What is Mining?

Mining basically refers to the method applied to generate cryptocurrency or to maintain cryptocurrency transfers by using hardware and software. The working principle of cryptocurrency mining can be characterized as solving complex mathematical problems to fulfill the function of creating a blockchain. 

The mining process is also referred to as a “mining operation” because the techniques analyzing the numerical verification processes that are generated by cryptography and located on the blockchain form the basis of cryptocurrency mining.

How to Mine Cryptocurrency?

Mining is performed through computers with strong technical infrastructure or systems equipped with specialized tools. So, the devices that fulfill the requirements of the mining process are much more powerful than the computer models that are abundant in the market and offered to the end consumers. Therefore, in order to do mining, it is important to have both necessary knowledge and special equipment.  

ASIC Mining

asic mining

ASIC (Application Specific Integrated Circuit) is the name of devices that are created for a particular use and consist of a kind of integrated circuit. The ASIC circuit provides an advantage in mining activities as it is completely built on performing the intended action. ASIC devices are small and can mine with relatively low energy consumption. However, obtaining ASICs can be quite difficult and costly.

GPU Mining

gpu mining

GPU-based mining can be performed by someone with a graphics processing unit (GPU). The GPU has the leading role in this type of mining, and the more powerful it is, the more successful it can be in the face of the challenges of the operation. For GPU mining, it is useful to have a GPU with advanced overclocking capabilities. GPU mining is the most preferred method in the production of cryptocurrencies such as Ethereum and Zcash. GPU mining stands out as a more powerful and effective method than CPU mining.

CPU Mining

cpu mining

Processing units of computers are used in CPU mining. A mining software must be installed on the computer to perform CPU mining. Being a more conventional and simple method compared to ASIC and GPU mining, CPU mining can still be performed more efficiently on systems with powerful processor models. However, the returns of CPU mining may be lower than the other two methods.

Cloud Mining

Cloud mining is the name of the mining process that people carry out with the computing power rented through a third party, without using the hardware of their own computers. Since there is no need for hardware in cloud mining, it does not require large expenses related to the technical structure of the computer or electricity consumption. Cloud mining service providers take on the technical side of the process for a certain fee, ensuring a safe and relatively easy process.

How Much Do Crypto Miners Make?

When it comes to the earnings of cryptocurrency mining, it is not possible to talk about an exact figure since each coin is measured with different values. Therefore, the mining method and earnings of each cryptocurrency are different from each other. Yet, some examples can be drawn from the most popular cryptocurrencies. While Bitcoin mining is carried out on ASIC devices, Ethereum mining is performed with CPU mining.

Calculating Mining Profitability

Three factors are considered in calculating the profitability of the mining process: Hash rate, power consumption (W) and energy cost (TL/kWh). For highly profitable results, you need scenarios with high hash rate, low power consumption and low energy cost. 

Calculating Ethereum Mining Profitability

calculating ethereum mining profitibalitity

It is necessary to consider the hash rate and power values for calculating the profitability of Ethereum mining processes. The factor that determines the hash rate may vary depending on the characteristics of the processor used. Hash rate increases on devices with high-performance features. 

When calculating Ethereum mining, the hash rate of the device is divided by the amount of energy consumed, and the result is taken as a basis. For instance, a mining operation based on a hash rate of about 120 MHs and an energy consumption of 350 W with a powerful graphics card can mine about 0.64 Ethereum in a year.

The Cost of Crypto Mining

It is not possible to talk about a single measuring point for the costs of cryptocurrency mining. Many details such as the preferred method, the type of the cryptocurrency, technical infrastructure, power consumption and the purchase and maintenance costs of the devices are the factors that determine the cost of the mining process. However, it can be said that the costs are likely to be high since high performance is needed to achieve efficient results.

Calculating Electricity Power for Mining Rigs

To calculate the total amount of electricity consumed in the mining activity, it is necessary to calculate how many problems the device is working on per second and the amount of electricity consumed for each problem. The factors that determine the level of electricity consumption are the mining method employed and the performance measurement of the mining rigs.

The legal status of cryptocurrency mining in Turkey is also one of the topics of interest. Some conflicting developments in our country on this subject have made it questionable whether crypto mining is in compliance with the law. Cryptocurrency mining is not explicitly prohibited under the Turkish Penal Code.

In addition to mining cryptocurrencies or generating coins with cryptography, one of the leading ways to own crypto assets is to use exchange platforms. Trading on a reliable crypto exchange platform is more favorable for people who want to invest in cryptocurrencies. 

If you wish to make your investments through a highly secure and reliable platform that provides high quality services and low commission rates with its experienced team, you can join Felixo Exchange and start enjoying the opportunities offered by the platform.

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Written by Bircan Akalın
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I graduated from Istanbul Bilgi University, Department of Business Administration in 2019. I continue my career as a Marketing Specialist in 2020, and now I work as a Marketing Communications Specialist. I also write articles on cryptocurrencies and blockchain on the Felixo Blog.