Cryptocurrency mining draws many like a magnet, especially those who consider such earnings "a penny falling from the sky" and view mining as a fairly simple way of obtaining cryptocurrency. Through mining, miners obtain cryptocurrency in order to then earn money from it. However, in order to have cryptocurrency, it is not necessary to be a miner. Now almost everyone has the ability to buy cryptocurrencies on exchanges for fiat money – for example, euros, dollars or yen – and then trade them. Moreover, these days the situation with cryptocurrency mining is not as simple as it used to be.
And although the process of mining digital coins frees you from the need to buy the cryptocurrencies themselves, it is associated with painstaking work and considerable investment. Therefore, before investing in equipment and spending your time on mining, you need to understand whether this activity really suits you.
Bitcoin is the very first decentralized digital coin, released in 2009. After it, a multitude of other digital coins appeared, many of which can also be mined using computing machines. But all of this requires financial investment, time and fundamental knowledge, and your decision about whether or not to engage in mining directly depends on your capabilities and technical knowledge in the field of cryptocurrency mining. Therefore, if you are technically savvy, then the answer is "yes," and most likely you should take up mining digital currencies, investing money in mining equipment.
But you should not forget that cryptocurrency mining can be imagined as an arms race that rewards early adopters. And the fact that you can mine today does not mean that this opportunity will exist tomorrow as well. As an example – many have already heard about the plans for Ethereum to transition from consensus based on the Proof of Work (PoW) protocol to the Proof of Stake (PoS) protocol. PoS is a completely different method of verifying transactions, although the goal of these protocols is one and the same. Unlike PoW, in which the algorithms reward miners who solve mathematical problems for the purpose of creating new blocks and verifying transactions, PoS selects the creator of a new block in a certain way depending on their "stake" of coins in the network (essentially, their wealth). The creators of Ethereum, its developers and community are now striving to make this difficult transition from PoW to PoS.
If you consider mining as a hobby, then it can become a good way of obtaining only a small income – perhaps $2 a day. This means that the $1,000 cost of your equipment will be able to pay for itself only over 18-24 months. But if you consider mining as a supplementary income, then it will not suit most people, since it is not a reliable way to earn a significant amount of money. Most likely, one can talk about supplementary or main income only when you are ready to invest from $3,000 to $10,000 in equipment. With such an approach, you can probably count on a daily $50-$100, or even more.
Now let us figure out whether it is possible to bet on PoW these days. The PoW algorithm underlies costly computer calculations that correspond to the traditional understanding of cryptocurrency mining. PoW is designed to create a group of transactions in a distributed ledger known as a blockchain. This approach is currently used not only by the Bitcoin blockchain, but also in the networks of Ethereum and other cryptocurrencies, and it implies investment in fairly expensive computing devices that consume a great deal of electricity. Some functions of a PoW-based system are quite special – they are little-used or even unused, since they are specially created for the blockchain. It is important to understand that now some Ethereum developers, such as the company Honest Mining, fully specialize in PoS, moving away from PoW because of its instability.
Mining based on the PoS algorithm serves as an alternative for achieving decentralized consensus. Given that PoW requires a lot of electricity and the presence of equipment, mining blocks while using it is also considered almost a waste of all resources. Compared to PoW, the PoS algorithm is far more efficient, convenient to implement, and not associated with environmental pollution. This new type of mining uses less electricity and offers more profitable coin mining.
The mining industry is now striving for more accessible and safer methods of organizing its work, which should not harm the environment, and a vivid example is the Ethereum community, which is going to fully switch to the PoS algorithm. This new approach, just like PoW, allows consensus to be reached in the network and implies fair rewards for its participants. At the same time, whether or not to start engaging in cryptocurrency mining, everyone decides for themselves, based on their own capabilities.
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