A Beginners Guide to Privacy Coin Mining

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A Beginners Guide to Privacy Coin Mining


So you’re interested in mining privacy coins? Well, ZCash is probably right up there on your priority list. And for good reason. Privacy coins have been gathering a lot of steam lately in the wake of regulators looking to limit Bitcoin and all of the altcoins that have been spawned from it. In this guide, we’re going to get some insights on how to mine ZCash for beginners.

(Note that this covers Windows users, though the process on Linux will be somewhat similar.)

A Brief Overview of ZCash

ZCash adds an extra layer of anonymity to crypto transactions when compared to Bitcoin. Cryptography known as zk-SNARKS allows users to transact completely privately or if they choose, to make certain transactions visible.

This functionality has both good and bad sides to it. For one it allows you to safely send large funds around the world without potentially becoming the target of an online or offline attack based on your identity. On the other hand, it also holds the potential for various kinds of money laundering.

ZCash uses proof-of-work, similar to Bitcoin, to secure its network. A fundamental difference, however, is in its mining algorithm Equihash which facilitates the creation of blocks in a different way. This is an important point since you’ll want hardware that is optimized to make use of it. More on that later. For now, let’s move on and if you’re interested in an inside scoop on ZCash, take a look at our  ZCash guide.

Profitability

If you’ve never mined crypto before now would be a good time to find out if you’re actually going to make some decent profit off of this venture. Many uneducated entrants into crypto believe that mining is an easy way to make money. This is just simply not the case. Here are a few key elements you’ll need to take into account before making the plunge into mining ZCash, or any other cryptocurrency for that matter:

  • Current market price
  • The initial capital outlay for hardware
  • Total hash power available
  • Cost of electricity
  • Pool fee costs

To do this, head on over to What To Mine and enter in a few variables from your set up. As an example we input a typical eight graphics card rig with around 6000 h/s (hash rate):

Calculate your projected profit potential

Calculate your projected profit potential

As you can see the latest profit potential is not particularly high. This is largely due to the bear market of 2018 which has made it difficult for small miners to turn a profit. These results are only estimates though. As with most things crypto, nothing beats hands-on experience.

Mining Hardware

ZCash was built to resist ASIC machines and instead use GPU’s (graphics cards) as the main resource to mine the coin. This is good news for the beginning miner as you won’t have to compete with mining giants like Bitmain who have huge ASIC market share.

What this means is you’ll definitely want to get a hold of some Nvidia graphics cards. Experienced miners have reported that they far outperform AMD cards when mining ZCash. Nvidia GTX80 series is a good starting point if you don’t know which card to pick up. In addition, since demand for cards has put a bit of strain on the graphics card supply, you could try picking up a couple of second-hand GPU’s from your gaming friends or on eBay.

Storing Your Bounty: ZCash Wallets

Mining coins don’t help unless we can actually store them somewhere. Fortunately, we have quite a few options here. A third-party wallet is better for the beginner as the official wallet only works with Linux. There are a number of good options here though for ultimate security you’ll probably want to go with a hardware wallet like a Trezor or Ledger.

If you’re looking to build up a Bitcoin portfolio or perhaps cash out into fiat (eg. Dollars/Euros/etc.) then you’ll definitely want to mine directly to a supported exchange. This will allow you to skip additional fees when transferring between your personal wallet and the exchange. Contact your exchange first though to ensure they support this option.

Software and Next Steps

Drivers

Assuming you’ve gone with the Nvidia cards for your rig as we mentioned previously, now is the time to make sure they are properly installed and configured. Head over to Nvidia’s Geforce site and install the latest drivers if you haven’t done this already:

For maximum efficiency make sure you have the latest drivers for your card

For maximum efficiency make sure you have the latest drivers for your card

Installing many GPU’s can be a tricky process. You may find it best to install one at a time, reboot, and then rinse and repeat, or alternatively install all of them simultaneously. Miners have reported a few different ways to get the job done so schedule some time to properly install your gear before proceeding with the next steps.

Download and Run the EWBF Miner

Time to connect the software to your hardware so we can get some funds rolling in. The recommended software here is EWBF’s Cuda ZCash miner. Always be careful when downloading miners as some unknown programs may steal funds from unsuspecting users. Do your research and make sure to follow the Bitcointalk community when it comes to miner recommendations.

Download and install the latest version of Cuda. Windows has a nasty habit of interrupting the smooth running of mining machines. This means that you’ll need to adjust a few settings to make sure that you mine at maximum efficiency.

Firstly, ensure that your anti-virus doesn’t block Cuda or any other associated files. Secondly, you may also want to disable Windows updates and instead update manually by planning specific downtimes for your rig. Finally, disable sleep mode on your PC as this will continuously disrupt your ZCash mining.

Join a Mining Pool

Mining ZCash on your own is not practical and these days you’re only going to cut it if you join a mining pool. In short, these allow you to ‘pool’ your resources with other miners with a greater possibility of discovering blocks and claiming your mining reward. Investoon has a great comparison on ZCash mining pools close to your current location.

Click on a specific miner and you’ll get instructions on how to connect to that pool:

Instructions on how to join a specific mining pool

Instructions on how to join a specific mining pool

In particular, you’ll need to take note of the bat file and EWBF miner settings. These can be changed within the folder of EWBF that you downloaded earlier. You’ll also need to copy the wallet address over which we spoke about earlier. There are quite a few fiddly bits here so make sure everything is spot on.

Final Thoughts: How to Mine ZCash

Now all that’s left is to actually start mining ZCash! Double click the .bat file and you should be effectively mining your very first ZCash. Note that most pools allow you to check your wallet earnings via their respective websites. There’s still a lot more to learn if you want to make the most out of learning how to mine ZCash.

Remember, the markets are down and competition is tough. To stay afloat you’re going to have to keep in touch with the latest developments and refine your process. Good luck and happy mining!





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