Cryptocurrency mining is one of the most popular ways to make money from cryptocurrencies. However, over time it became less and less profitable. Nonetheless, mining remains one of the most important components in the crypto world, both because of its necessity for the smooth functioning of blockchains and because of its iconic status.
Mining is something that many crypto enthusiasts want to try, even if it doesn’t bring them much profit. However, that doesn’t mean mining cryptocurrencies can’t be profitable or easy.
In this article, we’ll be explaining everything you need to know about cryptocurrency mining and the most profitable cryptocurrency to mine in 2022.
What is Cryptocurrency Mining?
Cryptocurrency mining is the process that Bitcoin and several other cryptocurrencies use to generate new coins and verify new transactions. It involves vast, decentralised networks of computers worldwide that verify and secure blockchains – the virtual ledgers that document cryptocurrency transactions. In return for contributing their processing power, computers on the network are rewarded with new coins.
It’s a virtuous circle: the miners maintain and secure the blockchain, the blockchain awards the coins, and the coins incentivise the miners to maintain the blockchain.
How Does Crypto Mining Work?
Depending on the hardware used, crypto mining can be divided into three categories:
ASIC miners (application-specific integrated circuit miners) are probably the least known but most efficient form of crypto mining hardware. Unlike CPUs or GPUs, ASICs are designed for a single purpose: for ASIC miners, of course, it’s “mining” or solving the complex mathematical problems of validating and securing the blockchain.
Most ASIC miners are designed and built to mine a specific cryptocurrency. ASICs are generally not expensive, with an average cost of around $300 to $500. ASIC miners are around 100,000 times more efficient than the best CPU and GPU miners and have higher hash rates – they have tremendous mining power. However, a disadvantage of ASIC mining is that it is not suitable for all cryptocurrencies. Also, unlike the other two mining rig types, ASICs are not upgradeable and not durable.
A GPU (Graphics Processing Unit) is the graphics card that we use on our computer to watch movies or play games. It can also be used to mine cryptocurrencies.
GPU mining is less efficient than ASIC mining (although the hash rate is still high) and is more expensive on average. However, it offers miners flexibility as they can mine different coins using the same hardware device. Additionally, GPU miners can also be used for non-mining activities and are something that many people already have.
On the other hand, while most people already own a GPU, the computer they are using may not be powerful enough to be considered a profitable mining rig for GPU mining. So not only do you have to buy an expensive GPU, but you also have to pay for a computer that actually supports it. Additionally, GPU miners are also expensive to maintain due to the high power consumption of GPUs.
To mine with a GPU (or CPU), you not only need the usual combination of wallet hardware but also compatible mining software.
The CPU (Central Processing Unit) is the oldest and most outdated type of mining hardware. CPU miners allow you to mine cryptocurrencies using your computer’s processing power.
Not only is it extremely slow and inefficient, but CPU mining is also bad for your computer. In most cases, your profit from using a CPU miner is very small and not worth it.
CPU mining also includes mobile mining… which is not worth it. It can easily overload, draw too much power, and overheat to damage your devices—all for a small gain without consideration.
For those looking for experience rather than profit, CPU and mobile mining are good options since you don’t need to make an initial investment. If this is the case for you, make sure you choose a cryptocurrency that isn’t too difficult to mine and doesn’t require a lot of computing power.
Crypto Mining Methods
Besides the hardware used, crypto mining can be divided into three subcategories based on the method used to extract the coins:
In solo mining, as the name suggests, the miners act alone, without the support of others. This can be anything from newbie farming coins on their phone to a massive mining operation that includes a warehouse full of mining machines. Unless you have the latter, this mining method will not be very profitable, if at all.
Pool mining is done by mining a single block together using the collective power of multiple devices. While the cost and power consumption are lower, so is the win: the block mining reward is distributed among everyone in the pool. Pool mining requires you to have your own mining equipment.
There are many different mining pools, and we recommend researching them thoroughly before joining.
With cloud mining, you can mine cryptocurrencies without owning a mining rig or paying for electricity. When you use this method, you are essentially renting out someone else’s miner and taking a cut of their profits. Conversely, if you already own a mining rig, you can rent it out to cover various fees and costs – but your profits will also be reduced.
Typically, the miners you hire belong to large mining companies, and the cost is much lower than a person owning a mining rig or two. Like using a mining pool, cloud mining does not give you the full block reward.
Top 10 Most Profitable Cryptocurrency to Mine in 2022
The most important thing people look for when choosing mining is profitability. However, some beginners might misunderstand this metric: it doesn’t just depend on the price of the coin. You also need to consider the costs of running the mining rig for that cryptocurrency, how much you can earn per day, how many blocks you need to mine to be profitable, etc.
Ethereum requires a block time of 13 seconds to mine and use the best hardware: GPU, CPU.
The second most popular cryptocurrency and the original smart contract launchpad is undoubtedly the choice of many when it comes to which cryptocurrency to mine. However, in general, the more people try to mine a coin, the more profit each of them will make – partly due to the halving/tripling of the reward for each block and partly due to the token reaching its total supply faster.
