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Find out the essentials of cryptocurrency mining
The cryptocurrency phenomenon has sparked a new opportunity mine for virtual gold, kind of like the prospectors of a couple centuries back. This time around, you need some tech know-how to get into the cryptocurrency mining game.
This book shares the insight of two cryptocurrency insiders as they break down the necessary hardware, software, and strategies to mine Bitcoin, Ethereum, Monero, LiteCoin, and Dash. They also provide insight on how to stay ahead of the curve to maximize your return on investment.
From the basics of cryptocurrency and blockchain to selecting the best currency to mine, this easy-to-access book makes it easy to get started today!
Peter Kent is a longtime technology author who also created the online course Crypto Clear: Bitcoin & Cryptocurrency Made Simple. Tyler Bain is a professional engineer who specializes on the electrical grid. He is also a Certified Bitcoin Professional who focuses on system resiliency and mining mechanics.
Introduction 1
About This Book 1
Foolish Assumptions 2
Icons Used in This Book 2
Beyond the Book 3
Where to Go from Here 3
Part 1: Discovering the Basics of Cryptocurrency 5
Chapter 1: Cryptocurrency Explained 7
A Short History of Digital Dollars 7
First, take the Internet 8
Add credit card confusion 8
Add a dash of David Chaum 9
Result? DigiCash, E-Gold, Millicent, Cybercash, and More 9
The Bitcoin whitepaper 10
Bitcoin: The first blockchain app 11
Who (or what) is Satoshi Nakamoto? 11
What’s the Blockchain? 12
Blockchain around the world — the blockchain network 13
Hashing: “Fingerprinting” blocks 13
Blockchain is “immutable” 14
Where’s the Money? 16
What’s the Crypto in Cryptocurrency? 17
Public Key Encryption Magic 19
Messages to the blockchain 21
Signing messages with the private key 21
The blockchain address — your money’s home 22
Sending a transaction message 22
Unraveling the message 23
The Basic Components of Cryptocurrency 24
What’s in a wallet? 25
Private keys create public keys 25
Public keys create blockchain addresses 25
The private key controls the address 26
Where Does Crypto Come From? The Crypto Mines (Sometimes) 26
Chapter 2: Understanding Cryptocurrency Mining 29
Understanding Decentralized Currencies 29
Exploring the Role of the Crypto Miner 31
Making Cryptocurrency Trustworthy 32
The Byzantine Generals 33
Looking at the Cryptocurrency Miner 35
Making the Crypto World Go ’Round 37
Chapter 3: Building Blocks: The Transaction’s Journey to the Blockchain 39
The Cryptocurrency Network 40
Submitting Transactions 43
Looking at transaction fees 44
Change address 45
Verifying the transaction 46
Competing for bitcoin, the ten-minute contest 47
Winning the Bitcoin 49
Chapter 4: Exploring the Different Forms of Mining 51
Proof of Work Algorithms 51
Proof of Work applications 53
Proof of Work examples 54
Upsides 56
Downsides 56
Proof of Stake Algorithms 57
Proof of Stake explained 58
Proof of Stake selections 60
PoS example cryptocurrencies 61
Upsides 61
Downsides 62
Hybrid Proof of Stake/Proof of Work 63
Hybrids explained 63
Hybridized examples 65
Upsides 66
Downsides 66
Delegated Proof of Stake (dPoS) 67
Delegated Byzantine Fault Tolerance (dBFT) 67
Proof of Burn (PoB) 68
And MORE 69
Part 2: The Evolution of Cryptocurrency Mining 71
Chapter 5: The Evolution of Mining 73
Proof of Work Mining Evolution 74
CPU mining 74
Adoption of GPUs 74
Rise of the FPGAs 75
Dominance and efficiency of ASICs 75
The Days of Solo Mining 77
Pool Mining 78
What is a mining pool? 78
Choosing a pool 79
Pros and cons of pool mining 80
Cloud Mining 81
Pool mining versus cloud mining 81
Pros and cons of cloud mining 82
Chapter 6: The Future of Cryptocurrency Mining 83
Incentivization of Energy Exploration 83
Recovery of otherwise wasted resources 84
Continued Computational Efficiency Improvements 85
Doing more with less 86
Approaching the limits of physics 86
Corporate and Nation State Participation 87
Nation states 87
Corporations 89
Future speculation 89
The Mythical Miner Death Spiral 90
Block difficulty 90
Block difficulty adjustment algorithm 91
Miners of last resort 93
Part 3: Becoming a Cryptocurrency Miner 95
Chapter 7: Mining Made Simple: Finding and Preparing a Pool Account 97
Understanding How Pool Mining Works 98
Choosing a Pool 99
Pools that are good starting points 100
A few of the largest pools 101
Incentives and rewards 103
Pool ideology 105
Pool reputation 106
Pool fees 107
Pool percentage of the total network 108
Setting Up a Pool Account 110
Server choice 110
Mining equipment pool settings 111
Payout addresses 112
Payout thresholds 112
Researching Mining Pools 113
Cloud Mining 114
Working with Honeyminer 115
Chapter 8: Picking a Cryptocurrency to Mine 121
Determining Your Goal 122
Mineable? PoW? PoS? 124
Researching Cryptocurrencies 125
Mining profitability comparison sites 125
Algorithms and cryptocurrencies 129
The cryptocurrency’s details page 136
