Cryptocurrency mining has become a popular way to earn passive income in Nigeria. It’s easy to see why considering its low barrier to entry. With only a laptop, mining equipment and power supply, you can mine and earn crypto easily!
Not even the Central Bank of Nigeria (CBD) can stop this way of earning. Despite the CBD prohibiting banks from doing any crypto-related transactions, Nigerian crypto miners have not stopped mining coins. Instead, they turned to decentralised peer-to-peer exchanges to continue their transactions.
Now, the country has the highest crypto adoption rate in Africa and interest in cryptocurrency mining in Nigeria has grown even more. To know crypto mining and how it works, browse the sections below.
What is mining in cryptocurrency?
Mining crypto is the process where nodes record and verify transactions on the blockchain to prevent double-spending and create new virtual currencies. Those who own these nodes are called crypto miners. For every block they upload on the blockchain, they gain rewards in the form of new crypto.
To determine which miner out of thousands gets to verify and mine the block, they compete with each other by solving complex equations. To do this, they need hardware equipment that gives them sufficient computing power. Whoever is the first to solve the equation gets to upload the block and get the reward.
This process applies only to proof of work (POW) blockchains, just like the Bitcoin network. In this type of blockchain, a lot of miners need to reach a consensus to verify the transaction and validate the block. However, this requires plenty of energy. That’s why modern blockchains employ proof of stake (POS) as an alternative algorithm for the POW consensus.
In the POS consensus, select nodes from the network are assigned to mine certain partitions of the blockchain. But for a node to be chosen, it must stake a required amount of coins. This allows the network to consume less energy for a greener and more efficient validation process.
Types of crypto mining equipment
You’ll need the right equipment to effectively validate a transaction and mine a block on the blockchain. Here are the things needed in mining cryptocurrency:
To successfully mine a block, you must first have a digital wallet. This is where you’ll store the rewards you accept from mining. Once you’ve successfully mined the block, the crypto reward will be transferred to your wallet.
Many mining software providers create application-specific integrated circuits (ASIC), a specialised device built only for mining cryptocurrency. This can cost thousands of dollars, but it is the most efficient crypto-mining device specifically because it is made only for that.
Certain types of hardware equipment, specifically CPUs and GPUs, are used for mining crypto. Using either of these to mine requires tons of electricity.
CPU mining uses a computer’s central processing unit. It is the most accessible way of mining crypto since the hardware is more affordable than other equipment. However, it’s not the most reliable way to mine crypto because it doesn’t have enough processing power to compete with GPUs and ASICs.
When mining crypto with a GPU, you use one or more graphics cards attached to your computer. It can be costly since graphics cards are expensive, and you’ll require more of them to mine crypto in the blockchain successfully. However, this rig is not powerful enough to make massive profits from mining crypto compared to ASICs.
Instead of setting up your mining rig, you can choose cloud mining, where you pay a company to mine crypto for you. This method involves renting a rig and receiving the profits after deducting the electricity and maintenance costs. It’s a good deal if you’re not going to mine the crypto yourself, but you’ll have to commit to a contract that might affect your profits, especially when crypto prices fall.
How does crypto mining work?
Before learning how to mine cryptocurrency, you must first understand how it works. Crypto mining in Nigeria is no different from the rest of the world. To mine a crypto asset in the proof of work model, miners must compete to solve a complex mathematical problem. Whoever solves it first gets to mine the block and receive the reward. Miners validate transactions and record them permanently on the blockchain through this process.
How to start mining crypto?
dYou’ll need the right equipment and software to begin mining crypto and profit from it. Afterwards, follow the steps on how to mine crypto for beginners below:
- Set up your crypto wallet to store the crypto rewards you’ll earn from mining.
- Choose crypto equipment to help you mine the blocks onto the blockchain, then connect it to your computer. An ASIC device is the best for crypto mining because it’s fast, efficient and can secure profits in the long run.
- Install mining software on your computer that can handle complex mathematical calculations inherent in mining blocks. The faster the processor of that computer, the faster it can solve the problem for you to be able to mine the block.
- Once you have successfully mined the block, you can receive the reward in crypto. Then, you can do whatever you want with it: invest it in an exchange, use it for payments or HODL (hold) it on your account.
Why crypto mining?
Simply put, profits can be huge in cryptocurrency mining. You can earn income just by verifying transactions and stacking them onto the blockchain. Moreover, you won’t have to manually compute hard-to-solve mathematical problems since your mining rig will do all the work for you.
You can mine any of the cryptocurrencies in circulation today. All you have to do is invest in software and a computer rig built for this kind of work. With just that, you can see the profits flow to your crypto wallet.
Best crypto to mine
Among the thousands of virtual currencies available on the market, only a few can be considered the best crypto to mine. Here is a list of 5 proof of work cryptocurrencies from which anyone interested in mining crypto can choose.
Bitcoin (BTC) continues to be the top pick among crypto miners across the globe because of its mainstream success. It is a first-generation cryptocurrency and has a huge market valuation per coin that can provide you more profits when you mine blocks on its blockchain.
