In this article, we discuss the solo mining of cryptocurrencies, the advantages, and challenges associated with mining coins as an individual in 2019. We further explain the more profitable choice between pooled mining and solo mining currently.
Table of Contents
- Introduction to Mining Cryptocurrencies
- What to Know Before Mining Solo
- Solo Mining
- Solo vs Pooled Mining
- Steps to solo mining
Introduction to Mining Cryptocurrencies
Mining cryptocurrencies has become a sensation for the players in the industry as the adoption of digital assets goes global. The key to making profits through mining is getting in early in the action before the difficulty rises to create a red ocean situation. Bitcoin mining remains one of the most profitable coins to mine given the high reward price of finding a block- but with high rewards comes high risk and costs. With over 10000 individual nodes mining the Bitcoin blocks, solo mining of BTC using your personal PC is highly unprofitable given the high difficulty in finding a block.
To make a meaningful profit, we highlight what solo miners need to know before starting to mine altcoins.
What to Know Before Mining Solo
· Don’t push for the large cap/ existing digital coins
As explained above, Bitcoin mining is one of the least favorable coins for a solo miner to make a profit. The list, however, extends to other top coins given the influx of miners on the cryptocurrency which increases the difficulty to obtain a block reward. Instead of focusing on the large-cap coins such as Ethereum (ETH), Bitcoin Cash (BCH), Monero (XMR) and Litecoin (LTC) miners should focus on cryptocurrencies with a lower difficulty.
· Look for new altcoins to mine
Before starting to solo mine, have a look at the new coins coming into the market to increase your chances to make a profit. As explained above, miners who enter the scene early have a greater probability to find a block reward than mining the large market cap coins. For this reason, it is advisable to check the BitcoinTalk Altcoin Announcements page to find new coins to mine. Do your own extensive research on the coin before selection to avoid mining a coin with no real value. Once you find your preferred coin (those without mining pools) you can start setting up your mining environment.
· Choice of equipment varies
The final piece of advice that miners need to be cautious of is the choice of equipment to mine. At the start of the mining craze of cryptocurrencies about a decade ago miners were able to mine Bitcoin using their personal PC’s and graphics processing units (GPUs). Today, miners require special high powered Application-Specific Integrated Circuit (ASIC) miners as they produce more hashing power. Other coins such as Monero use GPUs exclusively as ASIC mining rigs were faced out.
· Wallet security
One important measure miners should take in securing their wallet that receives the reward is keeping a backup of the wallet and encrypting the wallet. Remember to never add any external IP to your configuration file.
There basically two ways to mine cryptocurrencies alone without any help or pooling. For first time miners and novices in the field, they are encouraged to use the existing solo mining pool. The more experienced miners with vast knowledge in the field can create their own crypto node and connect the mining equipment to it.
Solo vs Pooled Mining
The main query for miners coming into the field is the difference between choosing to solo mine or join a pool of miners. While solo mining offers users the chance to claim the whole block reward for themselves in irregular timelines, pooled mining ensures consistency in payment rewards of mining.
As a solo miner, your probability to get a block reward is significantly lower than when you mine in a pool. However, if you were to solo mine successfully, then the whole block reward and transaction fees on the block are paid directly to your wallet. If a block is mined in a pool, the reward is shared between the participants in the group and the pool developers charge a 1% – 3% fee on your reward.
Steps to solo mining
This section explains how to set up your own mining environment given you have the right mining hardware installed on your laptop (CPU, GPU or ASIC).
- Pick a coin to mine. As advised above, mining new coins offer a higher probability to make a profit that already existing coins.
- Check the hash rate of the coin to ensure it is low for easy solo mining.
- Download the QT wallet.
- Create a config file, config the RPC port, ensure the server is set up and allows the IP address of your hardware.
- Configure the miner and point it to RPC IP / Port of the computer where the wallet is running
- Start mining to make a profit.
Advantages of Solo mining
- Miners prefer to go solo in mining to increase their block rewards profits.
- Solo mining ensures that you totally control your mining environment avoiding failures which arise from pooled mines.
- The block rewards for a solo miner calculated in the long run match those of people in the pools given the number of pool fees paid.
Challenges of solo mining
- It is difficult to achieve a block reward on coins that have a high hash rate if you are mining alone.
- Solo mining does not guarantee a steady payout to the miner, unlike pooled mining.