What is crypto mining?

Crypto mining is the process of maintaining a blockchain. Mining is essentially a continuous process of calculations performed by computers. Cryptos are mined primarily using graphics cards (GPUs) or specialized computers called ASICs.

This article is a beginner’s guide to crypto mining. It provides an overview of how the mining works for different cryptocurrencies. It also provides practical guidance on getting started and information on the financial risks of mining.

What is crypto mining?

Crypto mining refers to the computational work performed by computers. The purpose of mining is to maintain a blockchain (a distributed database) and to verify transactions.

Crypto mining is a process of continuously repeated hash calculations. Since the term hash calculations is a bit abstract for many beginners, mining is often described in terms of lottery numbers.

Think of mining as a competition to see who can guess the correct lottery numbers first. The lottery numbers are predetermined, but none of the miners know them. Miners go through random combinations of lottery numbers until one of them finds the correct ones.

The miner who wins the competition:

1. Receives a block reward (newly minted cryptocurrency, e.g., 3.125 BTC for Bitcoin).
2. Gets the right to add a new block to the blockchain and choose which transactions are included
3. Collects the transaction fees from all the transactions in that block.

Once a new block is added to the blockchain, the process starts over again. It repeats itself continuously with no interruption.

Mining is often described as solving complex mathematical equations. This is not true. It is a task that requires raw computing power and repetition, which is why guessing lottery numbers serves as a good example.

When discussing cryptos more broadly, it is important to understand that only a small fraction are mineable. These include cryptocurrencies that use the Proof of Work consensus mechanism, such as Bitcoin.

Since Bitcoin is the most well-known cryptocurrency, many people might think that all cryptos work the same way. This is not true. The majority of cryptos do not use mining at all.

What cryptos can be mined in 2026?

There are currently thousands of different cryptos on the market. Of these, there are 100–200 mineable cryptos. Most mineable cryptocurrencies have very small market caps, making mining them very risky. There are only a couple of dozen widely known mineable cryptos.

Below are the 10 largest Proof of Work -based cryptocurrencies, ranked by market cap.

Source: CoinMarketCap, status as of February 24, 2026. You can see a list of all Proof of Work-based cryptocurrencies on this page.

The second-largest crypto on the market, Ethereum, was mineable until 2022. Ethereum then switched to the Proof of Stake consensus in an upgrade called The Merge. However, Ethereum Classic, which forked from Ethereum over 10 years ago, remains a Proof-of-Work cryptocurrency.

Differences between mineable cryptos

Let’s take a look at the main differences between mineable cryptos. While the basic principles are the same, there are also minor differences in the technology of each cryptocurrency.

Mineable cryptos use the Proof of Work (PoW) consensus algorithm. As its name suggests, PoW requires network participants to provide proof of work that they have completed. In this case, the proof is a sufficient number of calculations performed by a computer.

This basic principle applies to all minable cryptocurrencies. The differences come from the devices that can perform the calculations.

Mineable cryptos can be divided into three categories based on the mining equipment:

1. ASIC
2. GPU
3. CPU

An ASIC is a computer designed specifically for a single task. In this case, it’s mining a cryptocurrency. All ASIC devices are designed for a specific mining algorithm. For example, an ASIC miner designed for Zcash cannot be used to mine Monero or Bitcoin. There are a few exceptions, though.

Bitcoin ASIC miners can also mine Bitcoin forks, such as Bitcoin SV and Bitcoin Cash. Litecoin ASIC miners can also mine Dogecoin and a few smaller cryptocurrencies.

Below is a picture of a Dash ASIC miner.

GPU stands for graphics processing unit (a graphics card). A so-called mining rig can be built from them by connecting more than 10 graphics cards to one motherboard. In recent years, the use of graphics cards for AI-related computing has grown significantly.

CPU stands for the central processing unit of a computer. CPU-minable cryptos are rare these days. Monero is an example of a CPU-mined crypto, although Monero ASIC devices already exist.

