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Monero (XRM) is among the best known decentralized privacy coins that can execute a completely anonymous transaction. Launched in 2014, the coin is meant to hide the information about its users’ identities, wallet addresses, transaction amounts, and other data.
Transactions in Monero are challenging to trace because the coin uses ring signatures and stealth addresses to conceal both the sender and receiver’s information. Like many other networks, Monero uses the Proof-of-Work (PoW) consensus to mine XRM, which means the cryptocurrency is mineable.
What is Monero Mining?
New Monero tokens are minted only by creating a new transaction block on a certain blockchain network. Still, unlike other PoW coins, Monero is based on the CryptoNight PoW algorithm, which requires access to the device’s memory.
The CryptoNight algorithm is also created to resist powerful and expensive mining machines known as ASICs and made CPU and GPU mining equally effective. This means that there’s less competition from users with powerful hardware taking advantage of the algorithm – also, both CPU and GPU require less energy, making Monero mining cheaper.
How to Mine Monero?
There are a few aspects to consider before starting mining XMR, such as the way of mining you want to use. Pool mining, solo mining, or cloud mining are all legal ways to mint new Monero coins, and it only depends on the miner which one they choose.
Pool Mining
Mining in a pool is one of the ways to mine Monero coins by joining resources. This means that users bring their hardware hash power into the joint mining kit to enhance their chances of verifying the transaction block and getting a reward.
Because the mining business is a competitive one, the higher computing power enhances the probability of winning the block. However, mining in a pool means that a reward will be split into equal parts among all the miners. In spite of that, it is essential to consider that Monero mining pools such as MineXMR, Nanopool, and SupportXMR usually charge around 0.5 to 2 percent fees for being part of the pool.
Since cryptocurrency mining is a highly competitive affair in most cases, mining in a pool makes it more possible to get rewarded, and that is why, usually, it is the most recommended option for cryptocurrency mining beginners.
Solo Mining
Mining coins by oneself is known as solo mining. This option refers to mining by the personal computer with a CPU or GPU. Individual mining means that you do not have to share the reward, but the odds of winning a block are lower, while electricity bills increase along the way. Solo mining requires more experience, and this is why it is not recommended for beginners.
Cloud Mining
Cloud mining is the ideal solution for those unwilling to join a mining pool or to mine for Monero by themselves. Cloud mining services make it possible to rent computing power from hosting companies that run Monero mining hardware.
The cloud mining option is rather risky and requires plenty of research before investing, as the many cloud mining services available online can be scams. Still, if you’re interested in this solution, pay attention to the following features to choose the best service: find out how long the company has been on the market, check whether the firm has a proper website presentation, as well as photos and video footage of its hardware running. Besides, make sure to check whether the pricing is adequate as dubiously cheap services are usually scams.
The Bottom Line
Mining XRM is not difficult, though. Because its algorithm doesn’t support ASIC miners, it makes it possible for anyone with less powerful and less expensive hardware to join the mining process.