With the increasing significance and relevance of cryptocurrencies and digital assets in the global economy, cryptocurrency mining has also become popular. The mining process entails dedicating your computational resources which are used to solve cryptographic equations that facilitate validation of transactions on the blockchain. For your contribution to computing power, you are rewarded with the blockchain's tokens.
If you don't have access to commercial-grade computational resources, you can also rely on mining pools which allow you to share your resources with other willing individuals. This article discusses mining in detail to find out the best cryptocurrency to mine in 2021.
Compare the Best Cryptocurrencies to Mine
Here is a list of popular cryptocurrencies that can be mined.
1. Bitcoin (BTC)
Although Bitcoin has become one of the most challenging cryptocurrencies to mine, the recent price surge has made it profitable once again especially for individual miners who are ready to pool their computational resources. Bitcoin relies on Proof of Work (PoW) protocol so you are required to solve mathematical equations as quickly as possible to earn rewards. Due to the halving of network rewards, miners currently get 6.25 BTC for each hash.
You will need a mining rig called Application Specific Integrated Circuit (ASIC) to mine bitcoins. They are purpose-built devices that are specially developed for solving complex cryptographic equations.
2. ZCash (ZEC)
Launched in 2016, ZCash is an anonymous cryptocurrency that allows mining through graphics cards. The total supply of coins is capped at 21 million. The platform relies on the Equihash hashing algorithm which uses a PoW protocol. You will need a high RAM amount while the reward for block mining is 3.125 ZEC tokens.
3. Litecoin (LTC)
One of the best currencies you can mine in 2021 is Litecoin. Denoted by LTC, Litecoin is a hard fork of Bitcoin blockchain so its mining requirements are quite the same. It is one of the most popular cryptocurrencies that rely on Scrypt PoW protocol. You will require GPU power to mine LTC tokens while the current reward is 12.5 LTC coins which would be just a little over $2,000 at the time of writing.
4. Ethereum (ETH)
The second most popular digital currency, Ethereum, is a network that facilitates the development and execution of smart contracts. It is one of the most practically viable blockchain projects so far as real-world applications are concerned. It has also been used in the DeFi movement along with initial coin offerings (ICOs). It relies on the Ethash PoW algorithm without any cap on the total supply of coins. The current mining reward for the Ethereum blockchain is 2 ETH.
5. Monero (XMR)
Being a privacy-focused cryptocurrency, Monero brings absolute anonymity for its users. The currency was first created in 2014 and uses the RandomX PoW algorithm that continuously modifies itself to prevent ASIC-based mining. Monero is mined using CPUs and offers a reward of 1.65 XMR.
6. Dash (DASH)
Established in 2014, Dash is one of the top thirty cryptocurrencies in terms of market cap. It is a hard fork of Litecoin blockchain and is used to facilitate secure international financial transactions through swift. The hashing function is proof of work-based X11 while the reward is around 2.88 DASH tokens.
7. Ethereum Classic (ETC)
After the DAO attack on the ETH blockchain in 2016, some of the Ethereum loyalists revolted against the hard fork and renamed the original network as Ethereum Classic. With every 5 million blocks, the blockchain cuts down the amount of mining reward. The current reward is around 3.2 ETC.
8. Bitcoin Gold (BTG)
Bitcoin Gold is another hard fork of Bitcoin that was launched in 2017. To democratise the procedure of mining, the blockchain project altered the PoW protocol to Equihash so specialised mining equipment can't be used. The blockchain relies on GPU mining with a reward of 12.5 BTG per hash.
9. Grin (GRIN)
If you are looking for an easy cryptocurrency to mine then Grin could be your best bet. You can start mining it with your consumer-grade GPUs such as NVidia’s GTX and AMD graphics cards. The blockchain uses MimbleWimble PoW algorithm with a reward of 60 GRIN per hash.
