Crypto mining requires the setup of a computer hardware network of high cost which is known as Mining Rig. Mining Rig is used to mine bitcoins and other cryptocurrencies.
Anyone with fast Mining Rig can mine cryptocurrencies from a computer or laptop at home. It does require some technical knowledge to configure and manage such a complex setup; especially if you are working alone.
Decentralized cryptocurrencies were brought into existence as alternatives to the centralized banking system for fast, anonymous, and secure transactions.
Let’s find out about,
- What is crypto mining and how does it work?
- Can you mine cryptocurrencies using a laptop or mobile?
- Is it profitable to mine cryptocurrency nowadays?
What is Crypto Mining?
Crypto mining is the process of generating new crypto coins & validating each crypto transaction on the blockchain network and later adding it to the distributed ledger called “Blockchain”.
Crypto mining prevents the ‘double spending’ (copy) of digital currency on a distributed network. That means there is only one legitimate digital currency which can be spent only once in the network.
And this biggest feature makes crypto more attractive to everyone.
Unlike the real world, fake notes are in circulation and cost a huge loss to the economy.
Every block in the blockchain contains real-time transaction data which can’t be manipulated (or changed) by anyone (stores permanent data).
A single block can contain hundreds of transactions.
Blockchain is a list of verified transactions. Every 10 minutes a new block is directly tied to the previous block and forms a chain.
Only validated miners are allowed to update the transaction in a distributed ledger to maintain the security of the network.
Basically, the role of the crypto miners is to secure the blockchain network and as a reward, they get crypto coins and transaction fees.
Sound easy. Not really!!
How does Crypto Mining work?
To maintain the security of the blockchain network, it’s important to validate the miner and for that Proof of Work consensus protocol has been designed.
A miner has to give proof that they have put enough time and energy to guess the random number correctly and are worthy of receiving a reward from the network.
To become a valid miner or to generate reward from the network; the miner has to solve a complex mathematical equation. This process involves guessing of random number known as Hash.
This guesswork is performed by a highly complex computer system set up by the Miner.
The process of guessing the Hash is known as proof of work.
The computers have to guess the 61-digit correct hash number to win the race from competitors. For that computer has to do multiple guesses as quickly as possible. And it requires an immense amount of computing power to be able to do that.
Once the computer guesses the right number; it identifies the pending transactions and groups them into the block. Then this block is sent to all the miners available in the network to validate.
Once the block gets validated by all the miners; the winning computer (miner) gets a chance to update the transaction in the distributed ledger on the blockchain. That’s how it becomes a validated miner.
The difficulty level of the equation increases as the number of miners increases in the network. More the miners, it becomes more difficult for computers to guess the Hash.
Hardware Requirement of Crypto Mining
When Bitcoin was newly introduced by Satoshi Nakamoto; there were only a few miners in the network. They used to use home computers to mine Bitcoins due to low competition.
But as soon as Bitcoin reached its popularity, more miners joined the network and they started using GPU (graphics processing unit).
What is GPU (Graphics Processing Unit)?
GPU is quite popular amongst gamers due to its speedy data processing ability.
It’s a special hardware component added to the computer to increase the processing power.
People started using GPU to solve complex mathematical equations in less time.
As per the experts, the mining power of 1 GPU is equal to 30 CPUs.
What is ASIC (Application Specific Integrated Circuit)?
After the crypto revolution, many new miners joined the network. Worldwide people had started taking an interest in this new digital currency.
Big companies came into the business of mining crypto and they brought new powerful mining tools.
The sole purpose of this hardware ASIC (Application Specific Integrated Circuit) component is to mine cryptos.
With time Mining pools came into existence.
What are Crypto Mining Pools?
Mining pools are a group of people with the same interest who comes together to form a pool.
For new miners, it’s difficult to compete against professional old miners. In such a scenario, people come together and form a pool to compete efficiently against more powerful miners.
They combine their mining power to increase the possibility to generate coins as a reward from the network. In the case of winning, a reward gets distributed amongst all the members of the group.
Can I mine Bitcoin, Ethereum & Other Cryptos from a laptop or mobile?
As per the reports, there are only 21 million bitcoins in the network, and out of the 19 million bitcoins have already been mined.
Bitcoin’s mysterious founder Satoshi Nakamoto embedded a fixed supply of BTC coins into the network’s code to control inflation.
Due to the limited supply and some other set protocols by its founder; it’s not that easy to mine bitcoin.
But you can give it a shot.
If you can set up all the necessary equipment required to successfully mine cryptos; you can surely mine Bitcoin, Ethereum, and other crypto.
There are still 2 million bitcoins out there. Experts say, till 2140 all the bitcoins will get minted.
Ethereum does not have an issuance limit yet and it can be minted via laptop. You only need a GPU to start minting Ethers.
Other cryptos like altcoins can also be mined using mobile Apps.
Is Crypto Mining Profitable?
Given the difficulty level, equipment cost, and electricity required; it’s not easy to mine cryptos profitably.
Cost of Crypto Mining includes –
- Cost of hardware equipment such as Mining Rig
- Cost of Equipments required to support Mining Rig such as electric wires, ventilations, etc
- Power consumption charges (electricity)
- Mining pool charges (if you are in any)
This is the reason most people preferred to buying crypto’s from crypto exchange platforms instead of putting efforts in mining.
To earn money from crypto mining, you also have to invest a lot of money. And one single wrong move can make you end up with paying more than you earned.
Crypro Mining FAQ
Can we use android phone to mine Cryptos?
Yes, crypto can be mined on android phones but it’s not recommended. Crypto mining puts immense amount of pressure which can permanently destroy the hardware of the phone.
What is Proof of Work?
Proof of work is the process of guessing correct 61 digit random number (known as Hash) by a miner on blockchain network.
What is the best crypto mining App?
Bitcoin Miner is the most popular app to mine cryptocurrencies.
What are the best crypto exchange platforms?
WazirX, CoinDCX, and CoinSwitch Kuber are the best crypto exchange platforms in India.
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