How to mine Digital Price
Cryptocurrency Mining For Dummies - FULL Explanation
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hey everyone welcome back to another mining chamber video in today's video we are going
to be talking about cryptocurrency mining in detail so we're giving you an overview on it
and how does it work different type of mining rigs and what impacts your mining profits as
well as giving you my opinion on the eighth 2.0 as well as the EIP-1599 so there will be a lot
of information in this video I hope you guys enjoy it and you get something useful out of it
in this video i do have a lot to talk about and explain but the first thing i
should cover is cryptocurrencies if you are new to mining i would assume you're fairly
new to the crypto world in general and came across of it once the prices skyrocketed in
the recent months as of january 2021 so let me briefly run down what cryptocurrency is
cryptocurrency is a digital asset just like your dollars except that it runs fully digital it
does not have a bank or any central entity that controls it hence why it's called decentralized
and that is one of the main pros of cryptocurrency there are many cryptocurrencies that are newly
released but generally as a miner we only focus on the profitable ones i will touch more on that
later on with cryptocurrency your money is your own you keep your cryptos in a wallet that is made
of a public and a private key imagine your public key to be your email address and your private key
is your password to receive or send money you will be using the public address now that means
if you lose your money or send it to the wrong address you don't have a way back as for anonymity
cryptocurrency is fairly anonymous but not hard to track down the source of the transaction and the
receiver there are some cryptocurrencies intended for further privacy and such but to achieve nearly
as full anonymity as possible you will definitely need to do more work from burner phones to bitcoin
atms one of the main things that you should know is how to buy cryptocurrency and how to sell your
cryptocurrency there are different regulations for every country but i have made a video on both of
these topics as well as on different wallets and exchanges you will have the link of these three
different videos in the descriptions below that will help you understand that part thoroughly i
do recommend watching these videos after this one and i do hope this two sense of an explanation was
sufficient for some background information now let's talk about cryptocurrency mining
cryptocurrency mining is the process of validating transactions and minting new coins from block
i will further explain what blocks are and how they work but first let's talk about
the two different ways to mine one is proof of work and the other is proof of stake proof of
work is what all the different mining hardware falls under such as gpu rigs a6 fpgas etc the
mining hardware solves randomly generated complex puzzles using electricity and computational power
and then you'll get compensated once you find the right solution while proof of stake is in
a way being a shareholder so it's owning a certain number of certain cryptocurrency
to then be able to launch a node and that will be validating transactions and minting new coins out
of the blocks usually these nodes need a minimum number of coins to create one in some scenarios
your coins are locked out and you can't move them around but there's also soft staking which is more
flexible fpc needs to be on 24 7 to keep your node online but it can be any pc as long as it's up 24
7 with a stable internet connection there is more to staking than what we've mentioned here but i
feel like it would need its own video to be fully covered so now let's get back to the main focus of
the majority of miners and newcomers that come to this channel for and that is proof of work
proof of work has much more to it there are many different algorithms that cryptocurrencies fall
under algorithms are basically different arenas of puzzles so some mining hardware can excel better
at certain coins with certain algorithms more than other coins the measurement for your mining
power is your hash rate the hash is considered the solution attempt to the puzzle so if your
hash rate is 30 mega hash then you're doing 30 million solution attempts a second there is a
lot more complexity to it regarding to solving the block and such but i don't want to get too
technical in this video i just want you to have an idea but i will leave a link in the
descriptions below for an article that explains it really well now like i mentioned before there are
different types of mining rigs so let's go ahead and go through these different types of rigs and
explain them briefly first we have the a6 a6 are known as application specific integrated circuits
and they are mostly used to mine certain coins with a high output of computational power as
well as a high electric consumption now by mining a specific coin i mean that if you buy for example
an s19 it provides a computational power of 110 terahash and consumes 3 250 watts but it can only
mine coins that use the shot 256 algorithm such as bitcoin with such immense hash rate your profits
will still seem low due to the network difficulty which we will explain later on in the section for
what impacts your mining profits and then the second type of mining rates we have the fpgas
fpgas are basically what's in between the a6 and the gpu miners so they're made for a handful of
algorithms they can't mine every coin but some of them can and they're very similar to gpus but they
are more efficient and more profitable to some extent but they can also get very very expensive
