Crypto 101: Cryptocurrency Mining

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Step 1 — A New Transaction Occurs

Step 2 — The Waiting Transaction Enters the Mempool

Step 3 — The Miners Propose a New Block

Step 4 — Miners Must Solve a Puzzle to Add Their Block to the Blockchain

Source: Kingpassive
Bitcoin reward per block after each halving. Source:
Source: Zipmex
  • ASIC Mining (Solo): Application-specific integrated circuits (ASIC) are single-purpose computers. Some ASIC mining rigs are solely dedicated to cryptocurrency mining. New ASIC devices can quickly make older designs unprofitable. Furthermore, ASIC-resistant cryptocurrencies cannot be mined with ASIC miners.
  • GPU Mining (Solo): Their traditional role in a computer is to process visuals and display them on a screen. GPU mining allows users to mine cryptocurrencies with more widely available hardware, such as regular laptop computers. Even though some cryptocurrencies can still be mined using GPUs, their efficiency is determined by the mining difficulty and algorithm.
  • CPU Mining (Solo): The central processing unit (CPU) is the fundamental component that powers computers. CPU mining allows you to mine cryptocurrency using your computer’s idle power. Bitcoin was initially mined using a CPU, but due to power limits, CPUs are no longer the most effective for cryptocurrency mining.
  • Mining Pools: A mining pool is a group of miners that band together to pool their computational power (hashing power or hash rate). As their chances of discovering additional blocks increase, they can earn more together and split the rewards. Many miners join mining pools to achieve a more consistent and predictable result.
  • Cloud Mining: Cloud mining platforms charge consumers a monthly or annual subscription to rent their internal mining hardware resources. In exchange for a fee, the cloud platform will perform mining activities on a blockchain network on your behalf. Any earnings earned from mining are distributed to you. The higher the charge, the more hash power you can rent; consequently, your rewards should be more significant. This choice, however, is dangerous because there is no guarantee that you will reap the benefits of your investment. Many of these services have even been exposed as scams.
Whattomine is a website that can help miners to choose the best cryptocurrency to mine based on the miner’s computational power. Source: Whattomine

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