How To Mine Your Own Cryptocurrencies

ETH

We’re in the middle of a cryptocurrency bubble and an NFT (non-fungible token) craze. For context, the price of a Bitcoin (BTC, BITCOMP) is bubbling around $56,000. The price of an Ether (ETH-X) is just over $1,700. That sounds bubbly, but this column is not about financial advice. I’m going to teach you, step by step, how to build a very small cryptocurrency mining operation so you can get a deeper understanding of the process. With this knowledge, you will be able to make some predictions about the future of cryptocurrencies, NFTs, and the underlying blockchain technologies that enable them.


Crypto and NFTs (Two Sides of a Coin)

Cryptocurrencies such as ETH or BTC are created (“mined”) when a miner completes a certain amount of computations used to verify transactions that are added to a specific blockchain. The miner is rewarded for this effort with a small amount of cryptocurrency. In theory, every ETH or BTC is fungible. Said differently, my 10 BTC or my 50 ETH are worth exactly what your 10 BTC or 50 ETH are worth, and they are interchangeable.

NFTs are created (“minted”) when a unique, standardized token and associated smart contract are recorded on a blockchain. In theory, NFTs are non-fungible. Said differently, the NFT of Nyan Cat (which sold at auction for $510,945) is unique and not interchangeable with other versions of the same file.

A copy of the “Nyan Cat” NFT

Unique, immutable records of cryptocoins and NFTs are stored on blockchains that rely on vast networks of individual mining operations and mining pools. You’re about to jump into a mining pool – but the water is far from fine. Please read the following disclaimer very, very carefully.

Disclaimer: If you’ve read this far, you are a serious newbee. That’s awesome. This is the kind of science project you used to love as a kid. However, we are about to jump into a super-complicated, extremely dangerous world where charlatans, hucksters, and flat-out criminals are indistinguishable from others. If you choose to follow the steps outlined below, please use a spare computer that you don’t need for anything else. It should not have any data on it at all – nothing! Just the operating system and files you absolutely do not care about. You do NOT want to do this on a computer that you use for business. You do NOT want to do this on a computer that has any personal information on it. I cannot say this strongly enough. This is an educational exercise and the first lesson is, “Protect yourself at all times.”

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This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it.

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Flat Broke 2 weeks ago Member's comment

I wish you had started with what you wrote at the end: "...this operation will simply never be profitable." It would have saved me a lot of reading time!