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How does crypto mining works?


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Crypto mining is a process of getting cryptocurrency while using machinery that ensures that blockchain data is in check. It involves work done by the computer to solve complicated mathematical problems with cryptographic functions. 

To understand mining better, we need to understand what blockchain means. Blockchain stores the transactions and acts as a decentralized ledger. It does not tend to change. 

Cryptocurrency records the transactions in private ledgers. People use these transactions to find the value when hashed with the ledger. It produces a set number of 0’s at the start of the hash value. Miner gets the award when the correct value satisfies the blockchain. The reward is crypto coins.

Let’s take a look at how mining works and what methods are used.

Mining computers

Most of the computers are capable of mining. But, they are not efficient enough. Mining requires lots of electricity, and in areas where electricity cost is high, mining can be detrimental and can cause loss. It is also worth noting that fast computers make the most money.

GPU Mining

Miners use gaming GPUs to mine at an efficient rate. These GPUs provide higher efficiency and can get the miner huge profit amid high electricity costs. Powerful GPU tends to generate results quickly. Modern GPUs, like NVIDIA GeForce GTX 1070 is the most popular mining GPU. 

A GPU is more powerful than a CPU and does massive calculations. That makes it a perfect candidate to mine Etherium and other currencies such as Ravencoin. 

ASIC Computers

Amid the rise in popularity of mining, specialized computers are prepared for the sole purpose of mining. ASIC (application-specific integrated circuit) computers only mine one type of cryptocurrency. For instance, the computer used for mining bitcoin can only mine bitcoin and would not mine Latium. 

Due to the strengthening of bitcoin, people bought hundreds of them to start mining farms. 

ASIC computers are useless for any other reason than mining and carry more risk than GPU. Many crypto coins, including Etherium, prevent ASIC to mine as it centralizes the mining power.

ASIC is used to mine Litecoins, another popular cryptocurrency in the realms of digital currencies. 

Mining pools

Mining of crypto requires the necessary equipments to mine a block. Individuals often join mining pools to combine power and split earning. The Crypto community discourages the mining pool as they centralize the power than decentralizing it. 

Final Thoughts

Mining can be a risky business. You can purchase all the equipment and go through all the effort. Still, you may get no returns. It is primarily because the nature of mining is similar to that of a lottery.

The investor should also analyze the situation in the country as the practise is banned in some places. Where it may still be legal, high electricity costs usually discourage the investor. One should always calculate the amount of risk before starting to mine. 

It is also worth noting that crypto mining is a multi-billion dollar industry, and it is continuing to grow that has interested firms to invest, so it should not be overlooked yet.


1) How does Crypto mining work?

2) What is crypto mining?

3) How you can mine crypto?

4) Guide to crypto mining