Cryptocurrency mining has become accessible to almost everyone in recent years. Modern technology allows you to start mining without significant initial investment — a basic understanding of the process and competent work organisation is all that is needed. And with the advent of cloud mining, the barrier to entry has been lowered even further.

In this article, we will tell you in detail whether you should get involved in mining, what methods of crypto mining there are, how to comply with legal requirements and where to start, so that your path to mining is not only profitable, but also safe.

Profit or risk: should I mine?

Mining is often seen as a source of passive income, especially if your equipment is stable and you are always connected to a network. In theory, this is true if everything is set up correctly. In practice, however, mining is far from passive. It involves regular hardware maintenance, software updates and high energy bills, making it more labour-intensive than it first appears.

Furthermore, despite the potential profits, there is no guarantee of income stability. This is mainly due to the high volatility of cryptocurrencies: coin prices can plummet, resulting in reduced profits or even outright losses.

The profitability of the equipment and electricity tariffs are also important factors. At least a minimum investment is required at the start, and the first revenues are usually used to cover these costs. It is therefore important to carefully weigh up the pros and cons and assess your skills and goals before starting.

Regulatory framework for mining in Russia

Since 2024, cryptocurrency mining in Russia has been regulated by law. This activity is now recognised as a form of entrepreneurship, which obliges miners to register and report to the tax authorities on the assets mined and crypto addresses used, ensuring transparency of operations and control over the movement of cryptocurrency funds.

Legal entities and individual entrepreneurs are required to register in a special register of miners. However, private users only need to comply with the established limits of electricity consumption, which is 6,000 kWh per month — this covers the needs of small home mining operations. It is important to remember that even if an individual is not registered, he or she is obliged to pay tax on income from mining.

Types of mining: choosing the best way to mine

There are several approaches to mining, each with its own characteristics:

- ASICs mining.

ASICs are specialised cryptocurrency mining devices that offer high performance and energy efficiency. However, as new models are released, older devices can quickly become obsolete and are not suitable for some cryptocurrencies that do not support ASIC-resistant algorithms.

- GPU mining.

Graphics Processing Units (GPUs) are versatile and can mine altcoins based on suitable algorithms. This method is popular and requires only standard equipment, but its efficiency depends on the complexity of the mining and the characteristics of the tokens.

- CPU mining.

Processors (CPU) can also be used for mining, but their performance is much lower compared to ASICs and GPUs. This method is only suitable for beginners and is considered inefficient for popular cryptocurrencies as other devices have much higher performance.

- Mining pools.

Mining pools combine the computing power of participants, increasing the likelihood of finding new blocks and earning rewards. Pools provide a more stable income than solo mining, but rewards are shared among participants based on their contribution.

- Solo mining.

Solo mining involves mining cryptocurrency independently without participating in pools. Although this method allows you to receive all rewards, it is becoming less profitable due to high competition and the significant cost of powerful equipment.

- Cloud mining.

Cloud mining allows you to rent computing power and not have to worry about maintaining the equipment. Despite the convenience, there are risks involved as there are unreliable, fraudulent companies on the market.

Registering a miner: step-by-step guide

To legally mine, you need to follow the basic rules and requirements:

1. Assess the scale.

Calculate the power consumption of your equipment to determine whether you can operate within the current regulations without registering as a legal entity. If you're planning to use home mines, it's worth installing a separate electricity meter to monitor costs and collect documentation for the equipment you use. This will help you control costs and comply with local regulations.

2. Organise records.

Create a system to track all transactions, including cryptocurrency mined, energy costs and equipment maintenance. Spreadsheets or specialised applications are suitable for day-to-day accounting. Also, make sure you keep a record of all transactions, address IDs and connection details to mining pools to minimise the risk of error and simplify reporting.

3. Prepare reporting.

Collect and structure data on cryptocurrency mined, exchange transactions, wallets used and equipment costs. Understand your country's reporting requirements so that you can submit all necessary documents on time. The data storage system should be convenient and secure so that you can quickly provide information to regulators when required.

4. Register for tax.

Calculate your tax base as the difference between your cryptocurrency revenue and your documented expenses for equipment, electricity and maintenance. Tax rates and rules can vary depending on your jurisdiction, so it's important to research local laws and register with the tax system to avoid penalties and trouble with the law.

5. Liaise with government agencies.

In most countries, miners are required to inform regulators about the assets they mine and the crypto addresses they use. Keep documentation related to mining for the legally required period of time (usually 3-5 years). This will help you comply with all formalities and protect you in case of inspections.

5 steps to start mining

1. Choose cryptocurrency.

Before you start mining, decide which cryptocurrency best suits your resources and expectations. For example, networks of major cryptocurrencies such as Bitcoin have high mining complexity, so individual miners prefer to join pools and use specialised equipment (ASIC). Alternatives are altcoins such as Dogecoin or Ethereum Classic, which require fewer resources but are less stable and more risky.

2. Choose equipment.

Mining efficiency largely depends on the right choice of hardware. ASICs are the most powerful and specialised solution for mining popular cryptocurrencies. Some cryptocurrencies, such as Helium, require equipment with unique technologies, such as radio transmitters. Make sure your hardware meets the requirements of your chosen cryptocurrency and is ready to handle today's network complexities.

3. Create crypto wallet.

You'll need a cryptocurrency wallet to store your cryptocurrency earnings, which provides important security and ease of interaction with the network. Make sure your wallet is compatible with your chosen cryptocurrency and supports the addresses needed to transfer rewards.

4. Set up the hardware.

To start mining, install the appropriate software by downloading it from the official website of your chosen cryptocurrency. Pay attention to energy costs: study your electricity bills and estimate potential expenses to avoid unprofitable work. Place the equipment in a room with good ventilation and sound insulation, as it generates heat and noise.

5. Consider joining a mining pool.

If you don't have powerful equipment, consider joining a mining pool. These pools combine the power of several miners, increasing the chances of earning rewards that are then shared among all members. Pool coordinators help to optimise performance and spread the workload, making participation more efficient and profitable for aspiring miners.

Cryptocurrency mining can be both a promising source of income and a source of problems if you don't follow the rules. Study the legal aspects, choose the right type of mining and follow our recommendations — then the process of cryptocurrency mining will be both safe and successful.