Mining Bitcoin Cash means two things: first, you contribute to ensuring the future of the Bitcoin Cash by mining it, but you also make some money along the way. What is mining? It’s basically the process of finding the answers to difficult cryptography puzzles.
In the cryptocurrency world mining is necessary because solving these puzzles ensure that cryptocurrency transactions are ticked off as legitimate. It also ensures that the supply of a cryptocurrency like Bitcoin Cash grows as mining adds new coins into circulation.
However mining requires a lot of computing power – and patience – so miners are rewarded for their efforts. At the moment Bitcoin Cash miners get 12.5 BCH for every block that they can validate. They also get all of the transaction fees for that block as validate it.
Can you make money mining Bitcoin Cash?
It depends, but it is likely that you will need fairly serious mining equipment to make much of a profit. You can work out whether you can achieve profitability using a calculator like this one. But you will need to know what “hash rate” your hardware is capable of – you should be able to work it out before you buy the hardware, or you could use this calculator to find your hash rate.
Also note that powerful mining hardware can use a lot of power so you need to take your electricity bill into account when calculating profitability. There is a handy calculator here to help you work this out.
Comparing mining Bitcoin to mining Bitcoin Cash
Bitcoin (BTC) is obviously the better known coin compared to Bitcoin Cash (BCH) but both are very similar in the way that they work. Mining BTC and BCH follows a similar strategy too but there are some key differences between the two coins. First, a BTC block is one megabyte, but BCH blocks are eight megabytes.
Clearly a bigger block will require more computing effort to solve – so a bigger amount of money will be spent on computing power to solve a single block. That said a bigger cryptocurrency block will also mean that miners get more transaction fees in return for solving a block.
Bitcoin and Bitcoin Cash uses the same blockchain so in both cases the reward for a successfully mined block is 12.5 tokens. You’ll note however that the price of Bitcoin is several multiples the price of Bitcoin cash – 20 or 30 times, depending on when you compared prices.
So the 12.5 tokens for mining a Bitcoin block is worth a lot more than 12.5 Bitcoin Cash tokens for mining Bitcoin Cash. The result is that Bitcoin Cash has tried to keep mining easy so that the coin can attract more miners. EDAs is an important aspect of keeping Bitcoin Cash mining easier than it would otherwise be.
In the past, one automatic recalibration of mining difficulty resulted in Bitcoin Cash becoming four times as hard to mine as before the recalibration – putting off many miners. However, Bitcoin Cash responded by triggering an EDA which meant that a lot of miners got back to mining Bitcoin Cash.
However, after the recalibration many miners kept mining Bitcoin Cash, and did this at a loss. You could argue that people were just showing their faith in Bitcoin Cash and that they wanted this particular Bitcoin fork to keep doing well.
At the time of writing you can earn 0.1502 USD per day for 1 THash/s when you mine Bitcoin Cash – according to BitInfoCharts, compared to 0.1441 USD for Bitcoin. Note that you must also account for transaction fees when working out the profits – users of Bitcoin pay a lot more in transaction fees, the transaction fees for Bitcoin Cash is insignificant in comparison.
What you need to get started mining Bitcoin Cash
After reading all of the above you should have a rough idea of what it would cost you to invest in your mining equipment and how much money you’ll make based on your costs – and your potential mining earnings rate. If your calculations tell you that you can make a profit, go ahead and get started – we’ll tell you how.
For starters you need a Bitcoin Cash wallet that can receive your mining proceeds. There are plenty of wallet options but we suggest, for the sake of safety, that you send your mining rewards to a wallet that utilises a private key stored on the device that it is installed on.
Remember to make a backup of your private key: your wallet.dat file must be stored on a different device. You could also choose to print a copy which you can store somewhere secure. Why? If your computer is stolen or crashes completely you won’t be able to get your Bitcoin Cash back unless you have the wallet.dat file, or a printout. We have a dedicated guide explaining everything you need to know about Bitcoin Cash.
Should you mine in a pool?
The next step is a very important choice: do you want to mine on your own, or do you want to join a pool of Bitcoin Cash miners?
