The Complete Crypto Mining Singapore Guide 2022
This Crypto Mining Singapore Guide covers all you need to know about mining digital currencies in Singapore. We discuss Bitcoin mining, what you need to mine crypto, how long it takes, and much more.
At the end of this guide, you will know how to mine Bitcoins and other cryptocurrencies efficiently in Singapore. This is crucial as while mining appears appealing to most newbies because it doesn’t require much effort there are potential problems to know about. For one, mining can cost you more than you earn with it if you don’t understand how it works in-depth.
To ensure our guide was exhaustive we used all the various types of digital currency mines for an extended period and mined differing cryptocurrencies from all the major blockchains.
Asides from our first-hand experience in Bitcoin mining and other cryptocurrencies, we also got the opinions of top crypto experts to ensure that the guide is completely reliable and comprehensive.
What is Cryptocurrency Mining?
Cryptocurrency mining is the process that proof-of-work (PoW) cryptocurrencies like Bitcoin and Ethereum use to generate new coins and verify new cryptocurrency transactions. The process involves a vast decentralized network of computers around the globe that secure and verifies blockchains (the virtual ledgers that record or document crypto transactions). In exchange for their processing power contribution, computers on the network earn cryptocurrency as a reward.
It’s a cyclical process: crypto miners secure and maintain the blockchain and the network rewards them with coins. So the coins offer an incentive for cryptocurrency miners to maintain the blockchain.
Why is Crypto Mining Important?
Asides from releasing new coins into circulation, mining is the core of many cryptocurrencies’ security. Mining secures and verifies the blockchain which enables cryptocurrencies to work as a peer-to-peer decentralized network without requiring third-party oversight.
Is Cryptocurrency Mining Legal in Singapore?
Before we get into how to mine crypto, let’s find out if mining crypto is legal.
Currently, no legislation in the Republic of Singapore particularly relates to mining digital currency although the process is not illegal.
So yes you can mine Bitcoin and other cryptocurrencies in Singapore but the practicality of the process for individuals in the country is questionable. The cost of space and energy for mining digital currencies is very high in comparison to neighbouring countries. This has contributed to the decrease in mining digital assets over time.
Aside from the cost of mining, cryptocurrency miners in Singapore have to pay taxes on all deliberate profits derived from the process. The IRAS mentioned that profits streaming from operations that trade or mine digital assets for financial gain are subject to tax. How much is dependent on The Income Tax Act which states a 17% tax rate on net profit.
How does Cryptocurrency Mining Work?
In the next section, we’ll give a practical example of how mining works for Ethereum and Bitcoin. But before that let’s get a general understanding of how mining works.
Years ago, anybody with an average personal computer could mine cryptocurrencies. However, as the blockchain grew the computational power required to maintain it rose significantly. For example, in 2019 mining Bitcoin needed 12 trillion times more computing power for a single coin than in its early days when the first blocks were mined in 2009.
This means that individual Bitcoin mining isn’t as profitable as it used to be. These days, Bitcoin mining is done primarily by companies and groups that combine their respective resources.
To mine crypto, these companies or groups use specialized computers to perform calculations needed to verify and record new crypto transactions, as well as, ensure that the blockchain is secure. Verifying the blockchain demands a huge amount of computing power which is contributed by miners most times voluntarily.
Coin mining is just like running an enterprise-level data centre. Organizations buy mining hardware and pay for the energy needed to keep the tools running and cool. For the process to be profitable the value of the rewarded coins have to be more than the cost of the entire mining process.
To earn the reward every computer on the blockchain races to be the first to discover a hash (in the case of mining bitcoins this is a 64-bit hexadecimal number). The quicker a computer on the network can generate guesses the higher the probability of the miner earning a reward.
The winner’s computer then updates the blockchain ledger using all newly verified transactions. This adds a new verified block that contains all those transactions to the blockchain. It is then given a pre-determined amount of cryptocurrency (newly minted coins). This typically happens every 10 minutes on average.
The reward received varies per cryptocurrency. For example, as of 2020, the reward for mining Bitcoins was 6.25 BTC. However, it is expected to be reduced by half in 2024 and 4 years after. This means that as it becomes harder to mine bitcoins, for example, the reward keeps decreasing until no more coins remain to be mined.
Types of Cryptocurrency Mining
There are various methods of coin mining and each one demands different amounts of time.
In the early days of Bitcoin mining, for instance, CPU mining was the first choice for most miners. But today, many crypto enthusiasts find CPU mining redundant and impractical as it can take months to get even an inconsequential amount in profit. This is primarily due to high cooling, electrical costs and amplified hashing difficulty.
GPU (Graphics Processing Unit) Mining
This coin mining method maximizes computational power by combining a set of GPUs in one mining rig. In this mining method, a cooling system and motherboard are needed for the rig.
ASIC (Application-Specific Integrated Circuit)
Unlike GPU, the ASIC devices are specifically built for mining cryptocurrencies. This results in the method producing more crypto than GPU. Each ASIC device is tailored to mine a particular algorithm. So you have to get the right ASIC device for the specific crypto algorithm. But they are one of the least cost-efficient methods for individuals and are mostly used by large organizations.
Because of the ever-rising expenses associated with ASIC and GPU mining, miners are opting for cloud mining. This mining method enables individual miners to leverage the perks of dedicated cryptocurrency mining facilities and the power of major organizations. On the web, there is both free and paid cloud mining and you can rent a mining rig for some time. Some examples of cloud mining companies include Genesis Mining, Hashflare, and BitClub Network.
