Mining (from the mining – development of subsoil) is the process of processing transactions in the system of digital currencies, in which records of current crypto transactions (blocks) are added to information about past transactions (blockchain). This happens when the miner closes the block. To do this, he uses powerful equipment to carry out special calculations for solving mathematical problems. In case of a successful solution, the block is closed, and the miner receives a reward in cryptocurrency. Thanks to mining, the entire operation of the network is ensured: confirmation of transactions, protection against the introduction of false information and duplication of transactions, protection against attacks, ensuring the decentralization of the network.
To understand how cryptocurrencies are mined, you first need to understand what a mining algorithm is. As you know, each digital currency is created using a specific encryption algorithm. It is it that the mining equipment decrypts, ensuring the processing of transactions on the network and bringing the miner a reward.
Anyone who wants to make money on mining can either do it on their own on their own equipment, or join a mining pool.
This is when multiple miners combine their hardware capacities to increase the likelihood of finding a block.
This will require powerful hardware, including:
It should be noted that some types of mining do not require special equipment. It:
Before mining cryptocurrency, you need to study the relevant regulations in your jurisdiction. In some countries, mining is completely prohibited (Egypt, India), like cryptocurrencies in general. More advanced rule-of-law states have been in a hurry for a long time and have created a regulatory framework for the crypto industry, or even tax / tariff incentives that any mining farm in the country can receive.
However, in most states, including Ukraine, the legal status of cryptocurrencies is still not defined. In this case, a novice miner should weigh what are the prospects for mining certain digital coins and how quickly the investment will pay off. But it is also worth remembering about the legal risks, because governments are actively working to create regulation of the crypto market.
Among the recent trends in the development of mining, experts point out the following:
We promise only interesting articles! We don't like spam ourselves :)