This isn’t a definitive guide on how to start the actual mining process. There are countless other guides out there, which go into minute technical detail. Instead, this is a list of the top things to do when starting out, in order to stand at least some chance of generating income whilst also avoiding some of the more common rip-offs lurking at every turn.
1. Forget Bitcoin
At the first mention of crypto, everyone’s first thoughts leap to Bitcoin. When I first started out, it was mining Bitcoin, back in the days when it was possible to grab a handful of USB block eruptors and a Raspberry Pi and to be mining coins in a matter of minutes. These days though, Bitcoin’s processing demands put it well beyond the reach of the new miner. My advice is to forget mining it altogether. In theory, it’s possible to rent hardware within cloud mining farms. In practice, these invariably fail to break even. Legitimate farms are only accessible to those with deep pockets prepared to invest large sums over long periods. Smaller farms are generally scams. These draw people in with attractive small upfront fees – but, once up and running, charge “maintenance fees” which absorb all profits. If you do manage to end the mining term with some coins, you’re likely to get a nasty surprise when you learn you can only withdraw to some shady exchange, which then makes you jump through endless hoops trying to verify your identity. If you’re lucky, you may eventually see a payout. If you’re unlucky, all the identification info you provide may be put to some more illicit use.
2. Start Small
When starting out, it’s all too easy to get carried away and start buying big bundles or hardware. My advice would be to stop, take a deep breath and to avoid any major investment until you’ve had some experience with a mining process to help you develop a better understanding of the issues involved.
The majority of small miners thes days are using GPUs to mine with, but it’s still entirely possible to mine with nothing more than a CPU. One project well worth looking at is Scala. Scala coins can be mined on old PC hardware, or even on Android mobile phones. Coins can be accumulated quickly if you join a mining pool. I’ve used Herominers Scala pool extensively and have found it to be reliable, paying out to my wallet without any issue. At present, Scala’s value means you’re only likely to mine pennies per day (although you can earn more if you have a Ryzen system or two you can utilise) but the real beauty to trying it is that you’ll learn a process which will help you understand much better how miners work and what’s involved in mining, withdrawing and storing crypto.
3. Get a Binance Wallet
After mining my first Bitcoin, I took a break for a while, only returning when I realised that the assets I’d mined had increased vastly in value. Getting back into things second time around, I got a bit precious about how everything should be decentralised and how large organisations should be shunned. As a result, I avoided Binance and used smaller exchanges. I stuck with this mindset for too long and, as a result, overlooked the earning potential of a Binance wallet to my own detriment.
This site isn’t intended to provide financial advice – but it’s well worth investigating the earning options available when storing crypto with Binance. Having now recognised this myself, I have a range of staking and defi investments; the former can earn a few percent APY, the latter anything up to hundreds of percent APY. Obviously, the level of risk increases in line with the return – high APY yields are likely to come from new or unproven coins. It’s entirely possible you may make a huge profit investing in these – but it’s just as possible that, by the time you come to withdraw your funds, the coin’s value may have bombed, shrinking your initial investment’s value and wiping out any gains made with interest or staking. I am not a financial adviser, so do your own due dilligence, but don’t do as I did and miss out on the option to stake coins which would otherwise be sitting idle. In particular, Binance‘s savings accounts appear to be a fairly low risk way to gain some extra passive income. Interest rates for these safer options are more modest, typically up to a few percent APY – but this is still better than most current bank interest rates.
4. Smash and Grab
The whole point of mining is obviously to earn income. Everyone hopes to spend a few weeks mining, sit back for a while and wake up one day a millionaire. The reality is that, with countless new coins appearing almost daily, it’s a lottery where most projects will either fail or generate only modest returns. Mining mainstream coins is likely to need large investments in hardware. As of now, Ethereum is the favoured coin for most GPU miners, but with a switch to Proof of Stake on the horizon, all of these miners are going to have to find new target coins in the near future. Energy costs are also very high throughout large parts of the world, so a good tactic right now is to seek out new projects, quickly mine a stack of coins and to hold these in the hope of a substantial increase in value over time. In the last 6 or so months, Ravencoin Lite (now renamed Avian), Raptoreum and Pulsar have all appeared and gained a following. By getting in early, I’ve managed to mine 5-10k coins whilst difficulty is low, before moving on to the next project. I don’t hold out huge hopes that any of these will reach $1+ pricing, but if any (or all) do, I’m quids in for very little effort.
