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EducationalJuly 22, 2021

What Is Cryptocurrency Mining?

Shubham Goyal
Product Specialist
July 22, 2021

In cryptocurrency, all transactions done are documented in a public ledger and later stored in the blockchain. This is to ensure that chains of record are created by linking completed transactions to the subsequent ones through the use of crypto hashes.

While recording all completed transactions on the public ledger, a cryptographic code must be computed to ensure that it is not easily hacked. This code must be hard to decipher but easy to verify. In the process of trying to solve these codes, a network of computers must compete. This process is known as cryptocurrency mining.

How to Mine Cryptocurrency?

Over the years, cryptocurrency has gained prominence that now interests investors and tech experts. There are different options to explore before mining crypto. For someone who wants to consider mining or desire to make money through cryptocurrency, there are factors to be careful to prevent risks. Do you own a computer that has a graphic processing unit? Then cryptocurrency mining is something you should consider if you want to know how to mine cryptocurrency, these are few ways you can go about it.

• Fast computers (GPU computers)

Like it was mentioned earlier, crypto mining is a process where a network of computers competes to solve difficult equations and get them stored in the blockchain then they get rewarded afterward. Most computers can be used for mining but not all computers can earn you more profit. So, it is important that your computers must process very fast.

One of the best ways you can mine cryptocurrency is through the use of Graphics Processing Unit (GPU) computers. Modern computers have both the CPU and GPU. This method remains the most popularly accepted way of mining cryptocurrency.

What does your computer have to do to mine? Your computer needs to perform a special task (math equations) which will serve as a “Proof of Work” this is to ensure transparency and fairness among the other miners. This is necessary before you can get even a bit of cryptocurrency.

Your GPU computer will mine cryptocurrency by making use of GPU cards. A crypto rig is achieved through a processor, motherboard, and a few graphic cards about 3 to 8 cards. GPU is used by professionals and is also suitable for beginners because it is faster and more profitable.

Application-Specific Integrated Circuits (ASIC) mining

If you are wondering if there is a particular system built towards the responsibility of mining cryptocurrency; ASIC is one. It is specially developed towards mining cryptocurrency and unlike GPU and CPU; it produces a large amount of cryptocurrency.

However, ASIC involves taking risks and there are uncertainties about it because any sudden update of the system can render it outdated. Although ASIC is very powerful and without doubt the most treasured. However, because of its speed and high profitability, it has denied other miners that are making use of GPU and CPU access to earn.

Cloud Mining

This is another option you should consider if you want to mine cryptocurrency and the best thing about it is that you don’t have to stress yourself. All you just have to do is pay a certain agreed sum of money to a corporation then they offer you their mining rig and the processes of mining.

You get to receive the earnings however the corporation will charge the electricity and maintenance costs.

CPU mining

CPU is the brain of the computer mines cryptocurrency through the use of processors. You can get to do this personally on your computers. However, it is slow and there is less profit. It is also not advisable to make use of a Laptop in order to prevent it from overheating.

Although you may not have to spend a dime when making use of the CPU mining, however, the profits are low and mining is slow.

How Much a Miner Earns

The amount of profit you make depends on the number of cryptocurrencies you rig. For instance, in 2009 after a miner succeeds in rigging a block Bitcoin offer the miner 50 BTC, in 2020, it dropped to 6.25 BTC. At an hourly rate, Bitcoin earns $4.06 million by mining Bitcoin.

When it comes to earnings, crypto miners are earning big through mining. Before a miner can mine a coin, it will take an estimate of 10 minutes and also a large amount of power within that period. If you are planning to try your hand on the new cryptocurrencies or Bitcoin and Ethereum, bear in mind that they earn differently.

For instance, Ethereum miners earn reasonable profits despite the transaction fees that will be charged. In other cryptocurrencies, you can earn $140 per day by mining cryptocurrency. If you are making use of cloud mining to mine cryptocurrency, you can earn as low as $70 per day.

What Do You Need For Mining Crypto?

As aforementioned, if you are planning on mining crypto in the comfort of your home, it is easy. However, there are few things you need to consider before you can mine cryptocurrency

A computer

A fast computer is basically all you need to start mining crypto. It doesn’t matter if you are going to make use of Cloud Mining, GPU mining, or CPU mining; you definitely need a computer. The CPU is the brain of the computer most useful if you want to do it all by yourself without spending a dime.

Modern computers always come along with the graphic processing unit (GPU) and this will be used to mine cryptocurrency.

• Electricity

This is a factor that shouldn’t be ignored.

Coin Mining Pools

There is no doubt that crypto mining is a profitable business and for someone who is considering crypto mining, there are two options. You can either choose to start mining on your own and you can also decide to work with other groups of miners known as the mining pool.

The major benefit of the mining pool is that you don’t have to bear the stress alone and you don’t have to depend solely on your resources. There is enhanced processing which makes the rate of output higher and faster than you would if you are doing it alone.

Through mining pools, different miners join their resources (computers) which as a result will increase their operations and output. However, the rewards earned will be shared among the pool members compared to the reward you will get when mining alone. In order to determine how the rewards are shared based on the contributions, each computer makes towards mining. So, if your work doesn’t contribute to the mining of the blocks, then you won’t be rewarded.

The mining pool coordinates the works of every pool member.

Risk of Cryptocurrency Mining

There are risks involved in cryptocurrency mining that you need to be mindful of. If you are not making use of the right channel to mine crypto, then there are bound to be risks. With large numbers of people venturing into crypto mining, crypto mining is becoming more cumbersome. The computer needs maximum power and that’s where risks set in.

Security:

Crypto mining is likely to pose a threat to security. There are cases where people have compromised the public internet because they want to increase the power of their computers. In this case, it can be infected with a virus that can cause delay or destroy the public network (Wi-Fi). Crypto-jacking is becoming rampant these days and it has hampered security.

Makes your information vulnerable:

It makes your computer vulnerable which makes it easily accessible by cybercriminals to exploit. Your data and your privacy are prone to be at risk.

TAKEAWAYS

• Do not make use of public-provided networks (Wi-Fi). This will help prevent security risks that are injurious to your data and privacy

• When you are not using a secured network, make use of the virtual private network (VPN)

• If you want to start mining crypto and you want to minimize the cost, then you should try CPU mining. If you are willing to take risks then go for ASIC mining.

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