Mining-profit calculators 138
The cryptocurrency’s home page 139
GitHub 140
The cryptocurrency’s Wikipedia page 141
Mining forums 142
Going Deep 142
Longevity of a cryptocurrency 142
Hash rate and cryptocurrency security 143
Community support 144
Decentralization is a Good Thing 146
It’s an Iterative Process 150
Chapter 9: Gathering Your Mining Gear 151
Selecting the Correct Computational Mining Hardware 151
Specified hash rate 152
Specified power consumption 154
Equipment cost and other considerations 159
Length of time your hardware will be viable 160
Mining Equipment Manufacturers 162
ASIC rig producers 162
GPU rig producers 163
A Wallet to Store and Protect Your Private Keys 163
Types of wallets 164
Securing and backing up your wallet 166
Where to Mine? Selecting a Viable Location 167
Vet your home for cryptocurrency mining 167
Communication requirements 168
Power source thoughts 169
Data centers and other dedicated commercial locations 173
Chapter 10: Setting Up Your Mining Hardware 175
ASIC Mining Rigs 175
Racks 176
Power supply 177
PDUs 179
Network and Ethernet connection 179
A computer to control your rig 180
GPU Mining Rigs 183
Getting your GPU rig online 183
Building your own GPU miner 184
CPU Mining 195
Mining Software 196
Pool mining 196
Solo mining 200
Part 4: The Economics of Mining 203
Chapter 11: Running the Numbers: Is it Worth It? 205
Factors That Determine Mining Profitability 206
Cost of equipment 206
Hash rate of your equipment 208
Mining rig efficiency 211
Cost of maintenance 214
Cost of facilities 215
Cost of electricity 215
Total network hash rate 218
Information about your pool 219
Block earnings 219
Cryptocurrency conversion rate 220
Calculating Your ROI 220
Your block earnings 221
Your expenses 225
Calculating ROI 225
Knowing the unknowns 226
Online profitability calculators 227
Historical estimates 228
Chapter 12: Reducing Negatives and Gaining an Edge 231
Profitability Through Efficiency 232
Upgrading ageing equipment 232
Mining different cryptocurrencies 232
Using exhaust heat 233
Reducing electricity bills 234
Knowledge is Power 236
Why current events are important 237
The “fork wars” 238
Your forking decisions 241
Here Today, Gone Tomorrow 245
Evaluating Your Mining Resources 247
Increasing mining competition 247
Increasing block difficulty 247
Diminishing returns due to halving events 248
Chapter 13: Running Your Cryptocurrency Business 251
What to Do with Your Mined Cryptocurrency 252
Convert your cryptocurrency 252
Buying equipment and paying bills 252
Paying with crypto when you can’t pay with crypto 253
Expand or upgrade your mining operation 255
But don’t forget the tax 255
Hodling your cryptocurrency 256
Invest your cryptocurrency 257
Donate your cryptocurrency to charity 257
Gift your cryptocurrency 258
Determining When to Sell 259
Cryptocurrency market indicators 259
Where to sell: Cryptocurrency exchanges 262
Dollar Cost Averaging 264
Dollar cost averaging your purchases 265
Cost averaging your exits 266
Custodial exchange risk 267
Tax and Your Mining Business 267
But you’re mining, not investing 269
It gets complicated 270
Scaling Up? 271
Do not overextend 271
Milestones to meet before you reinvest 272
Planning your expansion 274
Part 5: The Parts of Ten 275
Chapter 14: Ten or So Tips for When the Market Dips 277
Have a Plan 278
How Long Can You Last? 279
Learn from Market History 281
Don’t Panic! (Keep Calm and Carry On?) 284
Buy the Dip 285
Look for the Advantages 286
Anticipate the Market Recovery 287
Learn From Your First Dip 287
Consider Market Volatility 288
Switch to Another Cryptocurrency 291
Stop Mining! 291
These are simple calculations 293
Stop or go? 294
Chapter 15: Ten Ways to Boost ROI 297
Doing Your Homework 297
Timing Your Entry 298
Playing the Markets 299
Identifying Low Hash Rate Alternative Cryptocurrencies 299
Mining the Start of a Chain 300
Starting Small 302
Scaling Choices 303
Finding Cheap Electricity 303
Cooling Efficiently 305
Scoring Hardware Deals 306
Chapter 16: Ten Types of Cryptocurrency Resources 307
Cryptocurrency Market Trackers 308
Mining Profitability Estimation Tools 308
Cryptocurrency Reddit Pages 308
Blockchain Explorers 309
Data Visualizations 310
Cryptocurrency Data and Statistics 311
Cryptocurrency Wiki’s 311
Lopp.net Resources 312
Cypherpunk Manifesto 312
Cryptocurrency White Papers 312
The Satoshi Nakamoto Institute 313
Chapter 17: Ten Criticisms of Cryptocurrencies and Mining 315
Energy Consumption 316
Wasted Processing 319
Scalability, Transaction Speed, and Throughput 321
Coin Distribution Fairness 323
Market Bubbles and Volatility 323
Centralization 324
Scams and Rip-offs 325
Hardware Price Inflation and Scarcity 326
Fire Hazards 326
Neighbor Complaints 327
Index 329
The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.
The Used, Rental and eBook copies of this book are not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.
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