Mining is the process of generating new coins. Metals like gold and silver need to be mined from a real mine. With digital coins it is a bit easier and you ‘only’ need a lot of hardware power. Mining works by solving mathematical exercises and getting rewarded from the network with coins (or parts of it). So instead of physical energy you have to put a lot of electricity power into the mining of digital coins to find or generate them.
Solo vs Pool-Mining
To mine coins you can either do it own your own or you join a pool where you mine with many others together. The difference is
Hardware for mining
There are different hardware component you can use to mine your first coins: your CPU, with your graphicscard (GPU) or with special hardware called ASIC devices.
Lets dig into these in a bit more detail:
CPU Mining: This is the easiest way probably to try mining for coins as a first run. The requirements here are pretty basic: You need a CPU, luckily every computer got that, and you need a program called cpuminer. Cpuminer is also known as “minerd”. Sign up to join a mining pool and you are ready to go. There will be a step by step guide pretty soon going into detail how to set CPU mining up. Advantages of mining with your CPU are pretty obvious: almost no requirements, no additional hardware besides your CPU. Disadvante is the performance of you CPU: it is pretty slow compared to the other methods. Your energy costs will eat up all of your profits.
GPU Mining: Mining with your GPU is already a much more efficient way to mine coins and was the next step after CPU mining. Compared to your CPU the GPU is able to solve the hash values much more efficient; you get way more out of your energy bills. To mine with your GPU you need a modest graphicscard which is support by the GPU miners like cgminer. Most modern Radeon or Nvidia cards are supported. Requirements compared to CPU mining are only the additional graphiscard you need – or even better several of them – and mining makes much more fun.
ASIC: ASIC hardware are specialed devices produced for only one task: Mine coins. And this in the most efficient way: This gives you the best hash rate/power consummation ratio of all of the three methods mentioned.
Cloud mining: Instead of buying and maintaining your own infrastructure and hardware, you can rent mining power in a data center. Various providers are offering their services in the meantime. Worth comparing prices and services.