This article discusses in detail about cryptocurrency mining, cryptocurrency mining rig, cryptocurrency mining software, and hardware, how mining work, main requirements for cryptocurrency mining, what is bitcoin mining, what are the main function of bitcoin mining, how to mine bitcoin, cryptocurrency mining impact on the environment, mining calculators and FAQ’s in the end
What is Cryptocurrency Mining?
Cryptocurrency mining is the method in which the verified transactions between the users are verified then added to the public ledger of the blockchain.
By this process of cryptocurrency mining, new coins are generated and then added to the circulating supply of that coin, for example by Bitcoin mining the newly produced Bitcoin will be added to the circulating supply of the Bitcoin network
The process of crypto mining makes cryptocurrencies unique and decentralized as there is no central authority controlling the mining process and everyone can contribute to the mining of the coins and produce new coins
One must know that all the cryptocurrencies do not rely on mining, the cryptocurrencies that are based on mining are known as Proof of Work coins and the cryptocurrencies that are not based on mining rather they rely on staking mechanism (cryptocurrency Staking) to verify their transactions are known as Proof of Stake coins
What is cryptocurrency mining? Source, Youtube: 365 Careers
What are Cryptocurrency Miners?
Fiat currencies are printed by the governments under very strict rules and policies, no one other than a state agency of any country is authorized to print its fiat currency, anyone else trying to print some fiat will find himself in prison
But in crypto, you can mine as much coin as you can. you need to have specific hardware and software for cryptocurrency mining to start doing the process.
Cryptocurrency miners are the one who uses application-specific integrated circuit (ASIC) hardware to run the mining algorithms with particular mining software like MultiMiner, EasyMiner, CGMiner to verify the blockchain transactions and then add those transactions to the blockchain public ledger and receive rewards in the form of newly created coin
Bitcoin miners will receive rewards in Bitcoins and Ehtereum miners will receive the reward in Ethereum and so on
How Cryptocurrency Mining Work
When a person send any cryptocurrency to the other user, the coins are sent safely and the transaction is recorded on the blockchain forever, this whole method works because of cryptocurrency mining
A miner is a node in the way that secures transactions and builds them in blocks. With every transaction received all network nodes checked for their validity. Later Miner nodes get those transactions from the storage pool and assemble them into the block
The first step in mining a block is to hash each transaction extracted from the storage pool individually.
After each transaction hashed, the hashes are organized in a Merkle tree that is formed by pairing the various transaction hashes
The root hash is then entered into the block header accompanying with the hash of the prior block and a random number called the nonce.
Then the block header is hashed and produces the outputs that are based on root hash, hash of the previous block, nonce and other parameters.
The resulting output is the block hash and assists as the identifier of the newly generated block.
To be regarded as a valid output, the block hash should be less than the certain target value, which is defined by the network protocol.
The target also realized as hashing difficulty is usually set by the protocol to guarantee that the price at which new blocks are produced prevails consistent and proportionate to the number of hashing power designated to the network.
Every moment new miners enter the network the competition rises, the hashing difficulty rises. The hashing difficulty drops when miners migrate from the network
If a valid hash is found, the founding node sends the block to the network. All other nodes check whether the hash is valid and in this case, add the block to their copy of the blockchain and continue mining the next block.
What Are The Main Requriment For Cryptocurrency Mining
The main requirements for the mining cryptocurrencies are
You need to have a cryptocurrency wallet where you can put your coins after mining, ever crypto coin has different wallets, wallets for bitcoin will be different from the wallet of Cardano because the coins are built on a different blockchain. Coin built on similar blockchain can have same wallets, for example, You can use Ethereum wallet for all ERC20 tokens that are built on Etehereum blockchain
Cryptocurrency Mining Rig
Mining has become a complex thing. Few years before people were able to mine with their computer processing units (CPU) or graphic cards (GPU) and were able to generate profits from mining, These days you can do the same from your PC’s but the profit is not guaranteed and to be honest, it is now almost impossible to get profits from PC mining, You need to have an application-specific integrated circuit (ASIC) as your cryptocurrency mining rig.
