous, although setting up the electrical infrastructure to support mining machines should be done by a professional. PoS mining isn’t physically dangerous, but many scam websites exist in the Web3 space, making the practice potentially dangerous for the safety of your funds. YouTube videos offer guidance and assistance to avoid scams, but it’s difficult to avoid all malicious content. Proceeding with caution is advised.
How to Make Money from Cryptocurrency Mining
Determining how passive you want your income to be is key. Whether you take a more hands-on approach through a PoW operation or save yourself some time with the convenience of a PoS token, you can tap into the potential to produce value and make money from crypto mining.