Over the past 10 years, technological advances have enabled the creation of ASIC devices for the most popular mineable cryptos.

Mining algorithms

In addition to the mining hardware, different cryptocurrencies use different mining algorithms (also called hashing algorithms).

The Proof of Work (PoW) mentioned earlier in the article is a consensus algorithm. It generally states that network participants must provide proof of computational work in order to maintain the blockchain.

Mineable cryptocurrencies use PoW, but their mining algorithms vary. The mining algorithm decides which hardware works best for mining that coin. Back in the day, this mattered a lot more, before ASIC miners took over the crypto mining for the most part.

Below is a list of the mining algorithms of the most well-known PoW cryptos:

• Bitcoin and Bitcoin Cash: SHA-256
• Dogecoin and Litecoin: Scrypt
• Monero: RandomX
• Zcash: Equihash

Monero has changed its mining algorithm over the years to limit the advantage of ASIC devices.

Crypto mining equipment

Crypto mining equipment differs widely. Here’s an overview of the main features of ASIC, GPU, and CPU miners.

ASIC miners

The most significant Proof of Work cryptos are mined primarily with ASIC devices. ASIC is an abbreviation for Application-Specific Integrated Circuit. It means a computer designed for a specific purpose. In this case, the purpose is to mine cryptocurrencies.

ASIC miners range from thousands to tens of thousands of euros, depending on the model and its computational power (hashrate). They can also be purchased used. An ASIC device is intended for professional mining and is very loud, producing significant heat. For this reason, an ASIC miner needs a separate space from residential use, such as a basement or storage room.

In mining large PoW cryptocurrencies, ASIC devices are practically the only competitive option.

GPU miners

Using GPUs (graphics cards) is also a common way to mine cryptocurrencies. A GPU rig is built from connecting up to 10-15 graphics cards to a single computer motherboard. Below is a picture of a GPU rig.

Many beginners start with GPU mining because it is much cheaper than buying an ASIC miner. You can buy individual graphics cards and gradually increase your rig’s capacity.

Another advantage of a GPU rig is its ability to mine multiple cryptos. You can quickly switch the cryptocurrency you are mining to another if the profitability of mining decreases. Selling a single graphics card is also much easier than selling an ASIC device.

Graphics card prices have increased partly due to rising demand for AI. GPUs are increasingly used for AI computing.

CPU miners

CPU mining means using a standard computer processor to mine crypto. This is rare these days and is only suitable for certain cryptocurrencies.

While ASIC and GPU devices are suitable for professional use, CPU mining is more of a hobbyist activity. Processors are much more difficult to scale than GPU rigs or ASICs.

The advantage is the low entry threshold. You can try CPU mining on a regular computer.

How to start mining crypto?

Next, let’s go over how crypto mining works in practice and what things to consider. We can’t go through the specifics of each crypto that can be mined in this article. Therefore, we will give a general description of the topic. You can then search for more information about the crypto you are interested in.

Mining location

For ASIC mining, you need a dedicated space that is separate from your living area. ASIC devices are so loud and produce so much heat that you can’t keep them in the corner of your living room. A garage, basement, storage room, or similar space is well-suited for an ASIC miner. The cooler the space, the better, because the miner can easily overheat.

CPU and GPU mining can be carried out in a residential apartment, but these devices also heat up and are quite noisy. This is because the devices perform continuous and very demanding computing work.

Hardware

The hardware required for mining depends on the crypto being mined and the level of mining required. Professional mining typically uses ASIC miners.

If you want to test mining first and try it out as a hobby, you can start with GPU and CPU mining. You can also buy used equipment and start with small investments.

Electricity consumption

Electricity consumption is a critical part of professional crypto mining. The profitability of mining depends heavily on electricity prices. Too expensive electricity will destroy profitability, even with the best possible equipment.