ASIC’s are specially built for mining purpose only, these machines can mine cryptocurrencies at a very fast rate and can give you profits in mining, but on the other hand, they consume a lot of electricity and need a cooling system for proper operation
Cryptocurrency Mining Software
The software required for crypto mining will surely change according to the hardware you are utilizing for mining. The software to mine any coin on CPU will no doubt be different from the software to mine any coin on GPU or ASIC
- For GPU Mining you can use EasyMiner. It also supports ASIC mining
- For CPU Mining you can use cpuminer
- For ASIC Mining you can use cgminer and MultiMiner
Cryptocurrency Mining Pool
Miners that only mine by themselves are sole miners, any reward earned by solo mining belong to that particular miner.
Nowadays mining any coin with only CPU or GPU is not worthy as mining has become more complex and advance, but you can earn some profits using ASIC hardware, or you can join a mining pool to increase your mining power
Mining pools are the pools where a group of miners is gathered and such pool gives you the ability to combine your mining power with the other members of the pool and this helps you to increase your hashing power and members get a bigger chance to win the block rewards. Any block rewards earned in a mining pool are then shared proportionally among the pool members
The other basic requirement for crypto mining is a 24/7 connected internet connection.
Cost of Electricity
Before starting any kind of mining you must fully calculate your cost of electricity. the ASIC rigs consume a lot of energy as they are working 24/7 to mine blocks, ASIC connection to the Blockchain must not be intercepted so they need a very consistent supply of electricity
Countries, where electricity is expensive mining cryptos, is not a good option because of the large number of electricity bills you will receive at the end of the month
Countries like Argentina where electricity is very cheap can be the best place to mine cryptocurrencies if governments of such countries allow you to mine cryptos
Read also: What is Bitcoin and How Does it Work
if you are using ASIC as your mining rigs you need to have some kind of cooling system to cool down these ASICs. As these mining rigs are running all day and night, they not only utilize a lot of energy but also generate a large amount of heat, it is very much essential to keep cooling your machines by any cooling method you adopt for them so that they can keep mining for you
What is Bitcoin Mining
In cryptocurrency mining the most favorite cryptocurrency to mine is Bitcoin and the process by which new bitcoins are produced by solving complex mathematical problems with the help of bitcoin mining hardware like ASIC run by bitcoin mining software like CGMiner, MultiMiner is known as bitcoin mining.
What are the Functions of Bitcoin Mining?
There are different functions of bitcoin mining, some of them are
- With mining bitcoins, new bitcoins are issued, In traditional currencies Governments and Bank issues and print currencies but in the world of digital currencies, new coins are generated by mining or staking. The miners are rewarded with new bitcoins they generate every ten minutes. The reward issuance rate is permanently set in the Bitcoin mining system code so no miner can cheat it to earn extra rewards. Miner user ASIC devices to mine Bitcoin by solving the complex computational mathematical problems to produce new bitcoins
- With the Bitcoin mining process, Bitcoin miners confirm the transaction in the bitcoin blockchain. When any transaction is included in the block, only then that transaction is supposed to be perfect and secure. That is because when the transaction is included in the block only then it is added to the bitcoin blockchain otherwise the transaction is considered incomplete. The more the confirmations for any payment the more secure and reliable the transaction is
- In bitcoin mining, miners also secure the bitcoin network, by making it difficult for the hackers to attack, they also don’t let the exchange of transactions between the senders and receivers to stop or change. The only way by which any bitcoin transaction can be changed is by having network hah power of more than 51%. but as in the bitcoin network, hash power is shared among many different miners from different regions of the world making it almost impossible for the hackers to gain access to 51% of the hash power. This mechanism makes the bitcoin network secure and non-vulnerable to hackers
How to Mine Bitcoin
Bitcoin mining is a very broad topic, mining of bitcoin is getting difficult day by day, its not easy and nor convenient for any person to just start bitcoin mining. There are big mining firms like BitMain, F2Pool, and others that have taken almost control of bitcoin mining. However, the main steps in bitcoin mining are
