A guide to crypto mining & how it makes money - Bure Valley

A guide to crypto mining
 & how it makes money
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Bitcoin, Ethereum and - lately - Dogecoin have been making
extraordinary headlines. Bitcoin nearly reached $50,000 US for
one coin for the first time, and Ethereum climbed from $567.68
in November 2020 to 1,829.09 three months later. Dogecoin -
formerly quite an obscure crypto option - has soared in 2021
by 659%, largely thanks to SpaceX CEO Elon Musk’s Tweets:
“Dogecoin is people’s crypto” and “No highs, no lows, only Doge”.

Many investors, of course, are profiting by holding onto coins which
have increased in value and then selling them for a gain. Others,
however, are making money by mining these cryptocurrencies.

What is “crypto mining”, however, and how does it make money?
If you want to do it yourself, what kind of equipment do you need?

Here at Bure Valley Group, we offer answers to these pressing
questions below.

What is crypto mining?
People can get confused by the term “mining”, which typically throws
up ideas of digging the earth, large excavators and commodities such as
silver and gold. Crypto mining occurs purely online using computers.

Here, however, the resource isn’t a precious metal but rather equations
which need “solving”.

This is the system which enables a cryptocurrency to work.

Think of these equations a bit like banking transactions. In your high street
bank, a system and central ledger are used to verify payments and transfers.

Yet with a cryptocurrency like Bitcoin there is no “central authority”
monitoring and processing everything. Rather, the “ledger” is publicly
available and shared by everyone across a network of computer nodes.

As such, when a transaction occurs using Bitcoin (or another cryptocurrency),
it needs to be verified to uphold everyone’s trust in the system. At this point,
computer nodes in the network compete to solve the equations involved. Once
enough nodes “agree” that the transaction is valid, however, it is processed
and the transaction details can be seen on the public ledger.

All of this “mining” work, naturally, requires a lot of computer power.

For “heavy duty” crypto options like Bitcoin, large data centres are often
involved using ASIC microchips (application specific integrated circuits).

For others like Ethereum, however, it is more possible for people with desktop
computers to participate using GPUs (graphics processing units).

                                                                     GPU

How does crypto mining make money?
There needs to be some incentive for companies and individuals looking
to set up computers which engage in crypto mining.

Here, cryptocurrencies like Bitcoin build a monetary reward into their
system which pays out to cryptominers when they complete blocks of
verified transactions.

This allows you to make money from Bitcoin, Ethereum and others without
actually having to buy any of it yourself.

These “blocks” are sometimes also called complex hashing puzzles. With
Bitcoin, once a miner has verified 1 MB (megabyte) of transactions he/she
has the chance of receiving an amount of Bitcoin as a reward. A payout is
not guaranteed, however. As such, the more processing power you have in a
cryptocurrency’s network, the higher your chance of solving the equation first
and getting a monetary reward.

How do I get involved with
crypto mining?
Here, there are lots of factors to consider. In particular, do you have the
right equipment to mine your chosen cryptocurrency?

In its early days, for instance, it was possible to use a regular PC to mine Bitcoin.
Today in 2021, however, this is no longer realistic and expensive ASIC gear is
needed to compete in an increasingly difficult equation-solving landscape. As
such, another option is to consider mining a “less competitive” and “less power-
hungry” cryptocurrency like Ethereum using a GPU mining rig.

This can be an exciting, profitable endeavour for IT-enthusiasts who plan
carefully. For a useful introduction to how to build a GPU mining rig, check
out this video here.

You do need to think carefully, however, about possible obstacles to your
profit margins such as: what market rate can you continue to expect your
cryptocurrency? How much will the equipment cost to buy and maintain?
How might power outages, internet connectivity, hardware repairs and
software issues (e.g. a virus) affect things?

For many people, realistically, the barrier to entry will be too high to set up
your own mining rig or farm.

Fortunately, there are easier ways to participate.

One option is to consider a solution like Cudo Miner, which allows you to make
money from your idle hardware through a simple installation on your
PC/laptop.

Another option, of course, is to invest in companies like these which enable
more people to engage in cryptomining without their own data centre or
expensive ASIC hardware.

Here at Bure Valley Group, we offer an exclusive network of projects
like these to investors interested in making a return from growing tech
companies across the UK.

Why miners matter
A vital part of the cryptocurrency market are miners - the facilitators of
all transactions and token generation that takes place on cryptocurrency
blockchains.

Though not limited to the above cryptocurrencies, companies such as Cudo,
Bitmain and others are vying for a slice of the lucrative market that is
expected to grow by $2.8 billion over the course of the next few years.

As the use-cases for crypto and blockchain products increases, which they
inevitably will, mining software and hardware firms will also be in demand.

Despite 2020 being one of stifled progress for many industries, blockchain is
ploughing ahead, and if anything, will be finding itself leveraged across the
world as governments and industries alike begin to acknowledge the value of
decentralisation, alternative finance solutions, and the wealth of services and
products that are now possible thanks to blockchain.

Highlighting Ethereum
Ethereum, the world’s second-largest cryptocurrency, hit an all-time high
on the 19th January 2021, rallying at US$1,440 (£1,050) and beating its
previous high of three years prior.

Moreover, since the stock markets bottomed-out in March 2020 due to the
pandemic, Ether (which runs the Ethereum blockchain) has risen over ten
times in price. This beats the growth of Bitcoin, which grew about seven times
in price over the same period.

In 2021, Ethereum is second only to Bitcoin in the global race for largest
cryptocurrency. It has grown remarkably over the years.

In February 2017, global market capitalisation was $1.41m, yet by February
2021 it stood at $184.96m.

Much of this growth occurred in the final months of 2020 and early 2021,
when it rose to $69.87m in November and $150.54m in January.

Although this is dwarfed by Bitcoin’s market capitalisation ($661.11bn in
February 2021), investors are certainly drawn to this huge return potential
in Ethereum.

Last year, the Ethereum network began entering into the hotly anticipated 2.0
protocol - an update that should transform the ecosystem it supports.

Many cryptocurrencies, decentralised applications (dApps) and decentralised
finance (DeFi) platforms are built upon the present Ethereum 1.0 network,
which has already proven to be revolutionary across the board.

                      dApps
                       DeFi
                                             1.0

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Professional Guidance
Whether you are a professional investor with years of experience, a curious
spectator looking to know more, or someone who is preparing to take the
plunge in to an extremely exciting space in the UK, then it is always advised
that regardless of experience, you seek expertise.

Bure Valley group has been supporting the growth and
development of businesses and investors for many years, covering
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To understand more about how Bure Valley can connect you
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