Сrypto for dummies

The main pros and cons of mining cryptocurrencies

  1. What is mining in simple words
  2. Pros and cons of mining
  3. Pros
  4. No special skills required
  5. Anonymity
  6. Profitability
  7. Ready-made business
  8. Passive income
  9. Income growth opportunities
  10. Availability of Information
  11. Minuses
  12. Payback risks
  13. Expensive equipment
  14. Cryptocurrency fluctuations
  15. Possible room and power problems
  16. Conclusions

In the context of cryptozyma, digital assets are losing their investment appeal. However, cryptocurrency mining is still relevant. According to Arcane Research, in September 2022, the bitcoin network’s hash rate is growing due to an influx of new users. CryptoQuant analysts note: large miners have returned to the hoarding strategy and sharply reduced coin sales. Such dynamics foreshadow a market reversal soon. If the forecasts come true, the fall of 2022 could be a good time to enter. But before you buy equipment, you need to make a business plan, study the market and assess the pros and cons of mining. This will reduce the risks and increase the potential profits.

What is mining in simple words

Blockchain consists of chains that contain all user transactions. Once transactions are confirmed, the blocks cannot be deleted or changed, they are cryptographically protected. This work is done by miners. As a reward, they receive a certain amount of cryptocurrency.

The task of the miner is to find the right solution (hash) before the other participants. The equipment used for calculations is processors, graphics cards, hard disks or ASICs. Participants with more powerful hardware have an advantage.

Pros and cons of mining

Like any business, digital coin mining has strengths and weaknesses. Because of the nature of the code, the cryptocurrency market is cyclical. For example, in the Bitcoin network, the reward per block halves every four years. Experienced miners believe that if you enter the business after a big correction, you can claim a high yield.

Additional profit will bring the rise in prices for professional equipment. But in this case there is a probability of working without income or at a loss for several years with unpredictable results. Therefore, before starting a farm, it is necessary to determine the goals, weigh the pros and cons of mining cryptocurrencies. The calculations should be made in the form of a business plan.


In 2022, mining remains a popular way to make passive money. You need minimal knowledge of blockchain and PC hardware to get started. Experience is not necessary, but will be an advantage. Mining does not require time, so it attracts users.

Experts name other reasons for the popularity of mining – the spread of cryptocurrencies and easy startup.

Evolution of Bitcoin's network hash rate according to Cambridge University
Evolution of Bitcoin’s network hash rate according to Cambridge University

No special skills required

At the dawn of cryptocurrencies, setting up equipment required special knowledge. That’s why coins were mined mainly by programmers who loved novelties. To connect to the pool, skills of working with applications in console mode were required.

In 2022, the process has been simplified as much as possible. Miner programs have a simple graphical interface. On the thematic forums and blogs you can find detailed instructions for configuring the equipment. Now users without special knowledge or skills can start mining.


It is possible to maintain privacy in mining. Most pools offer formal account registration without any personal data. All you need to provide is a computer address (IP) and a cryptocurrency wallet. Industry monitors do not track the coins that have been cashed in. If you cash out via services without verification, such as exchangers, it would be extremely difficult to identify the user based on circumstantial data.


The profit of miners depends on many facts. In short – you need to calculate the average price of coins and the cost of each TH/s of power. You also need to take into account:

  • Maintenance of equipment. On average, the costs are about 10 thousand rubles per year for each rig of 6 video cards or asics (excluding the prices of service engineers).
  • Monthly expenses. Miners have to pay for electricity and hosting.
  • Increasing network complexity. In order to maintain the level of income, you will have to buy more capacity or overclock your hardware.

In 2022, due to a significant market correction, the profitability of mining has decreased. In the current environment, you need to mine cryptocurrency continuously for 2-3 years to recoup your investment. The situation may change when the market reverses.

Ready-made business

Before launching a farm, you need to do some preparatory work. On average, it can take about 2-3 months to find components, purchase, assemble and configure the equipment. In 2022, miners can buy a turnkey farm. Such a deal saves a lot of time and resources. Equipment suppliers will provide free advice on cryptocurrency selection and calculate a business plan. The buyer will get a warranty (usually up to a year) on components and assembly.

Large data centers and pools also provide capacity for rent. The advantage of these services is a low entry threshold (you can start with $100-200). But there is a risk of running into scammers, who work on the principle of a pyramid scheme. For remote mining you need:

  • Choose a reliable service – capacity provider.
  • Calculate the potential profit on the online calculator.
  • Buy a contract.

Profit will be received daily to the investor’s cryptocurrency wallet or to the balance of the service. In the second case, you will need to withdraw coins manually after the accumulation of the minimum amount.

Calculation of profits in Ecos Mining

Passive income

The advantage of mining is the automatism. The process is controlled by special programs. It is enough for the user to set up the equipment once. In the future, it will only be necessary to monitor the stability of the work and conduct preventive maintenance. With a competent approach, mining can become the main source of income.

