After the last Bitcoin halving, mining communities have been turning their attention to other crypto tokens to mine. Monero has become a front-runner among alt-coins to mine because of its high profit-to-cost ratio. And, given that Monero is gaining popularity, this ratio is getting more favorable as each month passes.
Here is a closer look at what XMR is and how to mine it.
What Is XMR?
Monero (XMR) is a privacy-focused cryptocurrency that has become incredibly popular for those that want to transact anonymously. However, it has also become a major black market crypto. It is one of the oldest cryptocurrencies released in 2014, and it is mined in the same way that Bitcoin is. The supply limit on Monero is slightly different from Bitcoin. Monero will continue to drip indefinitely, as the developers realized that without coins being mined the blockchain loses utility.
For example, Bitcoin miners are responsible for the Proof-of-Work authentication on the blockchain, and without them being active after the supply limit is reached, the blockchain could cease functioning altogether. With Monero, when the supply reaches 18.5 million XMR, the mining will only release a maximum of 0.3 Monero per minute. This means that the XMR released will never reach the supply limit.
This means that the XMR that is being mined will become more valuable in the future as rewards drop. This has led to many choosing to mine Monero before the fixed date of May 31st 2022, when the 0.3 XMR/minute system takes effect.
What Are the Benefits of Monero?
Monero has a few benefits over other cryptocurrencies, but mainly they’re related to Bitcoin and that blockchain. Comparing Monero to Ethereum, for example, is like comparing apples and oranges. The advantages Monero has over Bitcoin are:
- Users can protect their identities and transact privately with one another.
- The total supply will never be reached and as long as miners see value in mining Monero, the blockchain will still get validated.
- It processes transactions 5 times faster than Bitcoin on average, with a block time of two minutes.
Because of its similarities to Bitcoin (and its advantages), there is a big demand for BTC to XMR exchanges. A notable number of transactions each day are between BTC and XMR on major crypto exchanges.
Monero does have a risk involved that doesn’t necessarily apply to Bitcoin, and that is the target on its back from regulators. Since other privacy coins like Zcash have cleaned up their image and the way privacy is implemented on their blockchains, Monero has become a major crime blockchain. It is estimated that at least half of all black-market crypto transactions take place on Monero.
As a result, law enforcement and financial regulators over the world have sought to blacklist and crackdown on Monero. This means that in some jurisdictions Monero is not available on exchanges. In the US, the tax office is actively targeting Monero users for tax evasion. This has already started to pay off as the IRS has managed to track users through the Lightning Network, which is a workaround to increase transacting speed.
How to Mine XMR?
There are a couple of ways to mine Monero. The process of mining is the same for both, but the amount of power that you have to use is vastly different.
Using a Mining Rig
Mining Monero requires specialized equipment, most commonly called mining rigs. You can buy these pre-made and ready to go, or you can create your own mining rig. There are plenty of forums on Reddit and YouTube dedicated to helping you build your own mining rig.
Using Your Own Computer in a Mining Syndicate
If you don’t want to use or buy a mining rig, you can use your computer’s normal processors to mine Monero by joining mining syndicates. Sometimes this can prove quite profitable, especially if you don’t want to spend thousands of dollars on specialized equipment. However, mining syndicates have their own risks, and some aren’t very rewarding, so you will need to research which group of miners to join.
Conclusion – Mining Monero
Remember, some crypto users are dishonest, and Monero has a seedy reputation already, which attracts the wrong type of crowd. As a result, you should be doubly cautious when dealing with other people using Monero. Always protect your personal information and be warned — there are malicious mining entities that are mining Monero at other people’s expense.
The safest way to mine Monero is to invest in the equipment and set up your own operation. But, if you can’t afford to do so, mining Monero should be approached with an element of caution. The positive side is that Monero is profitable to mine, and as time goes by, this profitability will increase.