Cryptocurrency Mining: Explained

ADVERTISEMENT

Ever given a thought to how cryptocurrencies actually come to exist? How does one actually get them onto a server? How does one actually introduce them into the network for community users to buy, sell and trade? The heavy energy and resource consuming process which is required to obtain these cryptocurrencies is called mining, which is why we say that one has to ‘mine’ their cryptocurrencies.

When it comes to cryptocurrencies, there is no central body to issue new notes or mint new coins. A cryptocurrency exchange has no such system of single point of authority.

 

Blockchain and Cryptocurrency mining

The technology of Blockchain supports virtually every cryptocurrency on the digital world. It is a decentralized shared ledger of each and every transaction that ever takes place on the network. The genesis block is the first block to record the first transaction made over the network. As and when newer transactions take place, they get permanently logged onto newer ‘blocks’ which are then chronologically added in a linear fashion onto the pre existing chain of blocks thus forming an ever growing chain of blocks called the blockchain.

In order to create a new block with all its legitimacy intact, a cryptographic hash is included. To arrive at a hash matching the right criteria, all one needs to do is calculate as many hashes as possible and then wait until one hits a match. Upon hitting the right hash, new blocks are formed and the reward of this computational process is given in the form of the cryptocurrency involved to the miner who founded this block.

In even simpler terms, mining is just the process to produce or create cryptocurrencies. The computer processing power enables mining, which is basically a record keeping service. A network of nodes on a distributed network race to solve a heavy mathematical puzzle using the trial and error method. The first computer to successfully solve the puzzle is known to “mine” the cryptocurrency. Higher is the computing power contributed from your side, larger is your reward.

 

Obtaining mining hardware and power supply

One first needs to decide on what hardware equipment they wish to use to mine their cryptocurrency. All these mining equipments are very expensive and one needs to make a sound intelligent decision before making a purchase. Always opt for a machine with higher hash power and efficiency. Usually, a machine with higher hash power is more costly. To keep a track of your expenditure and evaluate your returns, one could make use of the Bitcoin Mining Profit Calculator. AvalonMiner 741, AntMiner S9, AntMiner S7 are a few of the most popular, cost effective and reliable miners available on the market which can be easily bought from online shopping sites such as Amazon. In addition to this, one also needs to find a power supply compatible with their choice of miner.

 

Mining software and Mining Pool

A cryptocurrency miner would not mint out hard coins for you. You need to integrate it with a mining software to help you mine your digital currency. EasyMiner has a very user friendly graphical user interface (GUI) and can be used by almost everyone with little to no technical knowledge. It is very user intuitive. If one wishes to use a terminal based mining software, CGMiner and BFGMiner are two very good options.

Since mining requires a lot of energy, it is a costly process. It is always recommended to mine cryptocurrencies on a large scale. Not just this, undergoing the mining process individually, one needs to spend a lot of hours simply waiting for the block of transactions to pull through and then getting their virtual currency as a reward. To overcome this excess expenditure of time, services like mining pools are available. In a mining pool, all the participating members pool together their computing power to save time. Every time a transaction pulls through on the network, all participating members of the pool receive a reward. Of course, the fraction of reward received depends upon how much computing power one contributed in the shared network.

 

Obtain a Bitcoin wallet and start mining

Before one actually starts mining, one requires a place to hold their coins. Several web based wallets and mobile applications based wallets are available to choose from to secure your digital currency. Airbitz, Blockchain, Freewallet, Jaxx, My Celium Wallet, Coinbase, Circle, Blockchain, Strongcoin, Xapo are a few of the most widely used wallets. Miners can explore all these options and choose one that best fits their requirements. Once you have everything in place, follow simple instructions inside the users manual of your miner and start mining!

ADVERTISEMENT

11 comments

  1. […] Mining a particular cryptocurrency also depends on a number of variable factors such as hashrate, power consumption, mining output, etc hence it is always preferred to have optimal conditions set up for the mining equipment. One must not assume that installing mining equipment and starting of mining is the end of the game, a constant maintenance is also required along with it. Otherwise, the efficiency of the process keeps deteriorating. […]

  2. […] Cryptocurrency mining is nothing but a process of helping the cryptocurrency Blockchain platform to sustain as well as improve by offering a certain amount of computational power of the processors. it must be understood that cryptocurrency mining results in the rewards in the form of new cryptocurrency tokens but specifically in this case of Cardano mining there is no outcome of new cryptocurrency tokens as all the ADA tokens were pre-mined during its inception self. The concept of mining was initiated from the process of Gold mining, hence the people have gained a false notion that mining always results in the evolution of new coins, but technically, this is not the case.   […]

Leave a reply

Please enter your comment!
Please enter your name here