How to Mine Bitcoin Cash (BCH)
Bitcoin Cash requires three things for mining: a special rig or mining pool that does all the hard work, a wallet for receiving rewards and a reliable infrastructure for conducting mining operations. Bitcoin Cash operates on the basis of a proof-of-work (PoW) consensus mechanism for mining a historically limited number of coins (21 million).
Mining is the basis for the existence of a cryptocurrency economy. Although mining is closely related to receiving a reward in the form of cryptocurrency, this operation is responsible for maintaining confidence in the financial system.
There are many ways to earn cryptocurrency, and like other high-performing assets such as gold, you can do it by mining it yourself. Before picking up a shovel, let’s look at some factors that need to be taken into account before mining Bitcoin Cash.
The BCH ecosystem
Miners are an integral part of the cryptocurrency ecosystem and are responsible for confirming every transaction that passes through the blockchain.
When you send BCH to another wallet address, the underlying technology miners solve complex mathematical problems and confirm the legitimacy of each transaction request. In return, you get a miner’s reward in BCH.
To solve these mathematical problems, you will need powerful computers, which are known in the market as mining rigs. For the successful extraction of one block of transactions, the Bitcoin Cash ecosystem rewards 6.25 BCH. You also receive a commission for online transactions paid by the sender.
However, other cryptocurrency ecosystems, such as the original Bitcoin, offer higher rewards, which is directly related to the complexity of cryptocurrency mining. The complexity also determines the time required to successfully mine one block of BCH, and the corresponding income of miners.
But here’s the catch: you can only get a reward if you solve the problem first. This explains why miners end up creating huge warehouses for their operations: the more computers and video cards at your disposal, the higher the chances of winning the computing race among other miners.
Determining overhead costs
Cryptocurrency mining is still a business. You should be sure that the mining costs will be less than the reward you hope to receive as a result.
From the very beginning, it is necessary to make some calculations related to cryptocurrency mining operations: equipment, premises, electricity and labor.
Pre-planning gives a clearer idea of what can be achieved in reality. The right balance between mining installation and mining operations will ensure the most cost-effective operation.
Calculating overhead costs versus expected profitability will ultimately help narrow down the range of potential investments. The resulting ROI will reflect the real profit.
It is important to note that the BCH ecosystem provides for a halving of the reward rate, depending on the number of coins issued into circulation, as a result of an event known as a halving of the reward.
In order to counter the inflation inherent in fiat coins, in Bitcoin Cash, the reduction of remuneration occurs automatically, either once every four years, or after reaching 210,000 blocks, whichever comes first.
The first decline in the value of BCH occurred on April 8, 2020 and marked the end of the era of miners earning 12.5 BCH per mined block. The next reduction in the block reward to 3,125 BCH will occur in March 2024.
Historically, half-cuts make it possible to weed out the most inefficient miners until the market price normalizes. On the day when BCH first encountered halving, the cryptocurrency was trading at a price of about $246.42.
Creating a mining installation
While mining operations have always remained in the shadow of legal issues related to cryptocurrencies, the governments of many countries have begun to impose an outright ban on mining within their jurisdiction.
For example, China allows its citizens to store and trade bitcoin, but recently introduced a strict ban on mining. Thus, regardless of the status of the cryptocurrency in the legislation of the country, it is advisable to check the existence of special rules governing mining.
Having a clear idea of what lies ahead, we will proceed directly to the consideration of hardware requirements. The equal playing field inherent in cryptocurrencies attracts miners from all walks of life, allowing you to create a healthy combination of “DIY” and professional installations of a new generation.
Some prefer to use their old laptop to join the mining pool and share profits with other miners from all over the world, while others seek to establish a full-fledged node and compete with professional miners for much more remuneration.
In addition, you can choose a mining software that is convenient for your pocket, which will allow you to connect your computer to the mining pool and pay part of the reward for mining.
Depending on your capabilities and passion for cryptocurrency mining, you will be able to choose the appropriate option. There are a number of sites that allow you to configure the ideal mining equipment depending on the cost of electricity and the budget for the equipment.
The hardware for cryptocurrency mining consists either of an application-specific integrated circuit (ASIC) or a personal computer graphics card, also known as a graphics processor (GPU), and its implementation largely depends on the ambitions of the miner.
A ready-made mining installation on an ASIC consists of several processor chips, an Ethernet connection and a fan. To get started, ASCI miners just need to specify the appropriate IP address and information about the mining pool.
