What Does It Mean To Mine Cryptocurrencies?
There are two ways to acquire cryptocurrencies:
- Buy them
- Extract them
Before learning how to mine cryptocurrencies, keep the following information in mind.
What Is Cryptocurrency Mining?
Let’s start with the basics. Cryptocurrency mining is a process by which a person puts their assets at the service of the blockchain network in exchange for cryptocurrencies.
“Cryptocurrency mining” is a process in which miners use computing power ( hashing ), to process transactions and obtain rewards (cryptocurrencies), in other words, it is the process of recording blockchain transactions, in exchange for a reward, delivered in the same type of cryptocurrency that is mined.
In bitcoin (BTC) and Ethereum (Eth) blocks are mined and each block mined gives a variable amount of cryptocurrency to the miner. This is the simplest and most direct way to explain it, but let’s go into more detail.
How To Mine Cryptocurrencies?
Crypto mining is done by using powerful processors in complex computer equipment to perform a variety of computational calculations; miners are rewarded with new bitcoins and transaction fees.
Every cryptocurrency miner faces a mathematical problem every ten minutes and whoever is the fastest miner in the west to solve the problem will get one of the new coins that will be put into circulation.
The mathematical problem to be solved is based on random calculations, the purpose of which is to solve it by finding the solution and validating the new block of cryptocurrencies. By cracking it, they will be rewarded, once their answer to the problem is accepted by the other miners.
Since cryptocurrencies are a decentralized system, they require a validation process to verify the transactions performed and to prevent hackers from using the same amount of bitcoins multiple times or introducing fake cryptocurrencies onto the market.
Resources You Will Need For Mining
This process not only implies having a mining machine with large computing power but a stable electricity grid must be guaranteed.
Mining needs specific software for solving mathematical problems and a legal transaction verification that confirms that a block is a block. The miner‘s hardware must be fast to process math problems, verify transactions, and ultimately be able to receive rewards.
There are two ways to mine cryptocurrencies:
- the “cloud mining” process
- mining with your own hardware.
Mining: How The Cloud Mining Process Works
Now, to mine cryptocurrencies, you have to follow the steps outlined below.
Choosing A Mining Company
There are “ cloud mining ” or “mining” companies on the market that rent the hardware from you so that one person can do the mining process for you.
It is best to review the opinions and experiences of other investors in order to choose the best company.
Choose A Mining Package
Once you have solved the first step, choosing your mining company and registering with it, you need to select your mining package. These packages involve selecting a certain amount of energy along with the value to pay. Typically, paying a higher value will result in a higher return or quicker profit, hence the reason for choosing the best option.
Also, we advise you not to choose companies that sell you a contract on a “pre-sale” ( advance payment ) basis, as doing it this way will not guarantee that the contract will be profitable in the beginning and even more so when the date is not known. exactly where it will start.
How To Mine Cryptocurrencies: Choose A Mining Pool
On the other hand, mining is done in what is called pools, which are basically networks where miners come together, each contributing different potencies. This makes pools attractive to miners, because pools, compared to small teams, have a much higher capacity to solve blocks, because solving a “hash” is a task that requires a lot of mining power, measured in ” mh/s” or mega hash, and once solved the benefits are distributed to each of the miners in proportion to the power they have offered, which means that no matter how little you invest in equipment, you have relatively assured recurring benefits.
Select A Wallet
With this last step, your mining process has begun. So once your wallet fills up with Bitcoins, it’s the right time to withdraw them and deposit them in a more secure wallet.
Another possibility that mining companies give you is to invest in cryptocurrencies again; a decision that depends solely on what you have in mind.
Mining Cryptocurrencies With Your Own Hardware
You can mine with your own hardware, but for this, you must consider the following aspects of the process that will allow you to extract:
- Before spending any money it is important to use a cryptocurrency mining calculator to review costs.
- Prices vary and electricity costs can also vary in this process.
- Bitcoin mining is considered exorbitant.
- Mining with your own system is only recommended if electricity is plentiful and cheap.
- Your network connection must be strong for mining.
Today It Is Convenient To Under mine Cryptocurrencies
Currently, around 900 new bitcoins are mined every day. Each new block is mined approximately every 10 minutes. It is clear that the more powerful the hardware used, the faster the mining will be.
However, cryptocurrency mining has a major limitation: the high energy consumption, so you need at least a good computer and the ability to use cheap energy to make mining profitable.
How To Mine Bitcoin
If you are wondering how to mine bitcoins, here too you should know that you can do it in two ways: in the cloud or with your hardware. To do it through the cloud, simply choose a company and a mining package, then associate it with your wallet, so that the extracted bitcoins reach it. This is arguably the simplest process, and while the yield may be lower, it’s a great way to make a quick profit.
Cloud mining, however, is the process whereby anyone can start mining cryptocurrencies without owning the necessary hardware. All this happens through a remote and shared data processing center, located in what we call the cloud.
How To Mine Ethereum
Currently, after the recent Ethereum change (the Merge), when the merger between Ethereum 1.0 and 2.0 took place, the entire network already uses proof of participation to validate all transactions. This means that Ethereum mining is simply dead.
In short, mining bitcoin and other cryptocurrencies are profitable depending on the circumstances of the miner, due to the high price of the equipment and the energy cost it assumes, but if all these are not variables that interest the miner, all that all you have to do is set up your “rig” or mining equipment, have a digital wallet to store your rewards and join a mining pool.
How Much Does A Bitcoin Miner Cost?
The marginal cost of mining bitcoin was around $5,000, including both hardware cost and electricity consumption. However, the marginal cost of mining is growing significantly every year.
How to mine cryptocurrencies from smartphones?
One of the cryptocurrencies that can be mined with a smartphone is Electroneum. Simply download the application, create an account on the official Electroneum website and press the “Start mining” command within the application. We remind you that this is not real mining, but the application, instead of using the CPU of the smartphone to solve encryption problems, simulates the amount of CPU that could have been used for real mining. The speed of the mining, or hash rate, will depend on the CPU power of the phone.
Read Also: What Is Bitcoin?