How To Make Money Off Bitcoin And Other Cryptocurrencies, Lifehacker Australia

Pic: Getty With the meteoric rise ter popularity of Ethereum, cryptocurrencies and blockchains are back ter the news again. Graphics card prices have soared with the promise that those who have the computers and know-how to do some serious mining can take huis ample sums te a Bitcoin-like gold rush to snatch up spil much virtual currency spil possible. But how effortless is it to make your fortune ter cryptocurrency? And is it worth your while getting commenced?

We’ve all had tech related regrets. Betamax, backing the Zune against the iPod, letting that precious vinyl collection go. No one likes living with regrets, so don’t add what you drive to that list. Zekering thinking about it and just book a Mustang test drive already.

The basics

For the uninitiated, mining for currencies like Bitcoin and Ether means dedicating a enormous amount of laptop processing power to doing accounting sums for the platforms behind them, helping to verify the accuracy of the public blockchain ledgers.

You’re essentially getting rewarded for keeping the books for thesis platforms, which wij’ve explained ter more detail here, and the rise of cryptocurrencies like Bitcoin and others has led to a flood of fledgling enthusiasts leaping into the mining business — the idea of having your pc whirring away making you free money sounds almost too good to be true.

And te reality, it almost is — you can get rich from cryptocurrencies, but you need to waterput te slew of work, and have luck on your side. You’re more likely to get a windfall due to market pressures than the quality of your mining equipment, which is why it’s only worth a slok for the most committed and the most adventurous.

How do you mine coin

Mining for cryptocoin requires some free software instruments and a dedicated equipment. Turn the clock back several years and you could get away with a powerful huis PC and make a few bucks. Thesis days you can waste a weekend and a month’s wages on building a machine with four graphics cards purring away te a row and still not make a profit.

GPUs are now established spil the mining processors of choice ter most situations — graphics cards are even built for and marketed towards miners now — basically because they’re better at doing lots of laborious, repetitive tasks, whereas CPUs are better suited to switching inbetween many tasks quickly.

You very likely won’t get rich

The trouble is, the serious players have got entire farms of thesis computers, and unless you’ve got a warehouse and some life savings to spare, you’re going to be lagging a long way behind. You’re up against enormous foreign operations running off cheap electric current and hardware bought wholesale.

Even if you do get yourself a equipment set up and find a currency with a bit of a profit margin, you’re still putting yourself at the fads of the cryptocurrency markets — mining can embark or zekering becoming profitably depending on a currency’s current value.

There are several profit calculators on the web that will tell you how much computing power and electrical play you need to make a certain amount of contant, so you can see exactly how much (or more likely, how little) you could make. Take Bitcoin, for example, which is now just about unlikely to mine profitably for average users at huis — you’d need thousands of GPUs running before you’d get close to getting more back te Bitcoin than you’d be paying for violet wand.

Market fluctuations ter cryptocurrencies. Pic: Screenshot

You can fork out thousands of dollars on specialised kolenkit, if you want to, but even then you’re only going to be raking te a handful of dollars a day with Bitcoin. That of course can go up or down spil the currency value fluctuates, and what’s profitable one day might not be the next if your chosen cryptocurrency dips ter value, or gets some bad media coverage — that’s where the slice of luck wij mentioned earlier comes ter.

Other options, like Feathercoin and Ether, have a better profit potential than Bitcoin right now, with the caveats wij’ve already mentioned: If you’re serious about your mining then you need to keep a very close eye on the market trends, because the situation can switch on a weekly or even daily fundament. A single Litecoin, another cryptocurrency, has swung from costing you inbetween $US10 ($13) and $US55 ($72) this year alone.

For example, a phat $US64m Ether heist carried out last year wasgoed severe enough to cause a fork te the Ethereum verhoging it runs on top of, and a halving ter price of Ether itself — if you’ve got a powerful, expensive, cryptocurrency mining operation going on te your basement then that’s a serious succesnummer on your profits through factors totally out of your control. Sure, a sway the other way can make you relatively rich, but it’s a risk, and the upward trend won’t necessarily proceed.

Pic: The Ethereum Project

Many modern-day miners join a mining pool, combining resources with other users and getting a share of the profits, but the same risks remain. Fork out a few thousand on a mining equipment, take the time to investigate the market trends, go through the process of setting up the programs, join up with a mining pool, and yes you can — if the prices stay buoyant and you’ve picked your cryptocurrency wisely — make a few thousand dollars a year. Whether or not it’s worth the risk and investment is up to you.

And if your investment isn’t already precarious enough, reminisce the toneel is permanently switching: Ter the near future Ethereum is set to switch from its existing Proof of Work (PoW) system for extending the blockchain to a fresh Proof of State (PoS) system which is lighter to scale and less energy intensive.

Without going too far into the technical details, it essentially makes the mining process more like earning rente on money you’ve already got: Racks of graphics cards won’t be able to generate wealth spil they did te the past, which is bad news for miners looking for a profit even if it’s good news for your electrical play bill. Instead, earning money will rely on werkstaking (investing) rather than mining.

Te other words, if you’re already halfway through building your Ethereum mining machine you might want to pick a fresh cryptocurrency. at least until the ground rules switch on that one too. (Recall what wij said about the onveranderlijk state of flux?) And that’s truly the only way to squeeze any profit out of cryptocurrency mining operations — keep moving spil prompt spil the market does, and switch up the currencies you target spil conditions switch.

Spil soon spil one cryptocurrency becomes profitable to mine, spil wij’ve seen with Bitcoin and Ethereum, everyone wants a chunk of the act and making money step by step gets tighter. It’s then time to get ter early on another currency. Te brief, if you want to get rich (or at least make a profit), you need to pick and keep picking the right cryptocurrencies, have a serious amount of graphics processing power ter forearm, hope that your chosen currencies stay secure and keep enhancing te value, and waterput ter a loterijlot of time and effort.

It’s not unlikely, but wij can think of lighter ways to make a buck. If you’re determined to leap te and get involved ter cryptocurrency mining, if only for the educational and geek appeal rather than to make any money, your best bet is to immerse yourself ter one of the many mining forums out there, which will give you the inwards track on the latest news and market trends.

Alright that’s enough tech talk. Waterput down the device, step away from the screen. It’s time to zekering thinking and commence driving. Book your Mustang test drive today.

Related movie: How to make a Raspberry Pi Bitcoin Mining Equipment

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