i myself have no experience at all with any fpgas so one day we will probably do a video
covering them in detail and then the third thing we have are the gpu miners and that's
what this channel is primarily about so in gpu mining use graphic cards to be able to get more
computational power so the more and better gpus that you have the more mining power you have
and this option is the most residential friendly because asic miners do produce a lot of heat
and noise while fpga miners are very similar to gpu miners so these two options are residential
friendly in a way i have recently released a full buying guide for gpu mining rigs the link
will be in the descriptions below and we also had a giveaway in that video and the winners of that
giveaway will be selected in this video and there are different type of mining such as usb mining
cpu mining as well as storage mining where you can mine with your hard drive but all of these would
probably require their own individual video since there is a lot of information to cover on them so
hopefully in the near future i will have a video on every type of mining rig so that you can get
more information regarding to these topics now that we wrapped up the different type of mining
rigs we can go ahead and move on to the different type of mining services so as for mining services
what i mean by that is cloud mining hosting as well as gpu rental or buying pre-built rigs so
i'm just going to give you my opinion on them this is not a financial advice but it's just my opinion
on these platforms and maybe you can benefit from it so the first thing i want to start off with is
cloud mining cloud mining to the most part it's usually unreliable there are many scenarios that
people get handed the bad end of a stick in cloud mining since your money is going to a third-party
services that should be giving you hash power in return but you never know when these services
will close on you or leave there's a lot of ones that are scammy so they would take your money and
promise you a certain return such as 10 a month or such but then you'll never get your money back
you're probably going to be asked to pay more to be able to withdraw your funds and then you'll
never be able to withdraw them either way whether you pay or not so just be careful with these
services for cloud mining most of them are scams i honestly wouldn't use a service for cloud mining
it's better to just build your own rig and then there's also hosting hosting can be useful if your
electricity is very expensive so for example i've seen a lot of comments from germany and they're
all talk about how expensive the electricity is which is insane it's about 25 cents and above
so in that case mining cryptocurrency can be a little bit tough for you if you have to pay the
electricity bill it can get really hefty so what you'll need to look for is somebody credible or
somebody that you trust that can host for you and what that means is that you'll basically
have your rigs run at someone's else's place so if you know somebody for example in us or canada
and they have a fairly decent electric price you can have your rig built there by the person or
ship them the rig whichever way is comfortable for you and then from there you'll have your
rig running there by covering your own electricity costs as well as giving the person that's hosting
it for you a little bit of commission now as for what services can you use for hosting i honestly
don't know myself there aren't many out there but i would just look around and try to find a
friend or family member that you can trust because that is much more reliable than putting your rigs
with somebody else that you don't know and then the last thing is buying pre-built rigs
so sometimes people would want to buy just a rig that's pre-built and ready to go plug and play
just to save money and to avoid the hassle of having to build it yourself but honestly my
tip to you is to figure out how to do it yourself because you will be in such a hard time later on
if you get one that's pre-built let's imagine that you did buy a pre-built rig and then eventually
you run across an issue or instability problems and your rig starts acting up if you don't know
how it's built and you don't know how it works you will be investing a lot more time trying to figure
out what the problem is some pre-built rigs that you can buy off of people might offer you support
or service but still i honestly recommend you to avoid that but if you're a big investor and
you're looking to build out a big farm then maybe you can look into hiring a person or two to do it
for you and then that will be a better option now that wraps up the types of mining services if you
have any questions let me know in the comments below these are all just my opinions nothing is
for sure but i'm just letting you know through my experience and through seeing other people's
experiences so now let's get to the important parts what impacts your mining profits what makes
you make more money what makes you lose money and all that stuff the first thing about your mining
profits is knowing what crypto coin you should mine now depending on what you're using whether
it's asics fpgas or gpus you'll have a different coin of your own to pick and mine but for this
video we are going to focus on gpu mining since this is the primary category for this channel
so to know what cryptocurrency you should be mining with your gpus that depends on what gpu
you have so there is this thing called the dag file the dac file is basically a data set that's
stored on the vrams of the gpu and these data sets size increases over time so that means some gpus
for example the four gigabyte cards can't mine ethereum anymore because the dac size is larger