GPU configurations involve the use of the computing power of the latest gaming graphics cards. In addition to the graphics card(s), a typical GPU configuration consists of conventional computer components, including a motherboard or processor, power supply, risers and random access memory chips (RAM), which are packaged in a mining frame.
How to mine Bitcoin Cash GPU
The most obvious choice for a miner are motherboards with a large number of GPU slots, starting with six and ending with 18. Combined with a compatible processor, solid-state drive (SSD) and RAM, this gives basic performance.
Risers are the only component that is not typical and is specially designed for mining. Also known as GPU riser or PCI Express riser, extenders help lift GPUs above the motherboard to improve cooling.
Before you start installing powerful GPUs, it is important to finally decide on their placement in the case. After installing the GPUs, booting the system will allow you to check whether all components are connected correctly. After the configuration is completed, it remains to connect the system to the BCH e-book via the Internet.
As for the software, for mining on the GPU, it is necessary to reconfigure the basic input/output system (BIOS) and hardware drivers focused on mining.
As GPUs continue to become more powerful and reduce power consumption with each iteration, miners around the world have faced a shortage of chips, which has affected a wide range of computer game lovers.
In any case, both operations will be accompanied by the release of a large amount of heat and noise as a by-product. Although noise may not be the biggest problem for GPU configurations, each miner needs to provide a place that provides proper ventilation and cooling to achieve maximum system performance.
The absence of a cooling mechanism will ultimately negatively affect the operating costs and service life of mining equipment.
Take your time choosing the equipment that is most suitable for your needs. When it comes to your own mining, taking into account local power costs is of paramount importance.
In the long run, the capacity of the equipment will become the largest operating cost, which will ultimately affect your income.
Depending on the location, the purchase of equipment with lower consumption and capacity may be more profitable if the potential capacity can cover local electricity costs.
In places with cheaper electricity and higher equipment costs, miners can make do with older and less efficient components, which will subsequently significantly reduce their initial investment or equipment upgrade costs.
While some mining rigs are specially designed to work only with a certain token, others allow miners to mine several tokens, which gives them the opportunity to try themselves in mining several cryptocurrency ecosystems.
However, the path to a professional miner largely depends on reinvesting earned funds in equipment to make it more energy efficient and high-performance.
Mining Bitcoin Cash (BCH): Getting our hands dirty
By this point, you have already evaluated all possible options for starting your new activity as a BCH miner. The obvious first step is to get a BCH wallet address to collect rewards from the miner’s account.
You can use an existing wallet or create a new one from a reputable source. However, miners often prefer to create “cold” wallets or hardware wallets running on USB media.
Unlike online wallets, the autonomous nature of a cold wallet protects its cryptocurrency vaults from attacks from the Internet, and access to it is possible only with the help of a private key and additional software.
Creating a comprehensive mining system involves a number of operational and, possibly, legal problems that not many seek to solve. Perhaps one of the easiest ways to try your hand at mining BCH is a mining pool.
Joining the mining pool allows you to get acquainted with the ecosystem as a miner on your own experience without the inherent difficulties. All you need is a working computer, an internet connection, and software developed and distributed by a cryptocurrency mining company.
The pool’s job is to distribute computing tasks among several miners, which increases its chances of solving the block faster than competitors. Finding the most suitable pool involves cross-checking the compatibility of your system with the software infrastructure of the pool, the structure of payments, the transparency of the distribution of tasks and stability.
Although finding the perfect pool may require some technical knowledge, you, as a miner, will always have the opportunity to switch to another pool in the future.
Some mining pools set the priority of tasks depending on the computational abilities of the participants, so it is important to join a pool that provides equal conditions or gives an advantage in the distribution of tasks.
Mining pools operate on the basis of decentralized software that runs on each computer connected to the pool. This software serves as a gateway for the node managing all operations.
It is enough to download and install the software, log in to your account, after which the pool will begin distributing tasks depending on Internet bandwidth and computing power.
What to do with the extracted BCH
After you have successfully mined your first BCH block and earned a miner’s reward, you will be able to accurately calculate your earnings in relation to investments. Moreover, now you can use this reward to exchange for fiat currency through a cryptocurrency exchange or a peer-to-peer service.
To be a winner in the rating race, you need to upgrade your equipment from time to time: either add to the series of equipment, or replace it with a more powerful one. BCH can also be exchanged for goods and services thanks to the growing number of online cryptocurrency companies.