Mining plays a vital role in the cryptocurrency sector. Allowing in particular to generate new coins, this activity makes the entire crypto ecosystem work. Here’s the basics about cryptocurrency mining.
Mining cryptos: what does it involve?
Cryptocurrency mining, also called cryptomining, refers to the process of validating transactions carried out on a blockchain. To do this, miners must solve cryptographic equations using computers with significant computing power. They then receive remuneration in the form of coins.
The miners compete with each other to find the solution. Whoever manages to solve the problem first validates the transactions and is paid with new units of the mined cryptoasset. Miners can form pools to pool the computing power of their computers. In this way, they increase their chances of solving problems that prove particularly complex. They then share the mining reward.
It is now possible to mine a large number of cryptocurrencies. Among the best known, we find, among others, Bitcoin (BTC), Bitcoin Gold (BTG), Dogecoin (DOGE), Ether (ETH), Litecoin (LTC), Monero (XMR) and ZCash ( ZEC).
How to do ?
Many people want to know how to mine crypto with the aim of profitability. There are several ways to do this. In particular, it is possible to mine Bitcoin or another crypto with your PC using specialized software. The more powerful the machine, the more the mining capacity increases. The chances that the miner will find the solution to the mathematical equation are then higher.
Another option is to join a mining farm. This is a space bringing together computers and servers dedicated to cryptocurrency mining. The immense computing power developed by mining farms helps miners increase their profitability.
Mining cryptoassets with an ASIC (Application Specific Integrated Circuit) is also possible. Concretely, miners can use a computer that has been designed to mine a specific crypto. This type of material is very efficient. However, it is expensive. In addition, it requires regular maintenance and can quickly become obsolete as new, ever more powerful machines are launched every year.
In addition, there is a new service that allows you to mine crypto without the need to purchase and install hardware: cloud mining. This solution is increasingly popular, especially among miners whose budget is limited. It involves renting the computing power of a cloud server. Cloud mining companies pay miners remuneration proportional to the profits obtained.
Is it accessible to everyone?
Cryptocurrency mining is in principle accessible to everyone. To do this, however, it is essential to have sufficient computing power. It also makes sense to mine collaboratively.
Before do cryptomining, it is also important to be aware of several elements. First of all, the return on this activity can be interesting in the short term. However, crypto mining becomes more and more difficult over time. Indeed, the more miners there are, the more complicated it is to find the transaction validation algorithm.
Furthermore, the various expenses linked to mining, such as the purchase and replacement of the computer equipment used, must be taken into account. These can be reduced by joining a mining pool. In this case, however, the gain will be lower. The more miners in the pool, the more the reward will be divided.
On the other hand, you should know that the cost of electricity induced by cryptocurrency mining tends to increase each year. The same goes for the environmental impact of this activity. For information, energy consumption linked to Bitcoin mining increased from 40 TWh per year in July 2019 to 140 TWh per year in March 2023.