5. Use Cold Wallets
As time passes, the options for staking, lending and earning storing currencies on exchanges increases. If you can gain an extra 10% APY holding coins on an exchange, it’s probably worth the risk. If however it’s an unstakeable coin and you’re intending to hold for any period of time, move your coins to one or more offline wallets – either a wallet you’ve not mined to stored on another machine, or a good quality, trusted brand hardware wallet. Installing mining hardware often triggers false positive alerts from anti-virus software. This can mean you end up having to disable AV temporarily in order to complete the install. This inevitably increases risk of viral infection. Keeping stored coins safely away from this process helps mitigate the risk of losing all your hard earned crypto if the worst happens and you suffer a virus infection.
6. Back up. Twice. Or more.
Spend any time in crypto and you’ll soon come across people on Discord or similar asking how to overcome issues with damaged 2 factor authentication devices, or lost wallet keys. All too many of these involve people who’ve had all their eggs in one basket and have now lost their entire mining profit.
When you install a new wallet, always take a copy of the passphrase. Always immediately back this up to a second location. Ideally, also take a hard copy, printed and stored in a secure, fireproof location, or with a family member living elsewhere.
Ensure this is a continually updating process. If you start to mine a new coin, make setting up and secuing the wallet the first thing you do before even contemplating setting up mining software.
7. Spread risk.
The old adage not to keep all of your eggs in one basket is truer than ever with crypto. If you’re ever unfortunate enough to get ripped off, legal authorities are unlikely to do anything to pursue the perpetrators – and are probably powerless to do so anyway. If you start to accumulate signficant holdings of any one coin, it’s worth splitting the holding across multiple wallets. If you’ve gone out and blown a ton of cash on hardware and mined $10k in Ethereum, it may be worth considering splitting the majority of your holding across several offline wallets – but I personally also like to keep a small chunk on an exchange (better still something like Binance where you can earn interest at the same time). Doing the latter means that if you’re ever victim of a fire or robbery, you may avoid losing everything.
8. Look. Listen. Learn.
Undoubtedly, now is the time to be accumulating a decent crypto holding. Mainstream companies are becoming increasingly commited to crypto, governments are starting to plan taxation and, lots of people are already making substantial profits through mining, trading and smart investments. That doesn’t however mean that you should rush out in a blind panic trying to mine, buy or trade at the earliest opportunity. Now is the time when billionaires will be made, but it’s also the time when a lot of bad judgement calls will be made and a lot of life savings lost. Start with a small project, learn how things work and, whilst doing this, read, watch and listen to as much info as you possibly can. YouTube is probably the best resource – but treat everyone on it with distinct suspicion. For mining info, I’d recommend viewing videos from Brandoncoin, Red Panda Mining, Rabid Mining and The Hobbyist Miner. All of these channel’s creators are in my opinion genuine miners in it for the love of it, rather than shilling and advertising (a lot of people like VoskCoin and Son of a tech, but I’m suspicious of both for similar reasons).
When looking for new projects or mining pools, I’d recommend scanning their websites for Discord links and joining their Discord channels. Following these for a day or two, you can very quickly get an idea of the legitimacy of a project and any common pitfalls experienced by others.
Lastly, treat everything you view, read or listen to with a healthy dose of suspicion. Never trust anyone who approaches you directly with an offer of assistance. Even on Discord, project team members or support operators will generally keep discussion within the main channels. Treat any contact via direct or private message as a likely scam attempt. Finally, never, ever allow remote access or screen sharing with anyone on a machine used to mine or store crypto. Legitimate companies or projects won’t expect you to do this – anyone asking you to share or enable remote access is almost certainly a scammer looking to steal your hard earned assets.
Stay safe and happy mining!