Mining - what is it in simple words

In the last year, the world saw a boom in the extraction of bitcoins and other popular cryptocurrencies. Video cards sold out instantly, despite the increase in prices. All this is associated with a sharp increase in the cost and popularity of cryptocurrencies, especially bitcoin. As a result, many comers began to earn virtual money. I will tell you what mining is, its types and features, I will give useful tips.

Description in simple words

Mining (from the English "mining") - the creation of cryptocurrency according to a special algorithm. The computer creates a block confirming the validity of payment transactions (a chain of transactions forms a blockchain). A reward is paid to the user for the found block, which depends on the type of currency extracted.

How to mine cryptocurrency

There are several ways to mine crypto money at home - for example, pooling, mining alone, renting mining capacities from individual organizations.

If you decide to engage in mining yourself, using only your equipment, you will have to:

1. Get some expensive graphics cards.
2. Buy a farm (PC) with a modern cooling system, a motherboard with many slots to
3. Install video cards (minimum RAM - 4 GB).
4. Provide high speed and uninterrupted internet.
5. Install a mining program that is designed to mine the selected currency.

Mining Types

There are three of the most common methods for mining crypto money - pools, solo and cloud mining.

Pools

Mining pools - servers for the extraction of coins, distributing a hash (tasks of calculating blocks) between the capacities of network users that are connected separately.

If at the very beginning of the emergence of cryptocurrencies, an ordinary computer with average indicators could cope with mining, today pools are one of the few options that can really make money. An alternative is the acquisition and maintenance of expensive equipment.

All network participants send a personal equipment power pool to solve the cryptographic block. For this they get earned coins. The user will receive his fair share in any case, even in a situation where the capacity of his equipment is insignificant.

Pool Advantages:

• The absence of fraudulent risks (no one has the ability to influence the withdrawal of funds from the pool or stop it, unlike cloud mining);
• No need to buy expensive equipment and spend money on electricity;
• Proportional and guaranteed distribution of profits depending on the size of the contribution of each user.

There are several criteria by which mining pools differ - functionality, mined cryptocurrency, withdrawal fee, payment method, capacity requirements, etc.

Solo mining

It is carried out only on the equipment that is at the disposal of the user. The powers of other miners are not used. If the equipment is weak, it is recommended to join the pool.

The advantage is that there is no need to share the received coins with other users, the disadvantage is the long search for the block. In addition, there is high competition in the world of cryptocurrencies, as a result of which it will no longer be possible to find a block of crypto money such as ether or bitcoin.

For straw mining, you should choose a simple coin with a low capitalization. You will also need to download the wallet from the official website of the cryptocurrency developer.

Cloud mining

Cloud mining is the acquisition of a certain amount of capacity in an organization that has the opportunity for solo mining. She buys powerful equipment and hands over parts of its capacity to users.

Pros:

• No need to spend money on acquiring your own equipment and electricity.
• It is not necessary to have technical knowledge on mining.
• There is no need to control the operation of devices.
• Typically, entry costs start at $ 10, but there are offers from $ 1.

Minuses:

• Most of the "companies" on the Internet of cloud mining are scammers. They close the project immediately after they receive the necessary profit from gullible users.
• The duration of the contract with the organization does not exceed 24 months, so it is impossible to predict the profit and payback of the undertaking.
• The user will not have equipment that he could sell and get extra money.

What is a miner?

There are two interpretations of this word.

1. A miner is a person who is mining. Some users have turned the process into a profession. Officially, it does not exist, however, many people got rich, and continue to earn income through mining.
2. Miner is a special program that allows you to earn money. She solves certain mathematical problems. And for each correct decision, he receives a reward (a coin of the selected cryptocurrency). All cryptocurrency transfers are recorded in the general transaction log transmitted to the miners. The program selects one hash from all existing combinations, which will fit the secret key and transactions. When the math problem is solved, the transaction block is closed, after which another problem is solved.

How much mining can bring

Earning a day with straw mining depends on several factors:

• Electricity costs (sometimes they can reduce or nullify income).
• Equipment power (the number of video cards that are involved in the process).
• The exchange rate.
• The relevance of the chosen cryptocurrency (if it is very popular, then it begins to be mined all over the world, which reduces production and complicates mathematical problems).

If you choose cloud mining, then the profit depends on two factors:

• The amount invested in the project.
• Duration of stay in the network of the selected company.

If you are lucky, you can return the costs and make a profit.

As for the pools, the power of individual user equipment affects the amount of earnings.

Helpful information

• If you decide to install a standalone wallet on your PC, and not use the online service, be sure to copy the wallet. Dat file to a USB flash drive, then print and put the paper in a safe place. If the computer suddenly crashes and all files on it are erased, then without wallet.dat you will never be able to access your wallet again. All earned will disappear.
• Before mining, study alternative ways to get cryptocurrency - for example, buying coins on the exchange instead of directly mining them.
• Keep track of new cryptocurrencies regularly, study their prospects. Perhaps by acquiring a few cheap coins at the start of the activity, you can get rich in the future.

So, mining is a risky way to make a profit, but with constant market research and some luck, you can make good money.

Watch the video: Bitcoin and cryptocurrency mining explained (November 2024).