10. Dogecoin (DOGE)
Dogecoin started as a meme but has recently turned into one of the most popular cryptocurrencies since the launch. It relies on Scrypt which is a PoW protocol and you can use CPU and GPU to mine the coin. For every hash you solve, you will be rewarded 10,000 DOGE tokens.
Understanding Cryptocurrency Mining
When it comes to cryptocurrency mining, you can go down different routes depending on your strategy and the number of resources you are willing to put in. For standalone mining, you will either need to have invested a huge capital upfront to mine a popular cryptocurrency like Bitcoin or choose a relatively low-profile digital currency that hasn't been targeted by commercial miners. Another option you have is to participate in mining pools which enable you to share your resources with a group of other miners and the rewards are then distributed proportionately subject to your contribution.
You have to keep in mind that mining is a process of solving difficult mathematical or cryptographic equations that ensure security and immutability of transactions through a verification process. This is the process that is carried out by miners. There are different types of mining you can participate in:
- CPU mining relies on CPU power to verify transactions and the blockchain has been programmed to use the CPU.
- GPU mining requires the computational power of graphics cards and can be quite expensive but rewarding as well depending on your strategy.
- Cloud mining involves investing your financial resources in renting hardware required to mine a particular cryptocurrency. It's all about convenience although the gains are not substantial compared to other types of mining.
- Mobile mining allows you to mine cryptocurrencies on the go but is the least rewarding.
Advantages & Disadvantages of Mining Cryptocurrency
How Much Does It Cost To Start Mining Cryptocurrency?
For standalone mining, you may need to put up thousands of dollars to set up your mining equipment like rigs and graphic cards. On the other hand, if you are going to pool your resources with other miners, you may get by with a $500 to $3000 investment. To determine the profitability of crypto mining, you are required to be aware of precise numbers. It is subject to your initial investment and the cost of power in your region along with the price of the cryptocurrency price. Numbers you need to take into consideration include:
- Hashing power (TH/s or GH/s)
- Electricity consumption in Watts (W)
- Electricity expense
- Pool charges if you are going for cloud mining
- Price of the coin you are mining
3 Steps to Mine Cryptocurrencies
Step 1: Choose a Cryptocurrency to Mine
Take into account different factors such as profitability, initial investment, power cost, and price of the token to pick the most profitable cryptocurrency to mine.
Step 2: Best Mining Hardware for Cryptocurrency
Find the right hardware for mining the cryptocurrency of your choosing. Ensure that you are investing in the best and relevant hardware whether it’s CPU, ASIC, GPU, or pool mining.
Step 3: Start Mining Cryptocurrency
Once you have gone through the above steps, you can start mining the selected cryptocurrency. Get a wallet to store your mined tokens in a safe and secure manner.
When we talk about the best cryptocurrency to mine in 2021, we have to keep the volatility and other market factors in mind. Make sure that you are choosing the right cryptocurrency considering various costs involved with mining such as electricity and hardware costs. The mined tokens should be saved in a crypto wallet for better security.
Frequently Asked Questions
Yes and no. Some cryptocurrencies can be mined using home PCs while some require commercial-grade computing equipment like ASIC.
Subject to your mining strategy and purpose, you can either choose cloud-based pool mining or buy your mining hardware which may include CPU, GPU, or ASIC.
Make yourself aware of the hash rate, cost of power, cost of equipment and other factors.
Generally yes but it is not necessary. Although a higher hash rate means more hashes are solved quickly but it also leads to higher electricity consumption. You need to find the right balance between the hash rate and profitability.
People who want to mine but either don’t have financial resources to invest or are too technologically non-savvy to create their setup. Moreover, people who don’t have a lot of time on their hands can also rely on pool mining
Technically, yes but it will probably take a year for you to earn a penny. Smartphone CPUs and GPUs are too weak to solve complex cryptographic equations.
Invest in a high-quality software or hardware cryptocurrency wallet.
You will need to check out the local laws in your country of residence to find out whether it’s lawful for you to mine cryptocurrencies.