A quick check on the cryptocurrency milestones reveals that one of the most notable is the rising interest among people to take part in mining digital currency. The enthusiasm among the masses has prompted several manufacturers of hardware and software to come up with systems that are specific for mining cryptocurrency. Asus, AMD and Nvidia are on the list of the companies that have stumped their feet in the fray.
The talk on cryptocurrency is virtually everywhere. But those cryptocoins wouldn’t be that much in circulation, and the blockchain would not be of such value if not for the efforts of the miners.
How Does Digital Currency Mining Work?
Mining cryptocurrency refers to the process of generating new units of the digital coins as well as validating the transactions that are undertaken in the network.
In a bid to own cryptocoins, you might want to buy them from someone else. A typical example is the purchase of Bitcoins using Localbitcoins. Or you can sell goods to someone and demand for payment in the form of crypto-coins. And thirdly, you can opt to do mining and get rewarded for your contribution to keeping the network running. The latter is no doubt the reason why many miners are in the business. At the end of the day, they have the Bitcoins, Litecoins, Ether, Dogecoin or any of the hundreds of the cryptocurrencies currently in circulation, just like the person who buys them. The good news is that you can be a miner. Read on to find out how.
But Mining Digital Currency Is Not A Walk in The Park:
The whole process of mining cryptocurrency is not as simple as ‘verifying the blockchain transactions’ sounds. It involves solving complicated mathematical problems that are otherwise referred to as cryptographic hashing algorithms. The Blockchain is a public ledger that outlines all the transactions that have taken place on a certain cryptocurrency network. The Blockchain is a series of blocks. And a block is composed of certain cryptographic info. For you to mine successfully, you have to take into account all the results of the preceding calculations on the network. Each block has a difficulty level, and this varies so that new coins are generated at a constant rate. In the case of Bitcoins, a block solution is generated every 10 minutes whereas, For Ethereum, it is an average of 16 seconds.
For example, if you are looking to generate a new Bitcoin, you have to find a certain solution. When you finally get it right, a new Bitcoin is added into circulation. As a miner, you are also tasked with overseeing the transactions that the users are running on the network. The transaction fee is then paid to you, the verifier. You are supposed to ensure they are legitimate, and your certification is also visible by the other miners in the network. This ensures that only valid transactions are carried out, no currency is double spent, and ultimately, the currency retains its value.
What You Need for Mining Cryptocurrency
Everything comes with a price. And for a miner, it is no different. These mathematical calculations that a miner has to make need a
significant input. There are specific hardware and software that are suited for the mining task. The kind of equipment you use depends on which coins you are dealing with. Mining of Crytponight can well be done on computer processing units (CPUs) whereas Ethereum and Zcash are mined on Graphical Processing Units (GPUs).
Bitcoins mining was traditionally done using CPUs and GPUs. Later, Field Programmable Gate Array, FPGA came into the picture. FPGA brought along efficiency and thus lower electricity costs although it is not as fast as GPUs. Currently, Application Specific Integrated Circuit, ASICs, have stolen the show. The ASICs are dedicated chips which are only meant for a certain function, for example, mining Bitcoins. The ASICs offer a high Hashing power as well as lower consumption of electricity compared to the previous technologies.
Cloud Mining Now Stealing the Show
The expenses of buying and running the mining hardware and software can be quite high. And sometimes the fluctuations in the cryptocurrency market values can slap you with low returns. Miners currently work in mining pools. In the pools, everyone gives their contribution, and the payment of any successful mining is distributed among the members based on their input of Hash power. Pool mining formed the basis for cloud mining which has now been embraced by many.
The types of cloud mining are hosted mining, leased Hash power and virtual hosted mining. The most popular of the three is leased hash power. When you lease hashing power, you don’t need a miner. All you have to do is buy the contract and wait for your payouts.
Cloud Mining versus Traditional Mining
With cloud mining, you can expect higher profits because you don’t run everything. In the case of leased Hash power, you don’t have to own any of the mining equipment. When you don’t have the equipment with you, the secondary benefits are also tagged along. You will not have to pay any maintenance costs. What is more, mining gets harder as more miners join the party and a number of people owning miners often contemplate selling them. With cloud mining, this plus the technicalities of configuring the systems are lifted off your shoulders.
Cloud mining also accommodates even those who know very little about the whole process. It has opened the profitable business of mining digital currency to the whole world. This is unlike the traditional mining which was only friendly to people who were ready to dedicate their mind and soul to crypto currency mining.
If you have done solo mining and you switched to cloud mining, you cannot help appreciating the serenity that will immediately engulf your home. The sound and heat that emanates from the mining process literally turn a home into a mini industry – something many people loathe.
If you are looking to take part in cloud mining, Genesis mining is a renowned company that offers you the opportunity. Having started its operations in 2013, today Genesis mining is the largest mining company world over. It offers contracts for Bitcoin mining as well as Altcoins.This article was written by: