How can I earn money from cryptocurrency mining in 2022? Is it even possible at all? And if so, how do I do it exactly? We offer a comprehensive crypto mining explanation in this article.
What is crypto mining?
Crypto mining represents the process of mining new units of a particular cryptocurrency. A global computer network that runs a special crypto mining app guarantees the legitimacy of transactions, validates them, and adds them to the blockchain. The definition of crypto mining is simple: you legally put new bitcoins that you receive for verifying transactions into circulation. Your computer does the job for you. At first glance, cryptomining may seem like an easy and cheap way to make money. Although in fact, to establish a permanent income, you must buy crypto mining software, and you will receive your first income some months after you start. After that, however, all your efforts will pay off, including the cost of your crypto mining equipment.
A miner will receive a reward confirming one block of transactions. Unfortunately, the value of the block declines yearly, so now is a suitable time to invest all your efforts and funds into cryptocurrency mining if this is something you have wanted to do for a long time.
How does crypto mining work?
How does mining work generally? The operational system of this technology is explained in greater detail below.
You will only be able to mine cryptocurrency on a blockchain. Blockchain is a free information security technology that permanently records transactions in blocks and connects blocks with each other. This network is decentralised. It is not controlled by anyone. There is a special tool to access it, as well as platforms that allow you to create your own apps on the blockchain. Bitcoin mining always works with blockchain.
To start crypto mining, you will need a GPU (many use Nvidia, not CPUs from standard PCs), an SSD or ASIC, mining software and a crypto mining pool (miner community). When everything is ready, all you have to do is click the “Start” button. Your computer is now a crypto mining machine and will independently verify blocks and confirm the transactions, making you profit. You authorise the block by finding out the exact value of the hash block (unique code). The fee for this confirmation goes into the “common pool” and is proportionally distributed among the miners. Remember that these complex calculations will require a lot of energy consumption, which is bad for the environment.
How to start crypto mining
To start mining a cryptocurrency, you must buy or rent equipment and space on a server. For beginners, it is better to mine at lower powers. However, we will tell you more about this later.
Crypto mining equipment
Which services are appropriate for cryptomining? The leading crypto mining tools are AvalonMiner 1246, Antminer S19 Pro, WhatsMiner M30S+, and WhatsMiner M32-62T. However, they differ from each other in energy consumption speed and cost. If you cannot buy hardware, you could try mining through a website like NiceHash or the EasyMiner GUI mobile app available for Android, Windows, and Linux. They enable you to download software and connect to a mining pool.
When using high-quality crypto mining hardware, you will receive one bitcoin in little more than a day. However, the mining speed also depends largely on how powerful the pool you are participating in is. There is nothing for an individual miner to do in the market, as they are unlikely to recoup their investments in equipment. Although, the participants of the largest pools receive approximately a hundred dollars a day and work on the best machines.
The best crypto mining software
What are the best mining services on the market?
- CGMiner
This is a crypto mining rig established in 2011. It runs on almost any computer, is open source, and can connect to a Mac (maybe even your iPhone!). Great for advanced users, it lets you increase the number of blocks to be verified on any equipment. However, newcomers to the programme can get confused: it has no familiar graphical interface, only code.
- BFGMiner
This is simply customisable software, a simulator of an entire mining rig. It mines several cryptocurrencies simultaneously, monitors the equipment’s temperature and the CPU’s state, and remotely controls the mining process. It can be installed on the Raspberry Pi, a single-board computer designed specifically for teaching computer science, but used by miners worldwide. The experience of using BFGMiner is similar to that of CGMiner, with the same command line and the absence of a graphical user interface.
- MultiMiner
This is the first software on our list that boasts a well-thought-out user interface. This, of course, is not an entire crypto mining farm but a well-established software. It is compatible with different platforms and automatically mines cryptocurrency. Although it can be difficult for experienced miners to work with because the graphics are distracting, educational assistant materials appear on the screen throughout the mining process, and additional software is required for Linux and Mac. So, this is not the most profitable option, but it is an effective way to start out in the industry.
Cloud crypto mining
Bitcoin cloud mining means mining through connecting to other people’s power (in the cloud). You do not have to buy hardware or motherboards, and you do not pay for extremely harmful amounts of electricity whilst using it. Still, you do pay for a cloud connection. Below, we provide a list of companies that offer this service.
- LetMeCloud
It is a British company that has bought several data centres in different countries. It offers daily payouts and a handy system for tracking statistics. It works like a website (i.e., you do not need to download software), accepts payment with different cards, and is operated from a smartphone or laptop. One tariff plan can be completely different from the other: you can start with a yield of 180% per annum and reach up to about 250%. A regular bank deposit, meanwhile, offers up to 15% per annum, depending on the region where it has been opened. So, the minimum amount to get started is $250.
- Bitdeer
This platform is a warehouse for huge crypto amounts. It works with crypto mining hardware vendors and miner pools and owns numerous American and Norwegian data centres. You can manage your mining through a special smartphone app. All the company’s tariff plans are designed for 180 days — if you do not like them, you can always end any involvement with the provider. The service is considered one of the best crypto mining sites in the industry, and the threshold for entering the ranks of its users justifies its title. The minimum that potential Bitdeer miners will have to spend is $542.
- IQMining
The company offers to mine multiple cryptocurrencies, pays income in Bitcoin and Ethereum, and facilitates crypto trading by providing various tools. It is listed in trustworthy crypto mining stocks and is perfect for investment. Contracts with IQMining are intended for 1-5 years. Still, a lifetime contract allows you to mine cryptocurrency at a cheap rate ($0.32 for 10 GH/s). Furthermore, it has the ideal minimum spending amount — only 108 US dollars.
- Genesis Mining
The first non-European provider in our ranking is Genesis Mining from Hong Kong, which serves more than two million miners. It mines eleven of the most popular coins, allowing you to pay for mining on credit. The contract with the company is for a year, although the cheapest offers are sold like hot cakes. The minimum entry amount is $500.
- StormGain
This is a cryptocurrency mining application similar to Norton (it is an antivirus that has enabled mining by default). Furthermore, it can operate in the background and not interfere with the daily use of your smartphone or laptop. Inside the service, you can mine cryptocurrencies, buy forecasts for altcoin rates and exchange coins. It also includes a convenient wallet (even a cold one, but you will have to register to receive it) and a profit calculator. It withdraws funds to bank cards and requires at least $50 in stablecoin equivalent to start.
Mobile crypto mining
Cryptocurrency mining on a smartphone actually works. However, to begin, you will need an Android phone — making it convenient to check and validate blocks. Although you cannot build your crypto empire with just one smartphone because other miners use the best GPUs for crypto mining and boost their capacity daily. However, you can try mining on resources like Helium; they allow you to earn cryptocurrency without the obligatory purchase of expensive computers and motherboards. You can also connect your phone to the mining pool, guaranteeing the regularity of payments. It is certainly not a PS4 game, but it is definitely not malware that can infuriate anyone.
Although it is not an incredibly lucrative way of mining, it is popular with amateurs to extract cryptocurrency within games. For example, you can earn money in Super Crypto Kart by racing and completing additional tasks. But you can also lose: every competition has its own wager. The game is based on the Ethereum blockchain. Be careful: they do say that many try to cheat in this game.
Another interesting game is Merge Dragon Evolution. You can complete simple daily tasks and receive internal tokens for playing it, which are converted into Bitcoin or Ethereum. At some point, the game will require you to pay to be faster at completing tasks, although you can watch ads instead of paying. However, it is only allowed for 10 minutes. After this game, if you want, try Crazy Kings, a strategy game where you need to build your army and defend the towers. The more tournaments you win, the higher the rewards. Although there is one problem: you are expected to pay to participate in tournaments. The application only supports iOS version 10 and above.
The latest game worthy of our attention is CropBytes, where you become a farmer who grows crops and feeds animals. You get crypto by selling the food created by the animals, the animals themselves or buildings you have built. A trading interface is available within the game: you can follow product prices and select the best deals. Selling and buying are conducted in TRX.
Is crypto mining profitable?
Is crypto mining worth it? Yes, crypto mining profitability continues to be of interest to many investors. The higher the prices of crypto market assets, the more profitable mining is. Cryptocurrency exchange rates are not always stable, although this situation is common in a decentralised market. Therefore, investors consider crypto mining a profitable way to make money, allowing them to obtain more funds than traditional investment tools. Although the overwhelming interest is still offset by the cost of electricity consumption and equipment prices, which inevitably rise with each new month. Moreover, do not forget that taxes can rise up to 50% of your earnings.
Crypto mining profitability
Crypto mining profitability in 2022 has slightly decreased. Currently, altcoins are gaining popularity, requiring holding and not mining. Due to the huge electricity consumption, mining has been banned in China and several other countries. Miners living in nations with high inflation were forced to relocate or stopped earning money from cryptocurrency mining. How much electricity does crypto mining use? Let us do the maths: bitcoin mining requires just under 140 terawatt-hours of electricity per year. This figure exceeds the annual electricity consumption in, for example, Norway. However, this does not stop governments from introducing mining: Iran uses crypto mining to lessen the impact of sanctions imposed by the United States, and El Salvador has generally replaced the national currency with Bitcoin (it used to be the US dollar) and now mines crypto on solar-powered installations.
Crypto mining calculator
A crypto mining calculator calculates the profits you can make in current conditions. It includes the cost of electricity in your region and the funds you have for crypto mining. Calculators are built into all major mining services. However, some individual services offer free calculations. Such a calculator, for example, can be found at nicehash.com and whattomine.com.
Is crypto mining legal?
Cryptomining is legal, though not in all countries worldwide. As we have already mentioned, in China, mining is illegal because it consumes substantial amounts of electricity. Other countries are trying to restrict crypto mining. Hence, it no longer threatens the dominance of fiat currencies and state control over the financial market. In 2018, Bitcoin was banned in Pakistan, Morocco, Egypt, Bolivia, Nepal, Algeria, and Ecuador. A little while later, it was also banned in the Dominican Republic, Vietnam, Qatar, Bangladesh, and North Macedonia.
As you can see, the list of countries does not include the major players in the global markets like the US or the UK. Many countries have not banned cryptocurrency, although they are trying to limit it, introducing laws that will benefit the state and force the miners to comply with them. Crypto exchanges are already under attack. The majority now require you to fill out multiple personal information pages, sometimes even attaching electricity bills to prove you are not a miner.
Crypto mining taxes
What are the taxes for cryptocurrency mining? They vary for each country. In some countries, earning money through mining is still not classified as an activity which you need to pay a tax for. In other countries, there do not have certain services through which this tax can be paid. For example, to categorise a miner as a sole trader, more information is needed than just the fact of earning money from mining cryptocurrencies. This is because generating income is insufficient — the miner does not sell goods or provide services.
In developed first-world countries, mining is considered a taxable income. The tax is calculated from the “fair market value of the cryptocurrency at the time it was earned”, which is not quite accurate: how is the fair market value calculated? And what do you do if a miner has mined crypto that has collapsed in price because it was previously artificially high? A miner may be subject to not one but two taxes: deductions as a self-employed person and income tax. In practice, the deductions often become a tax on pensions and social funds, so be careful.