The Ultimate Guide on How to Mine Monero

Unlike the vast majority of other proof-of-work cryptocurrencies, Monero is designed purely to be mined on consumer-grade hardware. It’s the currency of the people in many ways, but the question remains, how to mine Monero?

If you don’t know where to start, you’ve come to the right place!

We’ll get into what Monero really is, how to mine it, and whether you can put your PC to work mining Monero profitably!

What is Cryptocurrency Mining?

The main difference between cryptocurrency and the traditional financial system, and the reason the establishment fears crypto so much, is the fact that it is decentralized.

Cryptocurrencies rely on blockchains, which are immutable and run by independent, decentralized nodes.

Given this means of operation, blockchain doesn’t answer to any one party in power. A node operator can’t deny, block, or reverse a transaction in the same way that a bank can. Instead, the system as a whole comes to a consensus on which transactions are genuine.

This consensus is achieved through crypto mining. Proof of work networks like Bitcoin and Monero both use this system, where computers that perform the mining operation are trying to solve a cryptographic puzzle.

The miner that wins the race to solve this puzzle gets to produce the blockchain’s next block, which is made up of the latest network transactions and a hash of the previous block. Then, all of the miners verify that this block, or solution, is indeed correct. Thus, network consensus is achieved.

Of course, miners don’t do all of this and propagate the network out of raw belief and the goodness of their hearts (though this may be true shortly after a blockchain’s launch, and certainly was true during Bitcoin’s early days).

Along with the right to produce a block, the winner of the aforementioned puzzle also receives a certain amount of network coins called the “block reward.” This economic incentive is what has made crypto mining such a commercial enterprise.

What is Monero (XMR)?

Bitcoin tends to get a bad rap, especially in the conservative press, as being a “shady currency used by criminals and money launderers.” This couldn’t be further from the truth, given that the Bitcoin blockchain is completely public and extremely easy to track if you can pin someone’s identity to their wallet.

One of the most basic and powerful tools law enforcement has to track down criminals is to follow the money. This is very easy to do on a transparent public blockchain, which is why sophisticated criminals and even terror financiers tend to use banks.

Monero, on the other hand, is known as a “privacy coin.” It was created to address the perceived lack of privacy with Bitcoin and uses a technique called “ring signatures” to obscure not just the wallets associated with transactions but even the amounts transacted.

In some quarters, Monero is considered the digital equivalent of physical cash in how anonymous and untraceable it is. You could even say that Monero beats physical cash in that sense, given that it is utterly fungible, while banknotes do have serial numbers.

Bitcoin is even less fungible because each and every coin can be traced back through its history of transactions. Therefore, BTC that has been used in illegal transactions in the past can actually be blacklisted.

The libertarian values espoused by Monero as a network aren’t exactly uncommon, so while it may be a candidate for regulatory oversight and even banning, plenty of individuals and businesses use it. This gives it value, and its block reward is lucrative for miners.

How Does Monero Mining Work?

Unlike many, if not most, other proof-of-work cryptocurrencies, Monero relies predominantly on consumer-grade CPU chips for mining. This is how Bitcoin was designed as well, but the natural evolution of technology saw first GPUs, and then dedicated mining machines called ASICs being deployed for BTC mining.

Given that ASICs are expensive and specialized, many blockchain projects have developed their specific mining algorithms to be ASIC-resistant. Not that this helps, because GPU miners can still operate on an industrial scale—and draw the ire of gamers to boot, adding entire new levels of crypto FUD and poisoning an adjacent demographic.

Monero does use GPUs as well, but the CPU remains the primary component required for mining. For this reason, it’s very accessible to ordinary people who tend not to stress their CPUs too much while using their computers.

Mining power is counted as a function of hashes per second, with more powerful CPUs naturally being able to push out more. Keep in mind, though, that mining isn’t a one-way street—for every XMR coin that you earn while mining, you need to weigh your electricity costs carefully.

Many would-be miners realize only too late that they’re making a loss since electricity is so expensive nowadays. Then again, if you’re going to be using your computer anyway, you might as well let it pull in some XMR on the side.

The first step when mining Monero is to download and install Monero mining software. To do this, you can visit the official Monero website and check out some of the options. The software you need may also differ based on your mining approach.

The other major step when mining Monero is to get a Monero wallet. Most mining software is clever in that it includes the developer’s wallet by default, so if you simply download and run it without inputting your own wallet, you’re being very charitable indeed.

Take a look at Monero’s webpage for some wallet options as well. The main choices are the Monero GUI wallet and the Monero CLI wallet, although there are mobile and light wallets there too.

Once you have your wallet set up and your recovery seed phrase stored away safely, you’ll need to decide whether to mine solo or in a pool.

#1. Solo Mining

This is one of the safest ways to mine since you’ll be using software that comes directly from Monero. It’s also the most encouraged way to mine since you’ll become an independent node—this decentralizes the network even more, making it more secure and robust.

Aside from not requiring any extra software, you also don’t have to pay anyone a cut by mining this way. The main issue, however, is that it’s purely up to chance when and if your computer solves a block. More hash rate helps your chances, but it’s called a “lottery” for a reason.

