How Does Mining Work?
Before we look specifically at crypto mining India, let’s have a look at how crypto mining works in general and how it has evolved since cryptocurrencies first came into existence with the launch of bitcoin back in 2009. As bitcoin mining India is still the best and most lucrative form of crypto mining to get into, we’ll generally focus upon bitcoin here.
We mentioned above that crypto mining is not for someone with only a fleeting casual interest in cryptocurrencies. This is because bitcoin mining in India, or anywhere else in the world, is expensive, hard work that requires high-level technical skills and is very inconsistently rewarding. Furthermore, bitcoin mining is no longer a feasible option for the casual investor; it used to be the case that anyone could download crypto mining India software and get started, however nowadays crypto mining is generally done on a large scale in warehouses, which require million-dollar investments to start up.
So why do people get into it?
With the above description, you could be forgiven for wondering why anyone would even consider getting into crypto mining at all. Well, there are a few reasons, with the main one being the fact that miners can get their hands on valuable bitcoin tokens through their own hard work as opposed to monetary investment – similar to the gold rush in the Western United States in the 19th century. Some people like to get into it through fanatical interest or simply because they want to utilise and build upon their technological skills.
In a nutshell: What does a bitcoin miner actually do?
The work of a bitcoin miner is essentially to audit and verify past transactions to help prevent the same coin being used twice, which is known as “double spending”. When a miner has verified 1MB of transactions (known as a “block” ) they are eligible to earn a quantity of bitcoin as well. The word “eligible” is operative here, as not all miners who verify 1MB worth of bitcoin transactions end up physically getting their hands on bitcoin. This is because once a miner has verified 1MB, they then need to be the first to create a 64 digit hash number that matches the target hash number. This may sound like it can be mathematically complicated, however, it’s actually more guesswork than skill at this stage, so a lot of luck is required when it comes to bitcoin mining India.
Pros of Crypto Mining India
- Popularity: Bitcoin and other cryptocurrencies have been steadily growing in popularity in India since around 2014, so there is a steady stream of cryptos to mine.
- Legality: In March 2020, the RBI banking ban on the cryptocurrency industry in India was lifted, meaning crypto exchanges and facilities for crypto mining in India are now operating legally. It is still worth noting, however, that neither bitcoin nor other cryptocurrencies are recognised as official currencies in India.
Cons of Crypto Mining India
- Costs: Top-end crypto software uses a lot of electricity and requires consistent internet with a decent speed, which can be hard to find in India, especially outside of the cities, and can run up some heavy bills.
- Fluctuation: This point isn’t particularly specific to bitcoin mining in India, but rather bitcoin mining the world over. The profitability of mining for bitcoin and other cryptos tends to fluctuate based on the market and usage. For example, bitcoin mining in India was considered to be quite profitable in 2018, yet by 2019 it was estimated that around 80% of bitcoin had been mined, meaning miners had moved onto mining other altcoins.
India Today wrote back in 2018 that the human energy cost required for bitcoin mining India was greater than the monetary costs. Today, arguably, it’s both. It used to be the case that an amateur miner could spend around $1800 (134331.30 INR) on the hardware required for crypto mining, download the software and then start mining from the comfort of their own home.
Today, however, crypto mining is now dominated by large scale warehouses or crypto farms, who have access to cheaper electricity, hardware, software and internet, meaning that the amount of crypto left to mine for the small amateur is pitiful.
What this means is that an “if you can’t beat them, join them” attitude is required from the humble miner, which in turn means either joining a cloud mining service or a mining pool.
Cloud Mining Prices
Cloud mining services usually have subscription-based pricing systems, similar to your phone or cable TV contract.
Let’s take Genesis Mining as an example, as they’re perhaps the biggest cloud mining service worldwide. Genesis has 3 subscription packages available for basic bitcoin mining; Gold (for beginners), Platinum (For experienced miners) and Diamond (For professionals). They also allow users to create custom plans as well. All of their packages last for 30 months and use the SHA-256 Mining Algorithm.
The pricing for each service package is as follows:
Gold: $209 (15,598.40 INR)
Platinum: $999 (74,558.87 INR)
Diamond: $4,969 (370,853.86 INR)
Why is the price difference so large between tiers?
They all last for 30 months and all use the same algorithm, so the price difference is largely down to the mining speed offered, which is calculated at Terahashes per second (TH/s). The GOld offers just 4 TH/s, while the Platinum offers 20 TH/s and the Diamond 104 TH/s.
