Many people interested in cryptocurrencies are also interested in crypto mining, particularly for popular coins like bitcoin (btc), ether (eth), and doge (doge). In general, crypto mining can be as complicated as you want.
For starters, there are a wide variety of crypto mining platforms you can choose from. central processing units (cpus), general processing units (gpus), field-programmable gate arrays (fpgas), and application-specific integrated circuits (asics) are all different types of computer hardware that can be use to mine crypto, and you can learn about all of them in our deep dive on the subject. These mining rigs vary in hash rate and power efficiency, which are two of the key factors in determining the profitability of mining. Furthermore, mining algorithms and the mining process in general for various cryptocurrencies tend to vary. for example, you would not mine zcash (zec) with the same equipment, or in the same way, that you would mine bitcoin cash (bch).
Reading: Mining bitcoin cash
Below, we’ll break down the similarities (and differences) in how to mine some of the most popular coins in terms of market cap and mining interest.
While bitcoin mining was once a feasible endeavor for home mining with affordable hardware, btc mining is now largely dominated by large crypto mining companies. Sometimes called crypto mining farms, these operations can use hundreds, if not thousands, of asic miners optimized for mining btc, which uses the sha-256 algorithm. These bitcoin asic miners are attractive, noisy and expensive, with prices ranging from $2,000 to $15,000 each. For these reasons and more, mining btc from home is more of a throwback to the early days of bitcoin around 2010, when competition was less and mining with home hardware was more feasible.
Nowadays, while there is nothing stopping you from trying to mine btc just using a cpu, your chances of winning a block reward are statistically lower than winning the lottery. even if you join a mining pool, the payout you would receive from mining bitcoin with cpus and gpus would be miniscule, and would almost certainly be negative income, as any crypto payout you would receive in btc would be dwarfed by the costs Of electricity. cpu or gpu miners would accumulate. while btc has become a highly competitive mining arena, there are many more cryptocurrencies you can get involved with.
ether (eth) is the native cryptocurrency of the ethereum network and has become one of the most popular currencies for those who mine cryptocurrencies at home. Some passionate eth miners even have gpu mining rigs that have numerous cards on each unit. Since ethereum uses the ethash algorithm, one that prioritizes small-scale miners with GPU hardware, it does not require a large-scale mining farm to be competitive. That said, gpus cannot mine as efficiently as fpga miners, and many gpu miners have transitioned to mining lower-cap altcoins.
Also, some of the biggest crypto mining equipment manufacturers are working on asic ethereum miners which could make eth mining with gpu and fpga largely obsolete. in fact, there is already an ethical miner on the market with an impressive hash rate of 720 megahashes per second (mh/s), although some question whether its high price is worth the increased hash rate and power efficiency.
Looking ahead, ethereum is migrating from proof of work (pow) to proof of stake (pos), a consensus mechanism that doesn’t require hardware mining. this will make eth no longer minable after phase 2 of ethereum 2.0 is implemented. on pos blockchains you are rewarded for staking your coins to support the network instead of crypto mining rewards on pow blockchains.
Litecoin (LTC) mining, dubbed “Bitcoin Gold Silver” by its creator, is quite similar to BTC mining. litecoin has a block reward that expires four times faster than bitcoin, and new blocks are processed approximately once every 2.5 minutes. It also has a maximum supply of 84 million LTC, which is about four times that of BTC. however, a key difference when it comes to mining ltc is the mining algorithm litecoin uses.
Instead of sha-256, litecoin uses the scrypt algorithm. The main technical difference between the two is that scrypt is a memory-intensive mining algorithm that requires possible solutions to be stored in a drive’s random access memory (ram). This was chosen to allow it to be mined from the cpu, as home mining of bitcoins became increasingly unfeasible. However, as was the case with BTC, LTC mining soon became profitable (for most) only when using more advanced and expensive GPU mining rig setups. Although scrypt was designed to be asic resistant, asic scrypt miners were developed later and have since placed cpu platforms at a competitive disadvantage.
Originally intended as a meme project to help increase public interest in cryptocurrencies, dogecoin has taken on a life of its own and is now a huge multi-billion dollar cryptocurrency. dogecoin has a block time of about one minute, ten times faster than bitcoin, with each block reward equaling 10,000 doge. Unlike most pow chains, the block reward per doge never decreases; this means that doge has no upper limit.
dogecoin uses the same scrypt algorithm that litecoin uses, and could originally be mined with cpu and gpu miners. With the advent of scrypt-optimized asic miners, those who don’t use them are now at a competitive disadvantage. In fact, some industrial-scale and institutional mining operations have plans in the works, or have already begun, to diversify their mining operations to include both Doge and LTC mining on a significant scale.
Similar to ZEC mining, Monero cryptocurrency XMR mining has also been optimized in an effort to allow retail miners to fairly compete for mining rewards with large crypto mining farms. While there may be some large-scale XMR mining, there is much more retail XMR crypto mining than some of the other blockchains that are dominated by huge industrial-scale mining operations. This is because Monero’s RandomX mining algorithm is designed to be, and has remained, largely ASIC-resistant. the randomx algorithm changes periodically and as the algorithm changes, any asic optimized for the old algorithm will simply not be profitable. For this reason, most of the large crypto mining farms focus on mining btc and other large cap projects where scale, specialization and asics give them a competitive advantage.
Because of this dynamic, monero xmr is one of the last large cap coins that can be mined at home with a reasonable chance of being competitive and profitable. this is because xmr can still be extracted from the cpu; in fact, it is optimized for cpu mining. a much cheaper option than asics, many of the best xmr cpu miners cost between $50 and $200. monero has a two-minute block time, and its block reward will gradually decrease until may 2022, when the supply reach 18.132 million xmr. after that you will have a static block reward of 0.6 xmr to incentivize miners to continue protecting the network.
mining bch is an almost identical process to mining btc. As bitcoin cash is a fork of bitcoin, the design parameters of the two cryptocurrencies overlap extensively, including the use of the same sha-256 algorithm. in fact, asic miners have been known to switch between mining the two coins. When using profitability crypto mining tools, they typically mine whichever coin provides them with the highest return on investment (ROI) at any given time. Using a combination of the current market price and the mining difficulty of these two coins, they can calculate which coin to mine to maximize returns.
for a simple example, if btc is $50,000 per coin and bch is $5,000 per coin, a bch mining difficulty that is 1/10 that of btc would yield identical returns (in the long run), as a miner is 10x more likely to win bch block reward. a bch mining difficulty that is 1/20 that of btc would result in bch being twice as profitable to mine. if bch’s mining difficulty is 1/5 that of btc, bch would be half as profitable to mine (assuming the prices in the example above are static).
For this reason, btc optimized asic miners generally target whatever sha-256 coin is the most profitable to mine at the moment. beyond this, the other fork of bitcoin, bitcoin satoshi vision (bsv), also uses sha-256, so these miners can switch between these three coins (btc, bch, and bsv) depending on mining difficulty and price current market.