Presently, the “cryptocurrency mining” (fr. minage de cryptomonnaie) topic is a hot one and attracts scrupulous attention from a plethora of crypto enthusiasts and investors alike. Nonetheless, people should have adequate proficiency in cryptocurrencies, cryptomining, blockchain transactions in order to keep up with current trends and be competent when it comes to digital transformation and financial freedom. The following brief article is devoted to illumination of such nagging issues as “what is mining?”, “how does mining work?” and “cloud mining review.”
Fundamentally, it is logical to begin the analysis with what is mining? Cryptocurrency mining (such cryptos as Bitcoin, Litecoin, Ethereum, etc.) refers to the process of creating new cryptocurrencies by solving complex cryptographic equations, validating data blocks and adding the transactions via blockchain. The ultimate outcome of this process is that the coin miners receive their reward (share) for crypto mining and, as a result, securing the network. As such, the procedure is termed as “mining” because it allows new coins into free circulation (digital emission). The main purpose of cryptocurrency mining is to generate and release new coins into its coinomy. To make certain that only verified miners can validate blockchain transactions, there are sophisticated computer algorithms that allow cryptocurrencies to function and secures the ecosystem from any cyber-attacks.
Popular Consensus Algorithms
- Proof-of-Work (PoW)
- Proof-of-Stake (PoS)
- Proof-of-Activity (PoA)
The main principle of the PoW blockchain protocol is that it is difficult to find a solution, but it is straightforward to check the outcome. However, for the PoS consensus, the network trusts the validator who pledges his/her own resources to create new blocks: the bigger the share, the higher the probability of block creation and transaction validation. The last consensus algorithm, PoA, is a symbiosis of PoW and PoS, meaning that the blockchain participants can mine or stake a share to validate the blocks via the ledger.
How to Get Bitcoins?
So, how to get Bitcoins? Bitcoin mining requires speedy computational capacities to solve cryptographic puzzles, therefore the faster the BTC mining machine, the more the person will mine and make profit in the end result. The evolutions of mining machines (or rigs) can be demonstrated as follows:
For BTC mining, CPU and GPU are not used anymore, considering the fact that the computational speed of these devices is insufficient to solve complex computational tasks. In turn, CPU and GPU can be used as alternatives for mining other cryptocurrencies that have a rather low hashrate. Sometimes, as an alternate to desktop mining, mobile mining can be applied as well for certain cryptocurrencies. Nowadays, for effective Bitcoin mining, ASIC (Application Specific Integrated Circuit) hardware is used. However, in order to make profit (and not losses), a person has to buy a number of such ASIC rigs and cover electricity expenses. The main reasons why solo BTC mining (mining on your own) is to a large extent an overly expensive affair are outlined below:
- Sky-high utility bills.
- High cost of ASIC miners.
- Mining hardware gets obsolete very fast because the BTC network difficulty increases with the BTC price.
- The problem of premises. The person has to rent or own a particular building for storing and running ASIC rigs.
- Air ventilation and cooling systems to prevent overheat issues.
- The miner must pour it on while maintaining both hardware and software 24/7.
- Some countries like PRC (China) have banned all cryptocurrency related operations, including cryptocurrency mining. The legal status of crypto mining may pose significant hindrances.
One of the best solutions to get newly mined Bitcoins is by using BTC cloud mining services offered by reputable companies (websites). The main principle of BTC cloud mining is that a person buys a contract for BTC cloud mining by renting hashrate capacities produced by crypto mining hardware stored in large mining data centers. Let us exemplify BTC cloud mining services as in the case with Hashing24.
The Hashing 24 website offers its registered clients the following contract plans: 12, 18 and 24-months tariff plans. A person selects the preferred hashpower (measured in TH per second), selects the contract duration, makes the payment and that is all. The mining starts automatically and the user can withdraw BTC mining revenue anytime he/she deems it is necessary. All minted BTC coins are new and it can be easily checked via a Blockchain Explorer. The company has been in BTC cloud mining business for nearly 10 years and its major hashrate supplier is Bitcoin mining leader Bitfury.
Conclusively, we have elaborated on the topics of cryptocurrency mining, how does mining work and gave a brief cloud mining review drawing on the example of the hashing24.com site. But you should always keep in mind that cryptocurrencies are volatile and may lead to both profits and losses. Always carry out in-depth research before investing in cryptocurrency, crypto mining or any other crypto-related activity.