Cryptocurrencies have taken the world by storm, and even though their volatility has been criticized, they are set to grow rapidly. Many people in the world are already earning big money through cryptocurrencies. While the majority of people are either cashing in on the crypto they purchased before it went big or trading it on crypto exchanges, there are some who are making money through mining.
But what exactly is cryptocurrency mining? And what are the ways of earning money through it? That’s what we’ll delve deeper into in this post.
Cryptocurrency Mining: What is it?
Cryptocurrency mining can be defined as the process of earning cryptocurrencies through computers tasked to solve complex cryptographic equations. The entire mining process involves the validation of data blocks and the addition of transaction records to a blockchain, which is a ledger/public record.
Crypto mining requires powerful computing hardware and abundant electricity. So, if you want to mine cryptocurrencies, you’ll have to start by spending a lot of money on equipment and electricity (mining rigs need to be active round-the-clock).
The Ways to Mine Crypto and Earn Money
Now that you know what crypto mining is all about, it’s time to take a look at all the ways you can mine it and make some money. Before we get this section started, we’d like to warn you that not all the ways mentioned here are legal. We recommend you to research more about the legal status of cryptocurrencies and crypto mining wherever you are before you start mining activities.
1. Competitive Mining
Competitive crypto mining is legal, and when it all started, it was highly profitable. However, the times have changed, and today, competitive mining is nowhere near as profitable as it once was. Even in Iceland, where both electricity rates and temperatures are low, competitive crypto mining is becoming more and more unfeasible.
2. Mining Through Subsidized Electricity
There are several places in the world where electricity is abundant – so abundant that its supply is far higher than its demand. In these places, miners can keep their mining rigs active without shelling out high electricity expenses. While the state of Washington in the USA was once the most popular place in the world for subsidized electricity mining, in recent times, Iran has emerged as the most popular subsidized mining destination.
3. Stealing Electricity
This is an illegal way to mine cryptocurrencies, but highly profitable too. After all, if you steal electricity, you don’t need to pay for it. While electricity theft in the early days of cryptocurrency mining was minimal, in recent years, it has become serious business. Countries in Asia like China and Vietnam have reported several cases of large-scale electricity theft.
Cryptojacking is yet another illegal way of making money from cryptocurrencies. It involves hackers introducing mining software/malware to the victims’ computers. The software allows hackers to steal electricity and processing power through the introduced malware. Over the last few years, the cryptojacking threat has skyrocketed because of advancements in the malware used by hackers to infiltrate their targeted victims’ computers.
5. Losing Money as you Mine
You might be wondering if we’re even serious right now. But the truth is that a lot of miners are, in fact, mining while making losses. However, the activities of these miners are far from legal. Many organized crime syndicates who conduct their business activities on the Darknet are dependent on such types of mining so that the cryptocurrencies they use continue to be in circulation.
Things to Remember Before you Start Mining Crypto
So, as of now, there are only 2 ways for miners to mine cryptocurrencies legally. While competitive mining isn’t very profitable, subsidized electricity mining offers a fair degree of profitability. However, cryptojacking and electricity theft are illegal, and you may have to spend time behind bars if you commit either or both of these crimes. So, we recommend you to steer clear of the illegal ways, even though they are the most profitable crypto mining methods.
You should also research well on what kind of computing power you would need to mine cryptocurrencies. Different cryptocurrencies have varying computing requirements. So, do your research and start your mining activities only when you’re fully aware of the investments required and the risks involved.