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One of the most well-known and anonymous mining cryptocurrencies on the market. A project that is ranked as the 10th most capitalised cryptocurrency on the list of cryptocurrencies. Monero (XMR) is an open-source cryptocurrency that features complete anonymity and transaction privacy. Monero's high anonymity is achieved by using the Cryptonode protocol, which means that random transactions in the blockchain are mixed with valid transactions, making it impossible to track your transactions. In Bitcoin, for example, every transaction is visible to users and you can trace which address the cryptocurrency was sent from. Anonymity should not be confused with privacy. All blockchain-based cryptocurrencies are private, but not all are anonymous.
In this article, we will understand how you can mine Monero, what you need to do it, what difficulties can you expect and is it possible to earn from Monero in 2023?
What is mining?
If you still don't know what mining is, then don't worry, we will explain it all now. Mining is a process in which a computer performs certain algorithmic tasks to generate new cryptocurrency tokens or coins. As a result of this computer work, the owner of the computer (the miner) receives a reward in the form of the cryptocurrency they mine. The amount of this reward can vary from coin to coin. Mining is only possible if the cryptocurrency blockchain runs on a Proof-of-Work consensus mechanism. This mechanism serves as protection for the blockchain and the stability of the network.
Differences between mining Monero and mining Bitcoin
Algorithm: Bitcoin and Monero use different hashing algorithms. While Bitcoin uses the SHA-256 algorithm Monero uses the RandomX algorithm, which they switched to in 2019. By comparison, SHA-256 is more complex, so it takes longer to hash. The RandomX algorithm is designed so that the coin cannot be mined on ASIC miners. On the contrary, this algorithm is optimized for mining on CPU. This makes it a zero entry threshold, as you can mine a coin on anything, even your laptop.
Rewards: The key to mining coins is the size of the rewards. Bitcoin has a reward of 12.5 BTC, while Monero has 0.6 XMR per DOGE block. RandomX had the property of a floating issue, meaning that the reward for each block mined gradually decreased. However, after the tail issue that took place at the end of May 2022, the reward per block became fixed.
Block creation time: It takes 10 minutes to create a new Bitcoin block, while Monero takes 2 minutes.
Mining on CPUs
As we have already found out, mining on CPUs is quite realistic, and Monero is proof of that. As we have already mentioned, RandomX algorithm is optimized for mining on processors and not for video cards. On the one hand, this avoids ASIC miners who specialize in complex calculations. On the other hand, everyone is on equal footing and the entry threshold is much lower. Just like for GPUs, we have made for you a small selection of the top 3 processors suitable for Monero mining:
1st place: AMD Threadripper 3990X - The highest performing and most expensive option. The processor costs around $4,500.
Characteristics:
Average hash rate: 54 KH/S
TDP: 280W
2nd place: AMD Threadripper 3960X - Ideal for those looking for a better option for the $200 price tag.
Characteristics:
Average hashrate: 25 KH/S
TDP: 280W
3rd place: AMD Ryzen 9 3950X is the best high performance processor for mining. Its affordable price of $1000 makes it a good option to buy.
Characteristics:
Average hash rate: 17.5 KH/S
TDP: 105W
Step 3: Choosing a wallet for Monero
There aren't many options when it comes to choosing a Monero wallet. Hardware wallets (which are considered the most secure) are now available for Monero coins: they are supported by Ledger Nano X and Trezor Model T. These wallets are currently considered the safest on the market. There are, of course, free wallet options such as the MyMonero web wallet and the Monerujo mobile wallet, but we don't recommend them for long-term storage of your assets.
Step 4: Choosing and installing software
Monero mining software is divided into 2 sections: for CPU and for video cards. We won't go into too much detail on how to install this software and for which platforms it is created, as that's a topic for a separate article. So just hold on to a selection of the best software for mining.
Processor mining software
The most popular CPU software are XMR Stak, Claymore's CryptoNote CPU and XMRig.
Software for video card mining
There are other software for video cards. The best ones are: MinerGate, Monero Spelunker and Cudo Miner.
Is it profitable to mine Monero in 2023?
Before engaging in Monero mining, you should understand that mining directly involves some risk. Also note that the reward per block of Monero has decreased noticeably when compared to previous years. In any case, if you want mining to be profitable, you need to use special mining calculators and calculate if mining will be profitable for you, because even electricity rates are different everywhere. How much you can get out of mining directly depends on how much you are willing to spend.
How much can I earn by mining Monero?
We will be looking at a mining pool for our example, as it is the most profitable for us. Let's take the AMD Ryzen 9 3950X processor from our top above as an example. Average hash rate is 17.5 KH/S and TDP is only 105W. Let's let the pool commission be 1%. Let's take into account the price of electricity, for example in Moscow, which averages $0.09 per Kw/h. Let's insert these values into our mining calculator and obtain that the net profit at the current exchange rate from mining Monero will be only $106 per year. Assuming that CPU costs about 1000$, this seems not a very profitable decision, because even if nothing changes, the payback period of such mining will be about 10 years. Of course, you have to consider that the market is at the bottom right now, which means that the cost of remuneration has dropped, but the difficulty of mining has stayed the same. So you have to look at the cost of electricity in your area first, because it might be more profitable in your case.
Minuses of Monero mining:
Low payback: Based on our calculations, we can conclude that mining Monero is now very difficult and the profitability of this coin is only decreasing.
CPU Hashing Algorithm: RandomX is optimized for CPU mining and so the performance of your hardware is very limited compared to larger processing systems built specifically for mining or ASIC mining.
Diminished profitability: The increasing competition amongst miners and the rising complexity of mining can lead to diminished profitability over time.
Conclusion
At the moment, mining Monero cryptocurrency is not an ideal decision to choose it as a primary coin for mining. This coin is good in that it has a low entry threshold, and everyone can try mining without any investment. However, this is also a disadvantage, as there are a lot of people who want to get a penny. On the other hand, there are a lot of coins with better conditions for mining, and if you decide to get serious about it, you should look into mining more suitable coins, such as Ethereum Classic or Dogecoin.