Income growth opportunities

In the current conditions (September 2022) it is possible to recoup the equipment on average in 1.5-2 years. Beginners miners usually assemble a rig of 6-8 video cards or 1-2 asics. Later the farm is expanded with the profit gained.

The advantage of this approach is small initial investment. The disadvantage is long payback period. Simultaneously with the daily income grows farm support costs (equipment maintenance, electricity, hosting). Therefore, experienced miners recommend to invest in the expansion of 80% of profits, and to spend the rest of the money on operating costs.

Availability of Information

In 2022, mining is a common way to make money from cryptocurrencies. Large companies, pools, technology providers are trying to make it easier for users to mine coins. Such platforms post recommendations on how to choose a cryptocurrency, detailed instructions on how to set up the equipment. Users can get an answer to their question in text or video format. On thematic forums it is also possible to communicate with more experienced miners.


Before you start mining, you need to assess the risks of the business. Newcomers often make these mistakes:

  • They use outdated equipment. To save money, novice miners take used video cards, which quickly fail almost immediately after purchase.
  • Buy or rent capacity at below-market prices. Such offers are often posted by scammers. Buyers receive defective equipment or lose money altogether.
  • They take out loans to buy equipment. If the market corrects, newcomers have to sell equipment at a discounted price in order to pay the bills.
  • They neglect the security of storing cryptocurrencies. It is not a good idea to accumulate profits on an exchange account. If hackers hack into the centralized service, customers will lose money. It’s worth choosing non-custodial storage – desktop or hardware. In such cases, private keys are held by users, and access to the network is connected if necessary.

Payback risks

At the peak of the market in 2020-2021, miners could recoup their equipment in 6-8 months. Prices for the equipment depend on the quotations of coins. In the summer of 2021, the average asik cost $15-17 thousand. In the fall of 2022, new equipment can be bought for $7-10 thousand.

Participants who started the business at the peak have lost in equipment value. Daily income has fallen due to a strong market correction and increasing complexity of networks. Users in Europe and the U.S. have seen electricity rates rise. These factors are increasing the payback period of equipment.

Expensive equipment

One of the main disadvantages of mining is the high price of components. In 2022, due to the growing complexity of the top networks, coin mining is effective only on the latest models of asics and GPUs. To maintain profitability, it is necessary to upgrade the equipment 3-4 months after the next model is released.

With the crypto-zima, the prices of mining equipment have decreased, but are still high. Also it is necessary to pay for electricity and hosting, if the farm cannot be assembled at home.

Cryptocurrency fluctuations

Miners earn income in the coins they mine. It is difficult to make long-range forecasts of quotes, even for professional analysts.

Coin prices are unstable. In the history of the market, Bitcoin has adjusted more than 80% three times. This was followed by periods of consolidation, which lasted for 2-3 years. During such periods, miners suffer losses. Large market participants continue mining as long as they manage to make money on electricity. Users who do not have a stock of resources are forced to stop working due to high costs.

BTC price dynamics in 2022
BTC price dynamics in 2022

Possible room and power problems

Many miners start at home. But a significant income requires powerful equipment, which is very hot and noisy. The electrical wiring of a typical apartment is not designed for such consumption, so the risk of fire is high. In this regard, in 2022, lawmakers are preparing a project to ban mining in apartments.

The room for cryptocurrency mining should be well equipped:

  • Install cooling (water or air conditioning).
  • Create thermal and noise insulation.
  • Conduct a quality wiring with a power reserve.

Modernization of communications is a complex and costly event. At the time of the work you need to stop mining. It is not possible to use for the installation of farms:

  • Bomb shelter – in case of emergencies it will have to be released in less than 24 hours.
  • Office – vibrations will spread throughout the building.
  • Basement – because of humidity and risk of flooding.


Digital currency mining is a risky business. A large number of factors (network complexity, hash rate, technology capabilities, and others) affect the success of the venture. Before working, you need to assess the risks. Without a detailed business plan, there is a high probability of losing money. The main advantages and disadvantages of mining are summarized in the table.

Easy start. You can rent capacity with minimal investment or buy a ready-made business.High volatility of cryptocurrency rates. Coin prices affect income and the cost of technology. Even professionals cannot make accurate predictions. In periods of strong corrections miners work only to pay for electricity.
Passive income. The equipment operates in automatic mode. You only need to carry out preventive maintenance.High prices for equipment. The complexity of mining is constantly increasing, so miners are forced to constantly update components.
The opportunity to increase income. It is possible to overclock the equipment, to mine two coins at once, or to buy more power.A separate room or hosting is required to set up the farm.

Even in the bear market of 2022, cryptocurrency mining remains a profitable business. Many miners see Bitcoin falling to $18-20K as an opportunity to ramp up capacity. Since the start of cryptozyme in October 2021, the Bitcoin network’s hash rate has increased 54.6% (from 159.3 E to 246.3 E).

Pavel Komarovsky

Financial journalist. Worked as Engagement Manager at McKinsey & Company
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