This is a sidebar post; you may wish to read the main mining rig post first.
Depending on the currency you choose to mine, you may need to create a wallet and/or address to receive the proceeds. The way this works will vary across currencies, but they’re very similar.
Wallets are usually a copy of the blockchain for your currency, along with the keys and address for your own “account” in the currency. It’s sort of an odd configuration if you compare to modern banking, but it serves the dual purpose of tracking your own balance and strengthening the security and scalability of the network. Continue reading
This is a sidebar post; you may wish to read the main mining rig post here first.
One thing I didn’t cram into my earlier post on getting started on cryptocurrency mining was how you actually make money (or fail to). To figure this out, we will look at the two ways you can mine cryptocurrency.
Drawing the Pool Picture
The “classic” method is what we’ll call solo mining. This means you’re looking for blocks on your own. If you find a block, you get the whole reward for yourself. For Bitcoin, this could be over $100k in one fell swoop. However, unless you have $100k or more in custom mining hardware (ASIC miners like the Antminer S9), your odds of finding a block on your own are miniscule at best.
The more confusing method is called pool mining. This means you contribute the work your miner does to a collective, who share out the rewards when the collective pool finds a block. If you’re the lucky block-finder, you get a LOT less reward than if you solo-mined that block, but the other 99.999999985% of the time (scientifically chosen random nearly 100% number) you’re getting a lot MORE than if you solo-mined and didn’t find anything.
You could think of mining in this situation as similar to taking a metal detector out to the Atlantic or Pacific beach looking for gold or other treasure. There’s a lot of shoreline and beach, and if you go out with one metal detector (or even two, one in each hand), you can only cover so much space. Take 10, 100, or 150,000 friends with their metal detectors and you have a better chance of finding something and sharing the reward. Continue reading