Cryptocurrency mining has become quite professional, especially after the difficulty of mining Bitcoin doubled from 2020 to 2022. However, while Bitcoin may be the largest and most popular cryptocurrency, others have yet to gain worldwide fame.
Monero (XMR) is one of them. It is similar to Bitcoin in many ways but differs in the key areas that make it special. More importantly, it makes it worth mining.
So, how do you mine Monero?
What is Monero (XMR)?
Simply put, Monero (XMR) is a privacy-oriented cryptocurrency. However, at a glance, Monero and Bitcoin are similar in two main ways:
- They use Proof of Work consensus algorithms to secure the network. That is, they use physical mechanisms for network operators to verify and execute blockchain transactions. This physical basis comes in the form of electricity required to solve cryptographic puzzles. In contrast, Proof of Stake consensus algorithms use economic-based mechanisms to do the same. Therefore, blockchain networks such as Cardano, Solana, and Avalanche use validators instead of miners.
- They have a total coin supply limit; Monero at 18.4 million XMR, Bitcoin at 21 million BTC. This makes both cryptocurrencies deflationary, unlike the US dollar, which is constantly losing value over time as the Federal Reserve increases its supply.
However, even in these similarities, they are quite different. Zooming in closely, we see that Monero deviates from Bitcoin in a number of ways.
Monero Supply Cap (XMR) – Tail emissions make all the difference
Bitcoin contains a limited number of coins that can ever exist – 21 million BTC. Right now, that leaves less than 2.1 million bitcoins to be mined in the next 120 years, or less than 10%. However, many BTCs are lost or permanently destroyed because people have lost access to unlock them in the form of private keys or damaged the storage device they were holding. They are contained in dishonest crypto wallets, which is why it is so important to protect your recovery phrase.
On the other hand, Monero takes into account that some XMR coins will lose in the same way. It has an additional mechanism that Bitcoin lacks – tail emission. While Monero will reach its maximum supply of 18.4 million sometime in May 2022, its background emissions ensure that Monero miners can continue to receive rewards.
In other words, Monero miners can calculate that block rewards will not fall below 0.6 XMR per block. In the original Bitcoin design, for a scenario where there are no more block rewards for mining, Bitcoin miners would rely on transaction fees instead.
However, this catalyst concept has not been tested (with Bitcoin). For this reason, the developers of Monero decided that there will always be a block reward through tail emission. The question then is, does this make Monero as deflationary as Bitcoin?
The answer is yes. When one accounts for the loss of XMR, as well as the increase in users over time, these forces negligently cancel out inflationary tail emissions. Moreover, Monero inflation is quantified early on, unlike the US dollar or other fiat currencies. Finally, tail emissions motivate Monero holders to use it as a medium of exchange rather than just a store of value.
Main Feature of Monero – Privacy
Although Bitcoin is called the cryptocurrency, the crypto part is largely absent. Cryptography refers to encryption to protect privacy, however bitcoin is an alias. This means that its transactions can easily be linked to an individual’s identity. In fact, Coinbase has developed a suite of tools to achieve this and shares them with a range of federal agencies.
Although you do not disclose your Bitcoin address details, you do disclose if you purchased BTC on a crypto exchange using your bank account. Likewise, you disclose it when you sell BTC on a crypto exchange and withdraw the funds to your bank account. In other words, the Bitcoin blockchain is transparent, showing the output and input transactions associated with an address.
While there are ways to circumvent this lack of privacy, they are complex and questionable. In contrast, Monero cannot be tracked by default, thanks to its ring signature feature. It is a cryptocurrency in the truest sense of the word, as it was originally intended. In fact, the Internal Revenue Service (IRS) has created a bounty on Monero and other privacy coins of up to $625,000 for cracking its code.
In this way, Monero is the digital equivalent of physical cash, anonymous and untraceable. From now on, this gives it an advantage over non-privacy currencies like Bitcoin. However, Monero as a digital cash has one drawback – the speed of the transaction. While the Lightning Network makes Bitcoin payments almost instantaneously, XMR transfers still take up to 30 minutes to complete.
Monero mining requirements and profitability
Now that you understand the value proposition of Monero, it is time to see how you can become a Monero miner. Fortunately, unlike Bitcoin, which requires specific and expensive ASIC hardware to become a cost-effective miner, Monero has no such requirement.
