Crypto mining is often compared to mining gold – but instead of using a pickaxe to dig gold out of the ground, computers use processing power to solve math puzzles and “unearth” new digital coins. These solved puzzles validate transactions and secure the blockchain network, rewarding the miner with cryptocurrency. In simple terms, your computer does work to help run a crypto network, and in exchange, you have a chance to earn crypto rewards.
What is crypto mining?
Cryptocurrency mining is the process by which certain cryptocurrencies (especially those using “proof-of-work” consensus) verify transactions and mint new coins. Miners use specialized computers to solve complex mathematical problems (like guessing a winning lottery number) that allow them to add the next block of transactions to the blockchain ledger. Whichever miner solves the puzzle first gets to add the new block and is rewarded with newly minted coins plus any transaction fees in that block.
This mechanism not only introduces new coins into circulation but also ensures all transactions are valid. In a way, crypto mining creates a virtuous circle: miners maintain and secure the blockchain, and in return the blockchain rewards miners with new coins – giving them an incentive to keep the network running.
How are blockchain and mining connected?
Mining is integral to blockchain operation for proof-of-work cryptocurrencies. Think of the blockchain as a digital ledger composed of consecutive blocks of transactions. Miners competing to solve the cryptographic puzzles are essentially racing to add the next page (block) to that ledger.
Each time a miner adds a new block of verified transactions, the blockchain updates and grows longer. This process simultaneously confirms the transactions in that block and secures the network by making it computationally difficult for anyone to alter past records.
Without mining, a proof-of-work blockchain like Bitcoin’s would have no one to validate transactions or secure the ledger, undermining the entire system. In fact, mining is what allows cryptocurrencies to function as decentralized networks – the miners’ combined work replaces the need for a central authority by verifying and securing the blockchain collectively.
Types of crypto mining: solo, pool, and cloud
1. Solo mining
Solo mining means mining independently, using your own hardware without joining a group. If your miner successfully finds (solves) a new block, you keep 100% of the reward. The catch is that for popular coins like Bitcoin, the chances of an individual solo miner finding a block are astronomically low unless you have enormous hashing power (comparable to large mining farms). Solo mining yields very unpredictable rewards – it’s basically a lottery. You might get lucky and hit a block jackpot, or you might earn nothing for a very long time. Solo mining is mostly only realistic for mining new or less competitive coins, or if you happen to have a lot of hash power at your disposal.
2. Pool mining
Pool mining is a collaborative strategy where many miners join forces by connecting to a mining pool server. In a mining pool, everyone contributes their hardware’s hashing power toward finding blocks, sharing the work and the rewards. When the pool as a whole finds a block, the block reward is split among all members according to how much work each contributed (usually measured in shares of hash power). The advantage is that you receive regular, predictable payouts instead of waiting forever for a solo jackpot. Even if each payout is small, they come more consistently, which can be better for a hobby miner’s cashflow. Pool mining also lets miners with modest hardware participate, since combining resources lowers the barrier to earning some reward. The downside is pools charge a small fee (often ~1-2% of rewards) and your reward is partial since it’s shared. Still, for almost all major coins, joining a pool is considered essential for small-scale miners – unless you have extremely high hash power on your own.
3. Cloud mining
Cloud mining is a method where you rent mining power from a third-party company instead of running the hardware yourself. In other words, a cloud mining provider operates large mining farms (warehouses of mining machines) on your behalf, and you pay them to allocate some of that mining capacity to you. In return, you receive a share of the cryptocurrency that their equipment mines, proportional to the amount of hash power you rented.
Pros of cloud mining:
- Very convenient – you can start mining without any technical knowledge or upfront hardware investment.
- No need to worry about electricity costs, space, noise, or cooling.
- Allows people in regions with expensive power or limited internet to participate in mining by leveraging remote resources.
Cons of cloud mining:
- Lower profits due to provider fees.
- You relinquish control over the hardware.
- High trust requirement – you must believe the provider is actually mining.
- The cloud mining space has been rife with scams.
Cloud mining can be a legitimate and easy way to start – just be sure to choose a reputable provider and understand the potential lower profit margin.
What can you mine in 2025? Popular mineable coins
Only proof-of-work cryptocurrencies can be mined. Some of the most mined coins in 2025 include:
- Bitcoin (BTC): Requires ASIC hardware. Highly competitive, but very secure and valuable.
- Litecoin (LTC): Uses the Scrypt algorithm. Can be mined with ASICs. Often mined alongside Dogecoin via merged mining.
- Monero (XMR): Privacy-focused coin that can be mined using CPUs and GPUs. ASIC-resistant and good for solo or small-scale mining.
- Ethereum Classic (ETC): Successor of Ethereum’s original chain. Still uses proof-of-work and can be mined with GPUs.
- Zcash (ZEC), Ravencoin (RVN), Dogecoin (DOGE): Also viable options, depending on hardware.
Basic hardware and software requirements
If you’re mining from home (not via cloud), you’ll need:
- Hardware: ASIC miner (for BTC, LTC) or GPU/CPU (for XMR, ETC).
- Internet: Stable, always-on broadband connection.
- Software: Programs like XMRig, PhoenixMiner, or tools provided by pools.
- Wallet: To receive your mining payouts.
- Power and cooling: Proper ventilation, and possibly fans, especially for multiple rigs.
Mining profitability: what to expect
Profitability depends on:
- Hash rate: The power of your mining hardware.
- Electricity cost: A major factor in your overall cost structure.
- Network difficulty: Higher difficulty means fewer rewards.
- Coin price: Your earnings depend on market value.
- Fees: Pools and cloud platforms charge small fees.
Use calculators like WhatToMine to estimate your break-even point and potential returns. Remember, many miners aim for long-term gains, not instant profits.
Risks and scams in mining
Be aware of:
- Upfront hardware costs: Don’t over-invest until you’ve calculated profitability.
- Electricity and safety issues: Mining equipment can overheat or overload home circuits.
- Cloud mining scams: Only use reputable, well-reviewed providers.
- Fake mining hardware: Buy only from verified sellers or manufacturers.
- Cryptojacking: Keep systems secure; don’t download unknown software.
- Regulatory concerns: Always check your local laws, and stay tax-compliant.
Final thoughts
Crypto mining can be rewarding, educational, and even profitable with the right setup and expectations. Cloud mining offers a less technical, lower-barrier entry for beginners, but due diligence is crucial. Start small, avoid promises of guaranteed returns, and always research your tools, platforms, and coins before investing time or money.
Disclaimer: The information provided in this article is for educational purposes only and does not constitute financial advice. Cryptocurrency mining involves risk due to market volatility, hardware costs, and potential scams. Please conduct your own research and consult a professional before making any investment or mining-related decisions.
