Mining is a crucial part of how cryptocurrencies are distributed, and new coins are created. Rather than being issued by a central authority, as seen in the case of fiat currencies, mining helps to maintain the decentralisation of Bitcoin’s blockchain. Open to anyone in the world who wishes to contribute, mining creates the foundation for new blocks in the chain, which are produced according to protocols dictated by the source code. In this listicle we look at the 3 best cryptocurrencies to mine in 2020.
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How to Identify Cryptocurrencies that can be Mined
Bitcoin, the first and best-known cryptocurrency, has strong competition within its mining community. However, many altcoins use different distribution methods, such as Ripple’s XRP, and cannot be mined.
Among other factors, the ability to mine a coin depends on the consensus mechanism of the network. Bitcoin uses Proof-of-Work (PoW); requiring miners to solve advanced mathematical problems through their computer in order to secure the network. For their efforts, these miners are rewarded with an amount of Bitcoin.
Miners used to get involved by using a Graphics Processing Unit (GPU) found in most modern computers. But while this method may still be effective for some altcoins, fierce competition from companies employing ASICs means that mining Bitcoin through your laptop is no longer possible. ASICs, or ‘mining rigs’ – are specially designed machines that are built to carry out a single function, crypto mining.
The first step is identifying which cryptocurrencies can be mined. CoinMarketCap lets you sort cryptocurrencies into sub-categories, look at this list to see which coins can be mined. Due to the strong volatility of the crypto market, miners need to carefully consider which cryptocurrency they want to mine, and ensure they choose one that has a track record of reasonable price-action movements to improve profitability.
The Most Profitable Cryptocurrencies to Mine in 2020
Bitcoin: Currently in the spotlight due to the halving in May
As the very first and highest valued cryptocurrency, Satoshi Nakamoto’s Bitcoin is likely to always make the profitable list. This year, the block reward granted to miners for validating transactions over the blockchain will be cut in half from 12.5 BTC to 6.25BTC. Halving is a process that happens every 210,000 blocks that are generated.
Some expect the price of Bitcoin to soar after the so-called halving process due to the reduction of the amount of Bitcoin entering circulation, decreasing supply and potentially increasing demand, thereby increasing the price – incidentally, this was observed in the last halving in 2016, which led to the parabolic rise in Bitcoin’s value at the end of 2017.
However, price movements are influenced by a number of factors, so careful consideration is needed before investing in mining.
Ethereum and Ethereum Classic: leaders in profitability
According to data on WhatToMine, Ethereum, and its forked iteration Ethereum Classic, are in second and third place for mining profitability, making them both good contenders who those looking to get started in mining.
Although this ranking changes frequently, miners of these two currencies have continued to be in profit in the face of recent market turmoil, showing the potential for further robustness in the long-term.
GRIN: Great for beginners
GRIN is a relatively new cryptocurrency and is yet to see its potential, however it’s easy to mine, making it ideal for beginners. It’s possible to start mining GRIN straightway with the GPU found on a laptop or computer.
The mining process features a block reward of 60 GRIN per block. Unlike Bitcoin, this currency focuses on privacy, and does not have a maximum supply, meaning that mining will continue as long as the project remains active into the future.
GRIN’s algorithm is based on the “Cucko Cycle” a concept that makes use of two algorithms: CuckARood-29 and CuckAToo-31. This makes GRIN the ideal choice for those who want to test how the process works before taking their first step.
Extra mining options for 2020
- Monero: this anonymous cryptocurrency has been one of the most commonly mined since its launch in 2014. Although Monero mining has lost some of its popularity since its peak, it is still one of the standout minable coins in the crypto space.
- Ravencoin: one of the most profitable cryptocurrencies in 2019. With the rise in price, new miners are getting involved in Ravencoin mining by using the X16R algorithm.
- Litecoin: Named by some as the lightweight Bitcoin. Litecoin could benefit from Bitcoin’s 2020 halving, meaning miners could stand to make good returns.