Alternatively, Monero mining can use both the CPU and GPU of a computer, whether it is a laptop or a desktop computer. Of course, the stronger both components are, the higher the block rewards. The metric by which we determine the mining capabilities of your computer is the measure of H/s – hashs per second.
Similarly, 1 KH/s is 1000 H/s because 1 Kilo = 1000. This can go all the way from Kilo (K) and Mega (M) to Giga (G) and Tera (T) as the highest possible measure of hash power ( And who knows, in the future, maybe we’ll see Petahashes!). At the time of writing, the total number of computers connected to the Monero blockchain network was consuming 2.9GHz/s mining power.
Practically speaking, on the spectrum between low and high PC configuration, here’s what you can expect according to the Monero mining calculator.
Mining monero with low quality hardware
On the low end, if we take the AMD Ryzen 5 Pro 4650G, it will have about 4170 H / s. The MSRP (Manufacturer Suggested Retail Price) for this CPU with integrated GPU is around $260. Then, when we calculate the CPU wattage at 65W, we arrive at Daily income loss of $0.05 per day.
This loss can turn into a profit only if the cost of electricity is less than 0.1 kWh. In this case, the mining gain with this CPU would be $0.01172 per day. Not much is it?
Mining Monero with advanced and medium devices
Now, let’s consider a massive PC configuration.
It has an AMD Ryzen7 5800X mid-range processor $450 MSRP. It does not have an integrated GPU, so this should be taken into account. The CPU itself has a mining power of 9110 H/s with a power draw of 105W. Furthermore, the discrete GPU, the GTX 1080 Ti, will have a mining capacity of around 1,000hrs/sec with a power draw of 200W.
Result – greater Mining loss $0.4 per day! The RTX 2080 Ti wouldn’t make much of a difference either, adding just 500 H/s to the Monero mining table. From this we can conclude the following:
- Even the most high-end GPUs have only a tiny fraction of the hash power needed to mine Monero, compared to a CPU, at around 10%.
- Single mining is not profitable, regardless of hardware.
Then the question arises, is mining Monero worth it?
Join the mining pools in monero
As you can see, Monero mining depends on the following factors:
- Electricity cost
- The hashing power of your PC, with the CPU being more important than the GPU
- The power consumption of your computer
Of course, if you buy a computer exclusively for mining Monero, this should also be taken into account. Other than that, if you already have a PC ready to hook up, the best way to get started is to join one of the Monero mining pools:
- MineXMR.com: 12892 active miners with a combined hash rate of 1.04 GHz/sec. Pool fee – 1%
- SupportXMR.com: 8,570 active miners with a combined speed of 450 Mh/s. Pool fee – 0.6%
- xmr.nanopool.org: 4,042 active miners at 566MHz/sec. Pool fee – 1%
Mining pools work by combining the computational power of individual miners to receive block rewards. In other words, this form of resource networks increases the probability of successful mining. While XMR payments are distributed across the pool, miners receive them in proportion to the hashing power they have contributed to the pool.
However, it is still questionable whether this will be profitable in the end. It all depends on your hardware and XMR price movements. If it goes up, profitability will increase. You just have to experience it.
Steps to start mining monero
Besides hardware, you need two prerequisites to mine Monero:
- Monero wallet. Either the Monero GUI wallet or MyMonero. Both are suitable for novice and advanced users and can be installed on all major operating systems – Windows, Linux and macOS.
- Mining software that connects your computer to Monero’s blockchain network. Either XMR-Stak or XMRig will suffice.
With both at hand, you can easily join any Monero mining pool by pasting your address from your Monero wallet to start receiving your block rewards as XMR. Then, you can send the mined XMR to your cryptocurrency exchange account (Binance, Coinbase, Kraken, etc.) to sell it for fiat currency or exchange it for a different cryptocurrency.
Should you mine Monero?
In conclusion, if you already have a computer, you should check whether the mining project will be profitable. By the time you read this, the price of XMR may have gone up, making it profitable even for solo mining. However, at the current XMR price of $211, it probably won’t be the case unless you have very cheap electricity. In this case, your best bet is to join a Monero mining pool and contribute to a joint effort.
You cannot start mining Ethereum without an Ethereum mining software.
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