Ether uses the proof-of-work hash function Ethash. It can still be profitable if you mine in a pool or cloud mining. Even if you get the full block mining reward, mining Ethereum alone is not a good idea. However, ETH has the same advantages as Bitcoin – you can be more or less sure that the price will remain high for years to come. Considering that it is more profitable than Bitcoin, Ethereum still deserves a spot on our list as one of the most profitable cryptocurrencies. However, if you want to make a profit mining Ethereum, we recommend you join a mining pool or consider cloud mining.
Ethereum Classic (ETC)
Ethereum Classic takes 13 seconds of block time to mine and uses the best hardware: GPU, CPU.
To recover from the DAO attack, Ethereum had to perform a hard fork in 2016. As the name suggests, Ethereum Classic is a slightly modified and updated version of the original pre-2016 Ethereum. It can mine with CPU and graphics card.
With a market cap of around $3.7 billion, Ethereum Classic undoubtedly has a large following, albeit less than its younger cousin. As such, it also requires a lot of processing power to earn block mining rewards — but being a mature cryptocurrency, it can bring stable profits to miners over the long term. Overall, it can be considered a decent alternative to Ethereum – the reduced complexity of Ethereum Classic mining is offset by its instability and lower price.
Grin needs a 1-minute block of time to mine and use the best hardware: GPU.
Grin is a fully open-source and community-driven cryptocurrency. Blocks of 60 GRIN are mined every minute, creating a coin every second, forever. This linear issuance with a fixed block mining reward leads to an ever-increasing supply but lowers the inflation rate. This design not only guarantees the long-term security of the blockchain but also makes the mining process fairer and more democratic.
Grin is a popular cryptocurrency, but it does have a dedicated community of users who believe in it. It is less popular and easier to mine, and despite its low price, it can bring stable profits. 60 GRIN per block doesn’t seem like much, but the coin costs $0.40, or $24 per hour – obviously not an astronomical amount, but not bad.
RavenCoin requires 1 minute block time to mine and use the best hardware: GPU.
RavenCoin uses an algorithm called KAWPOW. It is one of the best cryptocurrencies for GPU mining and perfect for beginners. The coin is in the top 150 by market cap, making it a worthy GPU mining company.
ZCash takes a block time of 1.15 minutes to mine and uses the best hardware: GPU, CPU.
ZCash is another ASIC-resistant cryptocurrency. The company that created it is also very privacy-conscious, making this coin popular in the crypto world. Although this coin is more difficult to mine due to the ASIC resistance, it’s worth it: mining it with ASICs mentioned above makes the coin’s (relatively high) price more stable and reliable, which means that it can be a great long-term investment.
DigiByte requires a block time of 1.25 minutes to mine and use the best hardware: ASIC, GPU, CPU.
DGB is a fast-growing blockchain focused on the security of digital payments and decentralised applications (dApps).
DigiByte is based on UTXO technology and uses five different independent algorithms to process transactions on the network. The technology supports various mining options such as ASICs, GPUs or CPUs, making DGB mining as profitable as possible.
Monero requires a 2-minute block time to mine and uses the best hardware: GPUs.
Monero is a privacy coin created in 2014. It is based on the CryptoNote protocol and uses the RandomX hash function. This is another ASIC resistant cryptocurrency.
Monero is one of the most popular coins for a reason: its supply is unlimited, meaning it doesn’t increase in mining complexity like bitcoin, and its price is high and top 40 by market cap. It has great long-term prospects. Overall, Monero is definitely one of the most profitable cryptocurrencies.
Vertcoin requires a block time of 2.5 minutes to mine and use the best hardware: GPUs.
Vertcoin is a cryptocurrency that uses the Lyra2REv3 proof-of-work hashing algorithm. This cryptocurrency is ASIC resistant, which means it can only be mined using GPUs or CPUs. This is done to ensure a more even distribution of coins, as ASIC-compatible cryptocurrencies are often mined by centralised ASIC mining companies and mining pools, making the whole process less democratic. Vertcoin’s creators made the coin ASIC-resistant to encourage decentralisation – one of the cornerstones of the original idea behind crypto.
Litecoin requires a block time of 2.5 minutes to mine and uses the best hardware: ASICs and GPUs.
Litecoin originated as a “lightweight” version of Bitcoin and shares some characteristics with BTC. However, LTC transactions are cheaper and four times faster.
Unlike Bitcoin, LTC uses a proof-of-work hash function called Scrypt, which allows you to mine the digital currency using a GPU without buying expensive ASIC chips. LTC mining rewards can be very high. However, note that LTC mining requires powerful hardware equipment and consumes a lot of energy.
Dogecoin requires 1 minute block time to mine and use the best hardware: ASICs.
Dogecoin is not only easy to mine but also very profitable. It uses the Scrypt mining algorithm.
Again, mining DOGE alone is not worth it, but both pools and cloud mining are good options for Dogecoin.
Mining can be very lucrative when you do your research: make sure you do some research before you start mining the most talked-about coins of the moment.
Knowing what type of hardware you need, your energy needs, and the rewards for mining a particular coin is crucial to determining if it’s right for you. This way, you can end up saving a lot of time and money.