Mining is one of the key concepts for understanding the nature of cryptocurrencies and how they work. It is a complex process used for verifying crypto transactions and generating new units of a cryptocurrency.
A lot of people believe that understanding how mining works involves too much technical jargon and IT skills. This is a mistaken view, however, because getting to know what’s this all about is quite easy.
In this article, we will explain the basic principles behind crypto mining and what you need to know to start the mining business yourself.
Crypto Mining 101 — What it Takes to Mine
As you already guess, mining requires mining tools called miners, stable internet connection, and at least general knowledge of how cryptocurrencies work. You also need to be aware that each cryptocurrency is unique and cannot be mined simultaneously with another crypto coin, although it’s possible to mine several coins with one machine.
What we mean by this is that you have to set up your miner differently for every coin you intend to mine. You cannot produce two different coins with a single setup. On the other hand, you could set up your machine to mine several coins.
Last but not least, you need a good calculator that will tell you whether the mining business would be profitable for you. A good calculator takes into account the coin’s current value, the electrical power required for mining, your miner’s hasrate power, and other relevant factors.
What are Miners?
You might be wondering what exactly is a miner. It is either a computing machine specifically designed for mining specific coin(s) or a regular desktop computer. In some cases, it is even possible to use mobile devices as miners, although it’s not recommended.
Depending on the protocol and mining difficulty required by crypto coins, a miner might be composed of advanced and expensive parts (for Bitcoin mining, for example).
However, if you want to mine less known cryptocurrencies, those that have lower mining difficulty, or those that use a consensus protocol which doesn’t require large hashpower, then the ordinary desktop computer would suffice.
Antminer Z11 – one of the best and most effective miners in the world used for Bitcoin mining.
Solo vs. Mining Pools
Mining has already turned into big business. Despite the high volatility of the crypto market, mining brings millions to mining organizations and individuals with advanced mining tools.
That said, you have two options — join one of the organizations (called “mining pools”) or mine solo. The former means that you add your miner to a network and receive rewards according to the hashrate power that you contribute. The more advanced your miner is, the larger the share of the pie you get.
Once again, it is essential to conduct a throughout research about the crypto coin you wish to mine and calculate which option is more profitable. Don’t forget that you might be competing against mining farms. If this is the case, you literally stand no chance as a solo miner.
If you have more questions about mining, crypto transactions, and cryptocurrencies in general, we found a great resource for you. Check out the informative and easy to digest infographic that follows and you will find the answers.