If you are fairly new to cryptocurrency, you may have heard of “mining” for coins but have not tried doing it yourself. It is difficult and expensive to get a hold of the latest mining hardware and using an online mining service may be daunting.
At the end of this post, I have included steps on how to rent a miner at miningrigrentals.com and use it to mine a coin (specfically, Madbyte coin). First, let’s take a look at what it means to mine a cryptocurrency.
Proof of Work
Bitcoin started it all with its Proof-of-Work mining method where computers would generate solutions to a hashing problem and the one that managed to find the best solution first would be awarded a prize of 50 Bitcoins. Over time, this developed into a war of hashing power with hardware created specifically for doing hash calculations called ASIC (Application Specific Integrated Circuit) mining rigs.
Today, while it is possible to still attempt mining Bitcoin with your desktop CPU or GPU (your graphic cards math chip), it is highly unlikely that you could solve even a single block at the required difficulty in your lifetime. As more miners compete with ever increasing hashing power, the difficulty of the required hashing solution keeps rising. The difficulty level is programmed so that it automatically adjusts accordingly to how fast blocks are being generated. Every coin has their target value for how many blocks should be generated in a predetermined time frame. If too many blocks are being generated, the difficulty will increase. If too few, the difficulty will decrease.
Fortunately, there are many coins out there that are still very minable because they are not popular yet and the algorithm difficulty level is still very low. Bitcoin uses a hashing algorithm called SHA256, so if you wanted to mine it, you would need to rent a SHA256 ASIC miner.
Scypt & ASIC Mining
Litecoin uses a hashing algorithm called Scrypt, which also happens to be what Madbyte coin uses. So far, ASIC mining rigs have been created for SHA256 (Bitcoin and clones), Scrypt (Litecoin and clones), X11 (Dash and clones) and Blake2b (Siacoin). There are many other coins out there (for example, Ethereum or Monero) that use other algorithms which can only be mined with CPU/GPU until someone creates ASIC hardware for them.
Proof of Stake Mining
Some coins do to not need miners at all, but rather base rewards on how much coin your have in your wallet and how long you’ve been holding it. This is called Proof-of-Stake and the only way to get rewards is to buy a lot and hold it in your running wallet.
In either case, Proof-of-Work or Proof-of-Stake, it is the method by which each coins blockchain is kept moving (allowing transaction to take place) and how coin supply is gradually generated. Over time, the reward drops (on most coins anyway) according to a programmed schedule.
In the case of Bitcoin, every 210,000 mined blocks the mining reward gets divided into half. At the time this post was written, Bitcoin’s reward has halved 3 times and is at 6.25 BTC. This halving ensures that the total supply of BTC will approach 21,000,000 but never quite make it there (kind of like Zeno’s Bridge; look it up if you don’t understand).
Madbyte has a current reward of 100 MBYT and halves every 1,200,000 blocks as it approaches a total supply of 300,000,000 MBYT. So, what happens when the reward becomes very small? The idea is that the coins value will increase over time because of popularity and scarcity, making even the smallest amounts increasingly valuable. As you know, this is exactly what has been happening with all cryptocurrencies so far.
As promised, here are the steps to start mining scrypt coins like Madbyte
Step 1: Create an account at miningrigrentals.com
Step 2: Fund your account by clicking your username from the top right-hand of the screen and selecting “Balance”.
Step 3: Send the amount of BTC you want to the “BTC Deposit Address” shown.
Step 4: Once you have sent it, you will need to wait a while for the balance to be confirmed in your account before you can start mining.
Step 5: From the “Rigs” menu, select the algo type you want to mine. In my example, I will select “Scrypt Rigs” (because Madbyte is a Scrypt coin)
Step 6: Look at the list of miners and select one that you think is appropriate and that you have enough BTC in your account for. Click on the associated “Rent now!” button.
This step can be a bit confusing as there usually many rigs to choose from. You might want to check http://mbyt.cryptocronic.com/stats to see what the currently difficulty is at. Notice the bottom of the difficulty box has a message similar to “210.7MH needed for 1 block per hour”. Madbyte has a target block rate of 60 blocks per hour, so calculate what hashrate you would need to get the amount you want, taking into account that the more hash you add, the higher the difficulty will start heading.
Step 7: Enter a value for “# Hours to Rent”. The minimum for this is usually 3. It will show your total BTC cost. Click on the “Rent now!” button.
Step 8: Now you will see a section of the page called “Pool Settings”. From here, click on the first “Add a pool” button.
Step 9: A “Define A Pool” popup will appear where you can enter values for “Pool Host”, “Workername” and “Password”. Use values of “mbytpool.com:3001”, “your-wallet-address” and “x” respectively. Of course, for your-wallet-address put in a receive MBYT address from your local wallet (do NOT use an exchange address for this). The password in this case can be anything, which is why I have just specified it as “x”. Some pools require you to sign up with an username and password, which you would place here instead. Click the “Save” button.
(Notice: you can define additional pools in case something happens to the first pool and it will automatically go to the next one in sequence)
Step 10: You can now press the “INSTANT PAY NOW” button to start mining.
To see that your miner is working, go to http://mbytpool.com/workers and ensure that your wallet receive address is showing up in the listings for Madbyte. It usually takes a few minutes for the address to show up here so don’t panic if you don’t see it right away. Remember that once you’ve started mining, you can’t pause it. So if something goes wrong and it doesn’t work, you will need to edit your pool settings (if you didn’t add additional backup pools) otherwise your mining rental time is wasted.
Some mining rigs specify that they only work on high difficulty pools. The Madbyte pool used in this example is using port 3001 which is a variable difficulty port (automatically adjusting from 1 to 512 difficulty). If you use a miner that specifies only high difficulty, you may need to try port 3002 or 3003 instead. If it is still too low, find a alternative pool that is compatible, otherwise your mining will not be optimal (or possibly not work at all).
As long as you know that a coin utilizes Proof-of-Work and has a mining pool, you can mine it using an online mining service such as miningrigrentals. Be careful, it’s easy to get addicted to mining. You need to keep track of how much you are spending on rentals. Often it is much better to just find a good deal for the coin you want on an exchange.
Have fun and happy mining!