@Treater98 30 April 2021 edited

Cloud mining vs hardware mining Before starting with the main topic i want to introduce some fundamental "definitions" such as: -What is a transaction; -What is a mempool; -What is a block; -What is a fake block; -What is a confirmation; -What is mining. **What is a transaction?** Each of us now and then makes a transaction to move our funds for a reason or another, but **what actually happens**? When a transaction is broadcasted, there is a process occuring, which is the "**sign**" of the transaction. A **sign** is a string of characters which walk along the other details of the transaction, which are **sender address, receiver address, amount to move and fees**. The presence of the **sign is needed** **to prove** that the sender address really wants to send the money, how? As we know, each public key is associated with a private key. The private key is the generator of the public address and it can sign transactions through cryptography. This is, of course, needed because otherwise anyone knowing your public key would be able to send your Coins, which basically doesn't make any sense. Once a transaction has been signed goes into a "place" called mempool. **What is a mempool?** The mempool **is a buffer** where the transactions are **temporarily stored** and are waiting for a miner to choose them and verify the sign. It can be compared to a waiting line. Of course miners will be willing to choose a transaction with higher fees than one with lower fees. **What is a block?** A block is a group of **transactions** that have been **verified** by the miners and have been **written on the BlockChain**. It may be made from 1 to thousands of transactions depending on the asset. Once a block is written it is **immutable**. **What is a fake block?** A fake block would be a block written on each Node of xCoin which **contains fake information**. If a Node has a different BlockChain from the other Nodes, it means it has been manipulated. In a theoretical way, if you could manipulate 50% + 1 of the Nodes of a BlockChain , the other Nodes would adapt to the majority of the Nodes, considering the fake block a real block. This problem is nowadays **no more** considered as a **problem** but once a BlockChain starts you may imagine that could be a real problem. (This reasoning works of course only for decentralized protocols) **What is a confirmation?** A confirmation is basically the **amount** of **blocks** that have been written on the BlockChain **after** the one you are considering. The more blocks are written on the BlockChain, the more confirmations an old transaction has. An example: If you consider the 1000th block of an imaginary chain and the last block of the same chain is the 1042th, this means that the 1000th block has 42 confirmations. **What is mining?** Mining is a process where a **calculator verifies** each broadcasted **transaction**. A calculator will "look" into the mempool, seeking for the transaction with the highest fees and will start its operation of verifing. For a calculator, it is possible, through cryptography, to **authenticate** a transaction by verifying that the **sender address** and the **sign** have been **generated** by the **same private key**, without actually knowing the private key. In this article we will of course not look into how the operation of validating is mathematically executed, but be aware that **transactions in different assets** are verified through **different algorithms**. Each calculator executes a very high number of calculations to verify that the sign and sender address have been created by the same private key. Once multiple transactions have been confirmed and some criteria have been fulfilled, like reaching the **maximum size** of the data that can be **written in a block**, or reaching the **maximum time** that a miner can operate, the **block is written** onto the BlockChain. **Hardware mining!** Hardware mining is the classical way of doing mining which, if done only for the purpose of gaining money, **needs making some calculations** and obtaining some **knowledge**, in order to be profitable. To start mining a user needs 2 things: ◼️Hardware to operate the mining process; ◼️Knowledge on how to optimize the gains. ◼️**Hardware to operate the mining process** It is not a secret that nowadays it is very hard to find some good hardware to start mining at a reasonable price, both because the global pandemic slowed down world economy and because "money making machines" don't stay unsold on the market for a long time. If we wanna take a look at the hardware we can split the whole sea of components in 2 parts: ♦️Antminers; ♦️Graphic cards. ♦️**Antminers** are devices built only for the purpose of mining, they don't even have a video interface to be set up, all the setting up occurs by accessing to them via their ip address (which can be **hard** to do **for a novice miner**). Antminers are not even very versatile, because they work on a **restricted** amount of **algorithms** and after some time they even become useless, why? Because they **slowly become less efficient**, consuming always the same amount of power but decreasing the amount of blocks that they can mine in the same amount of time due to the **increasing mining difficulty** (factor that we are not gonna discuss in this article). This leads to their **obsolescence** and they end up being just **e-waste** because no one is willing to buy a "money making machine" that slowly "burns" your money. ♦️**Graphic cards** instead are much more **versatile** on many aspects. They can operate on **different algorithms**, users