Mining Pool Prices
Mining pools pricing differs from cloud mining in that they generally charge a percentage fee for joining the pool as well as a payout fee. The cost of joining a mining pool is driven up by the fact you’re required to invest in your own mining hardware and software beforehand, plus you’ll have to foot your own electricity bill as well, which combined can put your costs into the millions of rupees.
To give you an example of mining pool costs, we’ll use Slush Pool, which was the first-ever bitcoin mining pool created back in 2010. Slush Pool currently charges a 2% pool fee and a 0.0001 BTC, but just for payouts under 0.01 BTC.
Cryptocurrencies and Technology
So far, we’ve largely focused on bitcoin mining in India as bitcoin still remains the most well known and popular coin to own, trade and mine in India and the rest of the world. However bitcoin mining India has long since passed the heyday it experienced in 2017 and 2018, has over 80% of India and the world’s bitcoin was thought to be mined by 2019. That’s not to say that bitcoin mining won’t become profitable again. If bitcoin starts getting spent in higher volumes and at a faster rate than it’s being mined, then the percentage left to mine will become higher once again.
Crypto Mining India: Alternative Coins
As the cryptocurrencies for spending, trading and investing becomes more common, so will the opportunities for mining. However, there are now so many cryptocurrencies out there that we can’t rely on an insurgence of bitcoin use to make crypto mining profitable again. In fact, Bitcoin didn’t even make the list of the most profitable coins to mine in 2020. Among the most profitable coins to mine just now are well-known cryptos such as Ethereum Classic (ETC) Litecoin (LTC) and DASH (DASH).
Bitcoin mining requires both hardware and software technology, making it a very high and risky investment for a home-based trader in the modern era. The bitcoin mining India boom came about from large scale mines being built with cutting edge hardware and software twinned with cheap electricity and the fast training of a tech-savvy and hungry young workforce.
We mentioned above that crypto mining India is a large scale industry with a trained workforce, however, what we’re aiming to tell you is how to set it up on your own, which as we mentioned in the Pricing section can be done in two ways; through a cloud mining service or at home using your own hardware or software.
Cloud Mining Service: Step by Step
- Choose a cloud mining company and select a package. What you’re essentially doing here is leasing power and time from a company in order to facilitate your own mining. Browse the web in order to find the right company and package for you.
- Choose a mining pool. Most cloud mining services won’t want you to go it alone and will have a list of mining pools you can join. Pick a reputable mining pool with a decent track record.
- Start Mining!
Mining at home: Step by Step
- Choose your hardware. Find the ASIC mining device(s) that suits your budget and needs. NOTE: you may also need to check your electricity supply and buy a power bank if needed.
- Choose a mining pool to join. Technically, you could skip this stage, but as we mentioned above it’s better to pay the fee and join a mining pool to increase your chances of turning a profit.
- Download the relevant mining software. Almost all mining pools will require all of their miners to use the same software and some will even have their own, so you don’t have much of a choice here.
- Start mining!
Security & Support
In order to have a safe and secure crypto mining experience in India, it’s recommended that you join a reputable pool or use a mining company or service with a decent track record. When it comes to a mining service, we’d recommend Genesis Mining, as they are one of the world’s leading mining companies, ensuring a safe and secure experience. They also have excellent customer support and allow you to join forces with other crypto miners.
When it comes to joining a mining pool, make sure to avoid unreputable pools or exploitative ones. When crypto mining India boomed in 2017 and 2018 a lot of hungry, tech-savvy Indians, hungry for opportunities were exploited and underpaid by scam mining pools and the investors and owners of large scale crypto mining warehouses. Join a reputable mining pool such as Slush Pool to ensure a safer experience.
Crypto mining in India may no longer be the eye-watering opportunity that it once presented itself to be for the young and technologically skilled, but it still offers potentially interesting opportunities for those who are interested and willing to put in the work. What’s more, is that cryptocurrencies have proven to us during their short term of existence that they have the ability to fluctuate extremely quickly, so for all we know another short golden era for crypto mining could be right around the corner.
That being said, we definitely wouldn’t rely on that happening and must stress once again that crypto mining is laboursome and requires a little bit of luck if it’s to be truly profitable. Cryptocurrencies, in general, are volatile in their nature, so if your interest in cryptocurrencies is a new thing, we recommend dipping your toes in by buying a small amount of a reputable cryptocurrency, such as bitcoin or DASH, and taking it from there. Crypto mining, for now, remains the domain of the truly dedicated enthusiast.