than four gigabytes even though you can still do them with zombie mode on but your hash rate will
be drastically lower so that's the importance of the dag file that's why it's recommended to
buy gpus with six gigabyte vram or more to mine ethereum ethereum is the most profitable coin for
all gpu miners at the time of this upload but then as a lot of you guys know ethereum will be moving
to proof of stake and they were also going to be eliminating the mining fees that us miners get
paid but before i give you my opinion on that news let me first explain to you what impacts
your profits so you understand why it's a big deal so the way that your profits increase or decrease
depends on three different factors to whichever coin you're mining to explain the three factors i
will be using ethereum as an example so now let's go back to the block from earlier the block is
what gets mined by your hardware and that block has a base reward of two ethereum so let's say
10 people with equal power in a mining pool end up mining that block and finding the right solution
that means that two ethereum will be divided equally between all of them since they have the
same amount of power but if you're a solo miner and you got lucky and then you solve the block
all the incentives will come to you directly so the two ethereum will be only yours but then with
solar mining your chances are much lower because the more hash rate you have the higher chances for
you to solve a block is and comparing your hashtag to a mining pool then that would leave you at a
very slim chances to be able to solve the block in some scenarios solo mining can be good but in most
scenarios pool mining is the way to go for stable incentives so now that the base reward of a block
is to ethereum you also need to add to it all the transaction fees that are within that block so
let's say i would send ethereum to someone i would pay a small fee for that transaction to go there
that fee goes to the miner so now let's say there is 10 000 transactions that happened or
10 million all these small fees would end up being in this block which increases their block reward
so that two ethereum base reward will be there that's the two ethereums that are going to be
introduced to the network so these are the coins that are actually mined the new coins
and then there's the transaction fees these transaction fees will just increase the block
reward and then it's the same concept everybody that solved it with the amount of power that
they have they will get the incentives according to how much effort they put into that block so
sometimes you can see blocks with 3 ethereum 5 ethereum 10 ethereum it all depends on the
volume in the network so the more transactions going on in the network the more you get paid
but generally we don't see high numbers that much usually it's around three ethereum for ethereum
for a block reward and that itself is really good now there's also one more thing that affects block
rewards and that's having halfing doesn't happen on ethereum but it's basically what cuts down
the base block reward by half so this happens on bitcoin every four years every four years
bitcoin will cut its block reward by half which makes mining the rest of the coin harder which in
return increases scarcity and that's usually good for the price now speaking about price that is one
of the important factors for your profitability so if ethereum's price goes up your profitability
of mining ethereum goes up as well and that works for every other coin because when you're
mining you're getting paid with that ethereum so if you're getting paid for example point
a month and ethereum is at a thousand dollars then you're getting paid a hundred dollars a month for
mining but then if ethereum drops its price to five hundred dollars and you're still getting paid
0.1 ethereum a month then you're only going to be getting 50 the price can't be taken
for granted because it all depends on when you decide to cash it out so for example if
you're mining ethereum throughout the month and throughout the month the price of ethereum was
high above a thousand dollars but then the day that you want to cash it out ethereum price drops
that means the price really didn't have any effect there other than taking your profits down
because the price went down the moment you wanted to take your money out that's why you need to be
careful with selling your cryptocurrency and finding the right time to sell them
now the last thing that impacts your profitability that is the difficulty of the network
and to explain that the best way possible i feel like it's best to use a metaphor so let's think of
the block reward as a little snack bar that you have and you also have your friends around and
since you're a generous person you're going to share it with them so you would generally share
this between all your friends equally and they all get a share of that candy bar but now let's
say you have another candy bar and then you have more friends came over so you'd want to share that
same candy bar through more people so you'd have to break it into smaller pieces that goes the same
way to the block reward so when more miners come to the network the difficulty increases because
the total hash rate increases that means everybody that's eating from the same plate will have just a
smaller portion and in some scenarios difficulty would decrease when the price of ethereum goes
down and in those times you'd be mining more ethereum but the price of ethereum is lower
so your profits will look lower so that's what difficulty does it basically just changes how much
you get from mining and now adding that to the two other factors which are the transaction fees