Requirements to Mine Cryptocurrency (Bitcoin Example)
So far we’ve covered what cryptocurrency mining is, why it is important, and how it works. Now let’s discuss how to mine crypto (using Bitcoin as an example) and the requirements of the process.
Requirement 1 - Mining Hardware
To mine, you need particular tools for the operation. In the case of Bitcoin, this would involve getting mining hardware. Years back, crypto miners could still use personal computers to hash blocks. Currently, though because of the competitive Bitcoin space you will have to use ASIC miners. These are special devices built just for mining Bitcoin.
Requirement 2 - Bitcoin Wallet
After mining, you’ll receive rewards in Bitcoin, so you’ll need to have a Bitcoin wallet where you can store your coins.
The wallet will have an address, typically a sequence of numbers and alphabets. You’ll also get a private key which is just like a password to access your Bitcoin.
Requirement 3 - Join a Mining Pool
A mining pool is a group of Bitcoin miners working together to generate more Bitcoins. Typically, you join a group of people already mining Bitcoin and add hashing power to boost the overall output so that the result of your mining project is a lot more effective than it would be if you’re running it yourself. This is because mining pools offer more chances to succeed.
Requirement 4 - Mining Program
As you begin to mine crypto, you would need to keep track of every transaction, and to do so you need a mining program that can run on your computer so you can monitor and control your mining rig.
Which Cryptocurrency is Best for Mining?
According to a recent report by Traders of Crypto; Verge, and Dogecoin are the most profitable cryptocurrencies to mine. However, it is recommended that you do your own due diligence in research to find the best option that suits your budget and available tools before investing in any investment product.
Miners earn a profit if the cost of the crypto received surpasses the cost associated with mining it (electricity, cooling, mining rigs, etc).
That said, let’s look at the numbers of the top-listed cryptocurrencies.
People who mine Verge previously termed as DogeCoinDark will get an estimated USD 13.97 daily as stated in the report. Verge is a privacy-focused cryptocurrency that seeks to provide hidden or private transactions by obscuring their geolocations and IP addresses.
This popular meme coin has a relationship history with Tesla CEO, Elon Musk, on Twitter. Miners can expect to get USD 12.86 in profit per day based on the report.
Dash is listed as one of the least profitable cryptos to mine. Miners are estimated to earn just USD 0.18 per day. The cryptocurrency aims to be an improved version of Bitcoin by offering improved privacy and quicker transactions.
Miners generated a daily profit of USD 1.15 daily when mining PeerCoin which placed it as the second least profitable cryptocurrency to mine. PeerCoin is the first coin to mix proof of stake and proof of work algorithms in response to the high energy consumption of other cryptocurrencies.
Ethereum classic which offers the stage functions as Ethereum was reported to be the 3rd least profitable coin to mine as miners earned $3.14 a day mining it.
Every crypto enthusiast knows how difficult it is to mine digital currencies. The process is time and resource-consuming. But with the right approach and tools, it can be simplified. For example, using a CPU to mine Bitcoins isn’t as effective as an ASIC device. So just follow the tips listed in this article for an effective mining process in Singapore.
Our extensive analysis of the Singaporean Crypto Space doesn’t stop here. You can also check out our full list of Crypto Guides for Singaporeans.
Most frequent questions and answers
Previously, cryptocurrencies were taxable in Singapore under the Good and Services Tax or GST for income received by businesses. But the act was stopped when the Inland Revenue Authority of Singapore (the body responsible for tax collection in the country) reviewed the goods and services tax requirements for cryptocurrencies or Digital Payment Tokens.
The Inland Revenue Authority groups Ethereum, Bitcoin, and decentralized cryptocurrencies as Digital Payment Tokens. Stablecoins like USDT denominated in fiat currency or that have a pegged value can however have the GST applied. This exemption is to prevent the possibility of citizens using stablecoins to “escape” a taxable transaction.
Individuals and organizations that buy and profit from the rise of the value of their cryptocurrency holdings in Singapore don’t have to pay tax on sales as Singapore does not have a Capital Gains Tax. However, if you get profit from trading digital assets consistently through the course of regular business activity then it is taxable.
Ether is transitioning into a proof of stake consensus mechanism which will make mining onsite obsolete.
Currently, Monero is the easiest cryptocurrency to mine because you can do so through browser extensions and free software on websites. You can even mine the cryptocurrency through Crypto Jacking. That is incorporating a mining code into websites and apps to facilitate mining.
The average time for mining 1 Bitcoin is about 10 minutes for powerful or industrial-sized machines. However, for individual miners, the average timeframe is 30 days.
Typically, mining pools charge their members anywhere from 1% to 3% as pool fees.
The best mine pool is dependent on the fees charged and overall output power.
Bitcoin mining on your own can be expensive as it requires pricey hardware. But with a mining pool, you can earn decent profits. Joining a mining pool increases the possibility of earning a reward because the mining difficulty increases with every coin awarded. Thus, unless you have a state-of-the-art ASIC miner, you should join a Bitcoin mining pool.
Yes, you can mine bitcoin cash efficiently using an ASIC device.
Skrumble.com provides all its content for informational purposes only, and this should not be taken as financial advice to buy, trade or sell cryptocurrency or use any specific exchange. Please do not use this website as investment advice, financial advice or legal advice, and each individual’s needs may vary from that of the author. This post includes affiliate links with our partners who may compensate us.