2021 saw the entry of cryptocurrencies into mainstream public attention. Investors flocked in the millions to the asset class. Although a majority of investors bought their way into the space, there is another way of acquiring crypto, that is through crypto mining.
Crypto mining is the process of using sophisticated computerized nodes to verify cryptocurrency transactions on a blockchain ecosystem. Miners offer critical security for the network’s distributed ledger after confirming the transactions. Upon successful completion, miners are entitled to rewards, which are often Bitcoin or Ethereum.
Now hardcore mining requires equipment which can often get expensive. Not to mention that the cost of electricity used can be quite high in such systems. Mining rigs, such as the ASIC mining rigs, are not only expensive but also use a lot of energy.
This brings us to the question,
Can crypto mining be undertaken for free?
Long answer short, yes you can. However, there is more to this than just attempting to mine crypto.
You may download one of the numerous free Bitcoin mining software available if you already have the necessary hardware. But this is only one part of the mining process; other aspects, particularly dealing with hardware, also need to be taken into account.
While you may mine digital currencies like Bitcoin or Ethereum on your home computer, the process is considerably less lucrative now that the difficulty has increased. The mining difficulty is a measurement of how challenging it is to discover a hash below a certain goal when mining a Bitcoin block.
Using just a home computer, you wouldn’t make much money, especially after accounting for power expenses. Meaning, that you will pay to mine cryptos like Bitcoin, in the form of electricity.
Leaving the power consumption aside, let’s take a look at how one can mine cryptocurrencies for free.
How to do it?
One of the easiest ways to mine crypto with minimum investments is to join a mining pool. This means banding together with other small-scale miners to increase your chances of discovering new blocks and making money. However, doing so also requires pooling the earnings with other miners.
Cloud mining is another such initiative that entails renting out mining equipment or processing power to other mining rigs. This is a growing industry within the mining realm, where people across the world access your computing power over the internet and may pay for the services using crypto.
An important point to remember
Bitcoin mining is a highly concentrated space. According to a report, 10% of bitcoin miners control 90% of the network’s mining capability. Another point mentioned in the report is that 0.1% of all miners possess 50% of the network’s mining capability. This indicates that the network advantages of bitcoin are distributed unevenly. Remember that you will be competing against well-established companies with enormous capacity when you join up to mine independently.
Moreover, Ethereum (ETH) is moving to a proof-of-stake method of consensus, which would make mining obsolete. Validators would instead stake their Ether to secure the network and validate transactions.
So before venturing out to mine crypto on your own, it is advisable to look into the space and calculate the costs of running such an enterprise, and also into the plans of the project for which you plan to mine crypto for.