It takes a lot of computing resources to solve a Bitcoin Cash block and so for this reason people often join their computing power into a pool so that they can solve blocks faster. This is called a mining pool. The result is that your mining equipment will be asked to solve a smaller, simper puzzle which means you successfully solve puzzles more quickly.
In aggregate, all the miners in a pool working to solve smaller puzzles more quickly can add up their efforts so that the bigger task – solving a complete Bitcoin Cash block – is achieved more quickly. In turn, rewards are achieved more frequently. In a mining pool this reward is shared amongst the people who work in the mining pool, according to the amount of effort (or computing power) they added to the mining pool.
The other option is to try and mine a full block yourself, but doing so is highly challenging – and you should look past the 12.5 Bitcoin Cash you receive for the block and realise that, even with the most powerful rig, you’ll still be looking at issues such as humongous electricity consumption.
Joining a mining pool
In reality, it’s almost impossible for a single miner to complete a full Bitcoin Cash block on their own – unless you’re investing massively in computing power and electricity expenses. That’s why casual miners tend to choose to work in a mining pool.
You have to choose your mining pool carefully. Some points you should take into account is the size of the mining pool, how they pay you for rewards (the payout structure), whether they provide stats and of course – what the fees are for participating in the mining pool.
Joining is usually easy, it just requires signing up for an account with the mining pool on their website. Next, you add a worker to the pool, and then add this worker ID to each machine that you use to mine Bitcoin Cash. This enables the tracking of your contributions.
Some of the most popular Bitcoin Cash mining pools include:
Starting to mine
You’re just a few steps away now – but you still need mining software which can monitor and control your mining hardware. The mining client software needs to run on our desktop computer, which software you choose will depend on the OS you use, and what type of mining rig you make use of.
In most cases mining pools will have custom software that you use for mining, this software could even be pre-configured: also containing a wallet address. All you need to do is plug your rig into the electricity grid and that’s it.
When mining in a pool you’ll need to have your login details and the address of the pool ready, as you enter this into the mining software client. When you’ve set this up you’re ready to mine. When mining solo you need to wait for a complete block to be mined before you see the rewards for the block in the wallet connected to your mining rig.
Mining in a pool means that you’ll see more regular rewards, in fact you can expect your reward to slowly accumulate in your account – but, of course, you need to enter your mining address into the client software to make sure you get your rewards.
What are your hardware options?
Mining has become very hardware intensive and for all intents and purposes you will only make real progress if you deploy an ASIC miner. ASIC miners are built specifically to mine cryptocurrency but these rigs are expensive, and you should also keep in mind that they can use a lot of electricity. So, there are two factors you need to consider: the hash rate of your ASIC miner, and its power consumption.
What are your software options?
You have plenty of options when it comes to software that can mine Bitcoin Cash, but we think two of the most popular options are BFGminer and of course CGminer, but do note that these are CLI apps – in other words, you need to operate the software using a command line interface.
However, if you don’t like the idea of using the command line you could “wrap” either BFGminer or CGminer inside of a GUI – it’s called EasyMiner. EasyMiner works both for mining solo, and mining inside of a mining pool.
Keep in mind that not all mining hardware is compatible with every mining software solution, so you need to be mindful of compatibility: look for software that works with the mining rig you invested in. Of course, it changes when mining in a pool because you’ll usually be using the custom mining software used by the pool.
What about cloud mining?
You can mine Bitcoin Cash without the hassle of operating your own hardware, worrying about electricity bills or managing mining software – you do so using cloud mining solutions. In the case of cloud mining you effectively rent computing power in a shared remote data centre.
Cloud mining is very simple to set up, you simply buy a contact according to your mining budget. You do need a computer to manage your cloud mining contract and of course a Bitcoin Cash wallet stored locally.
It is worth noting that cloud mining is not without problems. In fact, you could say there is a bit of a risk with cloud mining – cloud mining scams are very common. Also, the hardware used for mining is not under your control. Also remember, cloud mining is a service provided by someone else who has made a large investment, so expect to earn less if you mine using a cloud mining platform.
For a comprehensive list of cloud mining services check out CryptoCompare as it provides a nice comparison service which can help you find which crypto mining contracts provide good investments. One of the most popular cloud mining services is IQMining.