- You need to have bitcoin mining hardware commonly known as the application-specific integrated circuit (ASIC). The best in the industry are Bitman Antminer S9, Dragonmint T16, Avalon6, AvalonMiner 741 and many more
- Then to run that hardware you need to have Bitcoin mining software that will run this hardware just like windows run your PC. The best Bitcoin mining software areCGMiner, MultiMiner, BFGMiner, BitMinter, Miner-Server, EasyMiner, Awesome Miner and many more
- You need to connect to some of the mining pools that because mining pools are pools where a group of miners is gathered and such pool gives you the ability to combine your mining power with the other members of the pool and this helps you to increase your hashing power and members get a bigger chance to win the block rewards. Some of the mining pools are Poolin, F2pool, BTC.com, Antpool, ViaBTC, 1THash&58coin, Slush. BTC.top
- You need to have a Bitcoin wallet so that after mining your bitcoin you can transfer your newly produced bitcoin to your wallet. the best bitcoin wallet in the form of exchanges are Coinbase and Binance exchange. Best for safety is Trezor and Ledger Nano S. Best for Desktop is Electrum and best online is blockchain.com
- You need to have 24/7 Internet connection
- You need to have some kind of fully functioning cooling system
- You need to have a proper supply of electricity
Cryptocurrency Mining Impact on Environment
Cryptocurrencies mining harms the environment. There is a calculation that cryptocurrency mining can create 5-13 million tons of global carbon discharges.
The cryptocurrency mined produce four-time CO2 emissions as compared to the amount of energy generated by energy sources in Canada
A report by Coinshares Research Institute show that 81.4% of cryptocurrency mining plants are using electricity that is being made from renewable resources while the remaining 19.6% get their electricity from nuclear plants and fossils
The large scale miners are located in Iceland, Georgia, New York, Northern Scandinavia and Pacific Northwest, the locations that largely use renewable energy
The cryptocurrency mining produced nearly as much CO2 as 1 million cars in the identical time
According to de Vries, a single Bitcoin when mined absorbs a similar quantity of electricity required to provide a UK house for 63 days, 781,455 Visa transactions, or 62,765 minutes of video streaming at Youtube.
Cryptocurrency Mining Calculators
Before starting mining you need to calculate your profits, your profits will depend upon the hash rate you are getting from your mining hardware, the fees you are charged from your mining pool and the cost of electricity you will pay in the form of bills. Many calculators will help you to calculate your mining earning. some of them are
List Of Best Cryptocurrencies to Mine
There are endless cryptos that you can mine, But here is the List Of best Cryptocurrencies to Mine
- Bitcoin Cash
- Bitcoin SV
- Ethereum Classic
- Bitcoin Gold
- Sia Coin
Frequently Asked Questions
What Is The Main Purpose of Cryptocurrency Mining?
The main purpose of the cryptocurrency mining is to produce new coins and add them to the circulating supply of that coin, to keep the coin blockchain network consistently working by validating transactions and avoiding the network from hacks and getting stagnant
Is Cryptocurrency Mining Legal in your country?
Before starting any kind of mining process, make sure that do your government allow you mine cryptocurrency. The rules of mining vary from government to government. Some countries will allow you to mine while others will not. You need to double-check your countries laws before starting mining to avoid penalties
Is Cryptocurrency Mining Profitable?
The profitability of mining will depend upon what kind of hardware you are using for mining, what kind of hash rate you are getting, the fees of the mining pool you have joined, the cost of electricity in your country and the price of the coin you are mining, to be profitable in mining you need to have multiple mining rigs and you should mine more than one cryptocurrency
How to Mine Bitcoin on Andriod and iOS?
There are apps on android and iOS that will let you mine bitcoin on your mobiles but what do you think you are going to make, a penny or little more than that in one year because the hardware of mobile is of no match in front of the specially designed ASICs machines specifically built for mining. So truly do not even think of mining bitcoin with your mobile phones, it’s of no worth at all
Can I Mine Bitcoin on My Laptop or PC?
The positive answer to this question is that you can mine bitcoin on your laptop or Pc but the negative and true answer is that mining bitcoin on your laptop or PC will earn you nothing. You cannot compete with ASICs mining hardware with the hardware of your PC or laptop. So do not waste your efforts on mining bitcoin with your PC and Laptop