Before purchasing equipment, it is worth making profitability calculations. You can use, for example, the Minerstats.com website and compare cryptocurrency returns with different miners.

You can enter the miner’s hashrate, electricity consumption, and the price of electricity you pay into the Minerstats calculator. The calculator will then show you an estimated profitability. Please note that the calculations are based on price assumptions and do not guarantee actual returns.

Mining pools

Crypto miners typically use mining pools. This is because it is very difficult for an individual miner to beat millions of other miners.

The idea behind a mining pool is simple. Thousands of miners pool their computing resources together and share rewards among participants. This way, the mining revenue is distributed more evenly. Mining pools often also charge a 1-2% fee. The most popular mineable cryptos have multiple big mining pools.

You will also need mining software that connects your hardware to the mining pool. The software is usually free and is selected depending on the crypto you are mining and the hardware you are using.

Crypto wallet and taxes

To start mining, you also need a crypto wallet, which can be a mobile app, computer software, or a physical device. You can read more about crypto wallets in this article: Crypto wallet – a beginner’s guide.

The mining rewards are paid to your wallet in the cryptocurrency in question. If you mine Litecoin, for example, you will receive LTC in your wallet at certain intervals.

When you want to exchange mining fees for fiat (EUR, USD, etc.), you can send the coins to a crypto exchange. Remember that crypto mining rewards are taxable income. Visit the tax authorities’ website to learn more about mining taxation.

Profitability and risks of crypto mining

Crypto mining can be divided into technical and financial aspects. The technical aspect examines how mining works in practice. The financial aspect, in turn, assesses the profitability of mining.

In mining, technical and financial factors go hand in hand. Mining of the most significant cryptos, like Bitcoin, is almost entirely a professional activity. Some of the miners are even publicly-listed companies. Although mining can be done as a hobby without a profit motive, for most operators, the motive is financial.

Before beginning mining operations, it’s important to perform a thorough profitability analysis. This should take into account at least the hardware purchase price, hashrate, electricity costs, and the crypto’s market price predictions. It’s also important to understand that mining difficulty can change quickly.

Even small changes in the above-mentioned factors can significantly affect the final result.

These are the two biggest risks in crypto mining:

1. Increasing competition: Mining equipment continuously advances, meaning a device profitable now might become unprofitable within a year. Rapid development can quickly diminish the competitiveness of older mining hardware.
2. Price development: The profitability of mining is directly linked to the market price of the cryptocurrency in question. It is a good idea to be prepared for scenarios in which the price development is weaker than expected. Historical price development is not a guarantee of the future.

Mining also involves other risks, such as sudden increases in electricity prices or technical problems with equipment.

Before starting mining, it is a good idea to carefully consider the risks involved. Crypto mining requires technical expertise, suitable space, and cheap electricity. For most investors, it makes more sense to buy cryptocurrency directly than to mine it.

Crypto mining: The summary

Crypto mining is the process of maintaining a blockchain. In practice, it is about the continuous calculation work performed by computers. Although cryptos differ technically, the basic mining principle remains the same.

The largest mineable cryptos are mined mostly with ASIC devices. These are specially designed computers for mining cryptocurrencies. GPU mining is also popular, while CPU mining is rarer.

Mining is a process used by Proof of Work -based cryptos. There are 100–200 of them on the market. Most cryptocurrencies utilize Proof of Stake consensus, where validators are selected based on how many coins they lock (stake) in the network.

Crypto mining is largely a professional activity. Mining of major cryptos is dominated by large mining farms that can contain tens of thousands of miners.

Private individuals can also mine profitably. Potential returns depend on the price of electricity, the mining equipment, and the cryptocurrency being mined. The price development of cryptos also plays a crucial role in profitability.

Mining also involves risks. Equipment can become obsolete quickly, competition becomes fierce, and the price development of cryptos can be weaker than expected. Before starting mining, it is important to understand both the technical and economic realities.