However, you need to get your Bitcoin mining gear because mining this cryptocurrency is more difficult and resource-intensive than newer cryptos in the market that utilise a POS consensus.
Upon writing, the current BTC mining reward is 6.25 BTC per block. This gets halved every four years, which means it’ll dwindle to 3.125 per block and so on.
Ethereum’s network has a huge transaction volume, especially since it is at the forefront of innovation courtesy of its smart contracts and decentralised applications (dApps). This makes it a popular cryptocurrency to mine at present.
However, Ethereum (ETH) recently made a drastic change to its network. It has been converted to Ethereum 2.0, which has a POS consensus algorithm. This does not mean you can’t mine blocks on the network anymore. You just have to stake 32 ETH to become a validator. At the time of writing, the Ethereum network gives out a 2 ETH reward per block mined.
Litecoin (LTC) is a Bitcoin hard fork and has since established itself as one of the most successful cryptocurrencies in the market. It has a wide appeal and solid functionalities that make it a popular choice not only for investors but for miners as well.
Scrypt protocol is used in LTC mining, making it a profitable currency to mine using a GPU. Miners are rewarded with 12.5 LTC per block mined.
Monero (XMR) is an ASIC-resistant cryptocurrency, meaning you can mine blocks using CPU and GPU devices. This makes it more accessible to other miners without any ASIC rigs. Miners can earn a reward of 2.15 XMR per block mined.
This cryptocurrency also employs a CryptoNightR hashing function compatible with CPU and GPU devices. It’s one of the most profitable cryptos to mine because of its accessibility.
Dash (DASH) is a Litecoin hard fork well known for its secure and swift transactions using PrivateSend and InstantSend. This makes it a well-known remittance option for people who want to circumvent banking bureaucracy.
With the countless transactions being made on the network, mining DASH is a profitable prospect. Currently, the reward per block mined is 2.88 DASH.
Pros and cons of crypto mining
Just like any other business venture, crypto mining comes with a few pros and cons. Here are what you have to keep in mind when you start your journey in blockchain mining:
Mining crypto is a type of passive income, meaning you don’t have to do the heavy lifting to earn legal tender profits. You just have to invest in a mining rig, and you can get profits from every block you mine using that hardware.
It’s difficult for third-party hackers to penetrate your computer system and steal your funds. The very nature of crypto is the confirmation of a transaction on the blockchain network, which is hard to fake. Moreover, regularisation efforts of governments worldwide are making headways to help protect assets from the prying eyes of hackers.
Parallel crypto trading
Once you’ve earned block rewards from mining crypto, you can immediately sell, trade or exchange them to exponentially grow your money. This way, you get to increase the currency you’ve earned from mining by trading.
Setting up a mining rig is costly not only for the hardware you need to buy but also for the electrical energy consumption. You have to invest in good equipment like a high-end computer, mining software and graphics cards and then pay hefty electricity bills caused by hours of mining every month.
Decreases the lifespan of graphics card
Your graphics cards would be at their maximum potential to keep the mining software up and running. This means it’ll depreciate a lot faster, making you purchase a lot more of these over time as long as you mine crypto.
Presence of risk
The crypto market is highly volatile without proper government regularisation, making it a risky venture for miners and investors. Within hours, there can be highs and lows in crypto prices, which can incur losses from time to time. For example, you’re mining Bitcoin, and the price drops suddenly. You’ll lose money instead of making huge profits.
Crypto mining Nigeria: Earn profit by validating transactions
You can easily earn profits through crypto mining, but only if you’re ready to put out the effort and capital. Luckily, Nigeria is one of the best places to start your mining business, with crypto booming in the region.
It’s still a long way for Nigeria to contribute a large portion of the global Bitcoin hash rate, but starting a mining venture can help boost the country’s crypto economy. Not only that, but you also stand to gain massive profits from block rewards that you can use however you want. Whether you’d invest it in exchanges or HODL it in your wallet, there’s a benefit to earning passive income from crypto mining.
FAQs about crypto mining
What is crypto mining?
Crypto mining is validating transactions in the blockchain in exchange for block rewards. Depending on the cryptocurrency’s consensus mechanism, this can involve staking a specific number of tokens or solving mathematical problems using mining equipment.
What are the newest cryptocurrencies to mine?
Here are some of the newest cryptocurrencies you can mine as of writing:
- Dash 2 Trade (D2T)
- RobotEra (TARO)
- Calvaria (RIA)
- IMPT (IMPT)
- Oryen Network.
Where can I mine crypto?
You can mine crypto here in Nigeria! Invest in a good mining rig, and you can earn profits from mining crypto.
What crypto can I mine on my phone?
Unfortunately, a phone cannot mine cryptocurrency. You’ll need a CPU, GPU or an ASIC device to mine a block onto the blockchain successfully. You can also opt for cloud mining, where you’ll outsource the rig from a company and have them mine the blocks for you. Moreover, you can also join mine pools where a group of miners share resources, costs and profits.
Which crypto is easiest to mine?
Monero is the easiest crypto to mine because the cryptocurrency can be mined using browser extensions and free software. However, you’ll still need a complete rig to mine the block successfully.