What is mining?
Over the course of 9 years the cryptocurrency market has grown exponentially, and miners provide the backbone for the creation and maintenance of bitcoin and other altcoins. They make a series of calculations on a block of transactions. This is a way to ensure that every transaction done follows the rules so things like double spending don’t happen and everything is recorded properly. In more technical terms, miners do the cryptographic heavy lifting (known as hashing) that confirms every transaction made on the public ledger, also known as the blockchain. To make sure that there’s an incentive to do this work miners are paid by the algorithm of the coin for every new block added to the blockchain. For example, the bitcoin network rewards someone every 10 minutes.
Are there rules?
Yes, but it’s more like one big general rule that you have to take into account. Mining is an extremely competitive environment where only one miner is rewarded for finding a new block. Even though there’s “equal” opportunity for everyone to find a new block and get a reward, someone that made a higher investment in hardware has more chances to get it, because he has more processing power directed towards mining. The bitcoin network currently gives a reward of 12.5 bitcoins every 10 minutes to miners that find and add new blocks to the blockchain. However, it is worth mentioning that this time frame stretches out throughout the years when plenty of bitcoins are already in circulation, since there’s a finite supply of bitcoins.
Because the difficulty to earn bitcoin through mining is always on the rise, the trends changed over the years, instead of mining individually, pooled mining is done. This is a way for miners to increase their chances of getting a reward, much like an office lotto pool, you have a higher chance of winning something regularly, even if the payout is much smaller.
How big of an investment is it?
Normally when people think of a mining rig they tend to think of the typical graphics card (GPU) mining rig, which became popular when the value of Ethereum started to rise, because ether proved to be profitable to mine in these systems. A GPU mining rig is basically a gaming computer, just extra-powerful. Usually these rigs work with up to 18 graphics card arranged together, some miners even invest in making more than one of these rigs and set them up in a space in their house, which is called a mining farm. Even if they’re limited by how many electrical amps the home wiring system delivers, they tend to be a good option that doesn’t require an investment as hefty as ASIC hardware.
You can find plenty of video tutorials that show you how to build your own mining rig, and what custom hardware is needed in order to connect more than 2 GPUs on a computer motherboard, which can be a bit of a hassle for several reasons, but the main one being that one of the necessary parts tends to have a high failure rate because they tend to be rushed into the market. Additional to this you need specialized software to run the rig and learn plenty of software details. All of this can be exciting and fun if you already know your way around building a computer and getting parts, but the whole process can also be quite intimidating for a newcomer.
It’s worth noting that the investment and the choice on hardware depends on whether you’re going to mine bitcoin or altcoins, as mining bitcoins with a GPU mining rig is far from profitable unless you’re in a pool, so take that into account.