The popularity of cryptocurrency has not been a surprise for a long time. The news is full of information about currency surges, and the emergence of new coins that take off and allow earning fabulous amounts of money. Also, mining becomes more trendy, although the process itself is not new. And while some people think that investing in cryptocurrency is risky, others learned how to mine it and increase their income without leaving home. Probably you heard about bitcoin mining hosting service and how the digital money mining process works. If not, then we offer you a short guide that will help you understand exactly what mining is and why it is popular.
What is Cryptocurrency and What are its Features?
Let’s start with the definition of cryptocurrency and its specifics. So, cryptocurrency acts as ordinary money, that is, you can buy something for it and sell it at the same time. This currency can’t be cashed, and it is suitable for purchases only on the Internet. In fact, it is a substitute for conventional money. Digital money is used in the online environment.
Among the main features of cryptocurrency are:
- it doesn’t lend itself to inflation,
- anonymity when using cryptocurrency is guaranteed, as it is completely non-traceable,
- the decentralized nature of cryptocurrency means the stability of the whole system,
- impossibility to cancel the transfer,
- complete safety in storage and use.
What is Cryptocurrency Mining?
Now we can talk about cryptocurrency mining in more detail. Mining is the process of getting digital money. But it is not compared to the emission, because in mining there are certain functions and tasks for the performer. Most cryptocurrencies are decentralized. It means that all transactions in the network are not processed by any one central authority.
To motivate users to spend their time and computer power to process transactions – the system creates and accrues remuneration to the miner in the form of cryptocurrency or its part for a certain number of processed transactions.
But it’s not as simple as it seems at first sight. Most cryptocurrencies are based on blockchain technology, which means that each transaction contains information about all previous transactions in the network since the creation of the digital currency. Therefore, the complexity of processing cryptocurrency transactions is constantly increasing, and only one miner who first processed the transaction receives the reward. Therefore, there is great competition here.
Thus, mining is not speculation and a game, but a serious job that requires certain knowledge. It is an investment that can bring both profit and loss.
Cryptocurrency Mining Types
CPU mining. CPU mining was popular at the dawn of the first cryptocurrencies. Nowadays, CPU power is not enough to process the transaction data. This type is considered only for new cryptocurrencies on the market and doesn’t have a long transaction history.
GPU mining. It is a common type of mining because it involves the high speed of the whole process. For such mining will be effective full discrete video cards, not integrated into the processor video chips on laptops. Any currency can be mined on a video card, but some are better suited because they have a more GPU-friendly algorithm.
ASIC mining. As mining became an industrial-scale business, there was a need for specialized equipment for mining cryptocurrencies. ASIC is a chip that is customized to calculate a specific algorithm for mining a specific cryptocurrency. Technically, an ASIC miner consists of a board, a memory block, connectors for external devices, a cooling system, and a case. Unlike GPU processors, ASIC mining is more productive and uses less power. It is perfect for bitcoin mining.
The return on investment in ASIC equipment depends on many factors. Yes, you need to consider the equipment speed, the adequacy and proper tuning, the complexity of mining and the dynamics of the prices of a particular cryptocurrency.
Cloud mining. Mining has always been a business with a certain uncertainty because the rapid fall of the cryptocurrency rate can cross out all the business plans. This problem gives rise to cloud mining, where large industrial miners rent some of their equipment online to small miners with the help of special programs. Some investors have even started to set up large farms in favorable locations for this purpose.
Browser-based mining. With browser mining, you open a specific page on the Internet to mine cryptocurrencies, for which you get paid. This is very convenient, simple, and doesn’t require you to have any additional knowledge or investment. However, since the PC you connect to usually lacks the necessary power, the service charges an additional fee. It makes browser-based mining interesting only for beginners who have no idea about cryptocurrency mining but want to try this business.
How to Mine Crypto?
Mining bitcoin and other currencies are quite a profitable business. And the process itself will depend on the mining type. The basic steps are the following:
- choice of currency,
- selection and purchase of equipment,
- get a crypto wallet,
- join a pool.
Conclusion: Is Cryptocurrency Mining Worth It?
Cryptocurrency is highly popular, so you can earn both by buying it and mining it. The mining process itself is great for enthusiasts because you can make good money with this hobby. But in order to succeed, you need to choose the appropriate cryptocurrency and mining type. Keep in mind that solo mining is not profitable enough, and the best solution is to join mining pools. These are communities of enthusiasts from all over the world who connect devices so that mining is efficient and fast. As a result, they get together and work as a big firm. The rewards are shared among all the participants.
And remember, it’s up to you: if you have the desire and the money to invest, then mining will be a new experience for you.