and the price of the cryptocurrency that gives us the three factors that impact your mining profits
i hope it was all clear to understand if you guys have any further questions let me know in the
comments below now before i talk about ethereum 2.0 and what's happening with the miner fees being
taken off with the new eip implementation let's first select our giveaway winners
congratulations to all the winners thank you guys so much for participating in the giveaway a lot
of you guys gave great feedback on that last video and i really appreciate it i also decided to join
the giveaway by giving away 11 random winners 10 worth of ethereum so if you found a random deposit
of 10 dollars of ethereum in your wallet then know that you won the giveaway thank you so much
for everyone that participated in the giveaway and also thank you for all the sponsors of the
giveaway please make sure to check them out guys all the links will be in the descriptions below
to claim your reward all you need to do is just email me a screenshot of your youtube account
and make sure that the email is coming from that same address that's showing on the screenshot
and then after that i can go ahead and talk to the different sponsors and get the reward coming to
your way and we will be doing a giveaway every 10 000 subscribers so another giveaway will be
coming up very soon stay tuned for that so now that we got the giveaway out of the way we can
go ahead and talk about eip 1599 as well as ethereum 2.0 and whether gpu mining will be
viable for a long time so eip1599 will cut out all the transaction fees that are added to the block
so if you remember before we talked about the block and how there's a base reward
of two ethereum and then all these transaction fees will add up and increase the block reward
now if that gets cut off then we know that we'll always be getting only two ethereum per block
so we'll never see three ethereum five ethereum and all these additional profits that we usually
see when the transactions are getting really high that does suck it is a bad hit for gpu
miners that are mining ethereum which is the majority of gpu miners so what we can expect is
that our profitability will drop with at least 30 percent since the average of a block reward
is three ethereum so what you can do is you can go to whattomind.com and you can go in details
with a mining calculator where you can set your own block size and after that if you put in your
hash rate and everything like this you will see your profitability after the eip implementation
and to do that all you need to do is just put to ethereum as for the block reward and that way
you can know what to expect when that time comes the reason that they are looking to implement the
aip 1599 and burn the transaction fees instead of giving them to miners is because they think
it's better for the ethereum price and that it would be better against inflation like that by
reducing the amount of ethereum that's circulating but at the same time bit speed tripping points out
really good points regarding this topic and shows his opinion on the price action that
it won't be impacted as much by them burning the fees instead of giving them to the miners who are
securing the network so i do recommend checking out bitspeed's tripping video on this topic he
does explain it really well so i'll leave the link for it in the descriptions below and what also you
can do is there's a twitter poll where you can vote whether you're against or with the eip 1599
so i recommend going ahead and voting against it so maybe that they will not implement it later on
it is worth trying so i don't see why not and now the last thing i want to talk about is ethereum
2.0 it is mentioned that it will be going to proof-of-stake instead of proof-of-work so
before we mention that proof-of-stake is you hold some cryptocurrency like you're a shareholder and
then from there based on how much you own you'll be able to validate transactions and get paid
although the revenue from proof-of-stake is not as much as mining at all but either way once ethereum
reaches that point i do still think there is going to be a long time until it reaches there
at least a year for us miners to be able to mine with gpus or even more i get a lot of
questions about it honestly like i said i don't know what will happen in the future we just know
that there's a possibility of ethereum moving out of proof of work and then we also have the
possibility of losing the transaction fees so we will have two things that we need to worry
about but if your electricity prices are fairly good and ethereum remains at this price right now
which is above a thousand dollars then the profits will remain decent until it moves fully to proof
of stake and that can take one to three years so that will be it for the video guys in this video
we talked about a lot of different topics and we didn't really dive into details about them
so what i want to do is i want to make a list of videos that i will go more into details about
and one of them will be the mining pools and how they work and then also solo mining versus
pool mining and how to use different mining softwares and every type of mining rig explained
in details and if you guys also want me to make a video diving into details about gpu mining after
ethereum 2.0 please let me know i will go ahead and do that as well i hope you guys enjoyed this
video and i hope you found value in it thank you so much for watching and if you have any questions
or any feedback leave it in the comments below and make sure to hit that thumbs up if you enjoyed it
and subscribe if you're new to the community thank you again and i hope you have a wonderful day
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