#2. Mining Pools

Because of the lottery of solo mining, pools have emerged as an excellent alternative in terms of ensuring a payout. Pools combine the mining power of all the individuals that sign up for them and split rewards among all participants relative to their hash power.

Therefore, joining a pool can be a great way to ensure a more regular income from mining.

However, pools aren’t all positive. For one thing, most pool operators charge a fee, eating into your income. You also need to use third-party software, which can be risky if the pool operator is unscrupulous.

On top of this, the hash power being centralized by pools takes away from the decentralization and robustness of the network. Pools, if big enough, can become a major risk for the network.

#3. P2Pool

A decentralized mining pool of sorts, P2Pool is a sidechain whose blocks are potentially Monero blocks. This allows miners to receive the same frequent payouts offered by pools without having to trust a centralized pool and its operators.

P2Pool is sanctioned by the Monero project, has no fees, and is decentralized and permissionless to boot. It’s also trustless in that funds are never in custody, and payouts are made immediately.

Benefits of Mining Monero

Let’s take a look at some of the best reasons why Monero mining may be a good idea:

• Easy and convenient. If you’re reading this, you’re probably using some sort of computer. By definition, that computer contains a powerful chip called a CPU. Monero uses that, and all you need is some software and a wallet to get started. It’s a lot easier than mining other currencies, many of which require expensive GPUs, if not ASICs.
• Concurrently mine other coins. Since Monero is rare in that it primarily uses your CPU, you can put your other devices to work elsewhere. Plenty of coins can be mined with your GPU, so there’s no reason you can’t double up with Monero to occupy your CPU as well.
• Crypto values. If you believe in the future of privacy-based cryptocurrencies and think that they’ll win out in the long term, then Monero is one of the leading contenders.

Cons of Mining Monero

Here’s why some say mining Monero is a bad idea:

• Costs. Monero isn’t the most profitable crypto to mine, and it might push your electricity costs even higher than they already are. If you live in a country where electricity prices are through the roof, stressing your CPU more might make that electricity bill even heavier.
• Future regulation. As governments try to spin bank failures into the need for CBDCs, it’s quite possible that the regulatory hammer may fall upon privacy coins like Monero. It can’t be monitored or controlled by central authorities, making it a massive threat to the system.

Potential Earnings From Mining Monero

Monero has a soft cap of 18.4 million XMR, meaning that block rewards will decrease until then. However, once this supply is reached, miners will continue to be incentivized, with a block reward of 0.6 XMR being paid out in perpetuity. This system is different from Bitcoin, which has a hard cap of 21 million BTC.

Monero mining profitability depends primarily on the cost of electricity wherever you are and how energy efficient your CPU or CPUs is/are. A little research on Monero benchmarks will give you an idea of which CPUs can mine Monero most efficiently.

Then it’s just a matter of weighing the investment of buying those CPUs and fixed costs in terms of electricity versus how much your hash rate will earn. Monero mining may not be very profitable, especially in a bear market, but there’s always the possibility that it will appreciate in the future if you hold onto your XMR coins.

How Safe is Mining Monero?

The safety of mining Monero depends wholly on whether you’re careful with the software you install for mining. Scams are everywhere in cryptocurrency, so make sure you’re downloading and running software from the right place.

On top of this, there’s solo or P2Pool mining versus mining pools. With the latter, you have to download third-party software. This could certainly entail a certain level of risk.

On the other hand, downloading software straight from the Monero Project is less risky—they’ve got no reason to sabotage their own project by giving their miners dodgy software.

Key Takeaways

Monero is an extremely powerful cryptocurrency that solves some of Bitcoin’s weaknesses in the areas of privacy and fungibility. It uses ring signatures to obscure almost all aspects of a transaction, ensuring that the details of participants and even the amounts transacted can’t be inspected without their permission.

The privacy-focused ideals of Monero aren’t the only thing that matches the core values of cryptocurrency. It’s also mined using consumer-grade hardware, making it one of the fairest coins to mine even if all you have is an average PC.

Despite this, mining is so widespread that winning a block reward is most definitely a lottery. Many miners choose to forego the wait for a jackpot by joining mining pools, but Monero’s decentralized P2Pool offers you the best of both worlds.

How to Mine Monero FAQ

• How is Monero different from Bitcoin?

  Bitcoin is public and transparent, but Monero takes the concept of privacy seriously. XMR is perfectly fungible as a result of this, but its supply isn’t hard capped in the way Bitcoin’s is.

• What do I need to mine Monero?

  All you need to mine Monero is a consumer-grade CPU. Some CPUs perform better than others, but most give you a decent hash rate.

• Is Monero mining profitable?

  This depends on your electricity costs. Especially in a bear market, mining Monero may not be very profitable. The great thing about it is that you can generally mine Monero in the background while doing almost anything else with your PC.

• Is Monero mining safe?

  If you use safe software, yes. The least risky way to mine Monero is by solo mining or using the decentralized P2Pool, so you don’t need any third-party software.