can **undervolt** their equipment to increase their life, they can be **overclocked** to increase their performance, they are far **more quiet** than any antminer and most importantly on the **ecological side**, they rarely become e-waste because the market of **used** graphic cards is **thriving**. ◼️**Knowledge on how to optimize the gains** As a new user i want to suggest that you don't mine through some "**plug and play**" softwares such as nicehash/minergate and any similar group. Instead it is **much better** to subscribe to any **mining pool** and mine directly with the **best algorithm** and not let someone else make these **choices for you**. After choosing the best algorithm for your device and the best pool, you have to pay attention to: ♦️**Good ventilation** of your device because if it overheats it will be less and less productive; ♦️Energy cost, since it is almost a **static "fee"** that you have to consider, you may want to find some solutions like switching to a cheaper electricity provider or even better to produce your own energy. (we are not goin to discuss how to generate energy and i don't want to give advices to someone who is probably not an electrician) A fundamental topic that you have to consider is the **power** that you are giving to your devices. You may **undervalue this aspect** if you are willing to or you are mining with an **antminer** (which works the best with their own power adapter), but when mining with **graphic cards** it is as **essential as the mining device** itself. You will need a **good quality power supply** for your cards or you literally **risk to blow** them. Since the **price gap** between a **trash** supply and a **quality** supply may be around **40$**, i suggest that you **spend them** if you don't wanna risk to blow thousands of dollars worth of graphic cards only because you bought a 30$ power supply. If you are searching for a **good quality power supply**, you can search for a **certificate of efficiency 80 + silver/gold**. As a graphic card miner you will even have to **face** the aspects of **overclock** and **undervolt**. You want to **overclock** the card to **gain more** calculating power out of your card, but you even want to **undervolt** the card to **lower its consumption** and to **prevent** it from **blowing up**. This process of **finding optimal undervolt and overclock** is called "**Tuning**" and it can be done through the **manager** of the **graphic card**. It depends on the card you have, for example **MSI cards** have a software called "**AfterBurner**" to set overclock and undervolt. (Should even work with non MIS cards) **Cloud mining** Cloud mining is a new way of doing mining which is often told to be very easy and profitable, but most of the times it is not! Choosing to do cloud mining instead of hardware mining provides a **lower initial cost** for a user who wants to invest money but, sometimes, it offers even a **lower chance to get back the investment** in a long term of time or at all. **Cloud mining** is a way to mine **outside of your house walls**, **not** needing to **worry** about where to put the **hardware** to mine, the **heat** production from the devices, the **noise** produced by the devices and the **power cost**. As many people say "you will just need to provide an address to receive the payments". Well, to be honest it **sounds bewitching**, but most of times you are going to get back only a **part** of the sum that you invested because these services can't tell you **what** will **happen** in the **future**. If a cloud mining contract lasts 1 year and the plan, at the time of the beginning of the contract, claims to **pay back** the investment in **8-9 months**, you are **not** gonna end up with **gains** due to "**mining difficulty increase**" and due to any problem that may occur. The provider of the contract can say that the **price of energy** is increasing so you are **gaining less** and you can't do anything about it. Or they can have **internet problems** and the time that the devices are **not mining** will still be **deducted** from your contract. Most of times it is even hard to start cloud mining with any company because their **new hardware** often **sell out very quickly**, not allowing the new users to join the service. **In conclusion** i would say that **hardware mining** is much **harder** than cloud mining because you **have to know so many things** and need a lot of **precautions** in order to **mine properly** and make it a **profitable activity**, but i will never recommend that anyone signs a cloud mining contract. After 1 year a mining contract (ended or not) may or may not give you gains, even trusted services can't be trusted. If you spend 1000$ on a **mining contract**, in 1 year **you may end up negative**. Instead if you spend 1000$ on **mining hardware**, after 1 year **you still may end up without gaining back the spent sum**, but at least **you have the devices** left. If you took all the precautions, the hardware will still be in a good condition after 1 year. If something stops being profitable, you can change algorithm and if you want to quit (or upgrade), you can still sell your devices for a reasonable price. Please **don't comment** something like "graphic cards are **spoiled** during the **mining** process", no it is **not true**, what is true instead is that the process that spoils the card is the "**heat hop**" . If a card mined for a week and it has been at 55° for the whole week it will be in a better condition than a card used for gaming that has been, for the same amount of time, turned on and off various times.