Mining is one of the toughest jobs there is – and potentially one of the most lucrative. Our planet contains valuable geological resources, like gold and silver, and petroleum. Even things like salt and clay can be mined and sold.
Cryptocurrency is another valuable resource you can “mine.” You don’t have to dig a hole to extract Bitcoin or other digital coins from the earth; instead, you receive it as a reward for doing some accounting. You might even be one of the early adopters who’s already made a fortune mining Bitcoin.
It’s never too late to start, of course. But even if you’re not interested in joining the mining community, or going through its crypto betting sites, this is something everyone holding crypto should know the basics about. So let’s start digging.
What Is Crypto Mining?
There are no axes, saws or picks when you’re mining cryptocurrency; all you’re doing is validating crypto transactions on the public ledger, aka the “blockchain,” for the digital coin in question. As you validate transactions, new coins are generated as your reward.
You also don’t need any pens or pencils to do this accounting. Everything happens with computers, which run algorithms that produce encryption tools called “hashes” to identify and validate said transactions. The more computing power you have, the more hashes you can churn out, and the more crypto you’ll earn.
What Is the Blockchain?
If you’re already having trouble wrapping your head around crypto mining, it might help you to have a better understanding of the blockchain itself. The reason crypto works is that all transactions, including the creation of digital coins, are recorded on a public ledger. This ledger is a massive computer file that contains a certain number of data blocks, which is why it’s called a blockchain.
Each block in this chain contains a certain amount of crypto. In the case of Bitcoin, the first viable digital coin and easily the most successful, that amount is 3.125 bitcoins – using the lowercase form of the word to refer to specific denominations, and the uppercase “Bitcoin” to refer to the currency in general.
Every time a crypto miner completes verifying a block’s worth of transactions, the amount of crypto assigned to that block is put in circulation and given to the miner in question. So, if you happen to be a Bitcoin miner, you’re receiving 3.125 bitcoins (BTC) per block, which is worth nearly US$218,000 as we go to press.
How Do I Mine Crypto?
In theory, you can do it yourself with a program on your home computer. However, this was a lot easier to do 10 years ago than it is today. Bitcoin, for example, is designed so that it gets harder and harder to generate new coins, which means you need more and more processing power at your fingertips.
There are two ways around this: Spend a zillion dollars on a giant bank of computers, or take what processing power you’ve got and pool it with other miners. Ideally, you’ll purchase some hardware with application-specific integrated circuits (ASICs) that are designed for this purpose. Then you’ll download a software program like CGMiner or BFGMiner and start going to town.
Should I Mine Crypto?
That’s a question you’ll have to figure out for yourself.
It takes an increasingly large amount of power to mine crypto – and with Bitcoin, the reward gets halved roughly every four years, with an ultimate cap of 21 million BTC to be generated. So far, the price of Bitcoin has more than doubled with each halving, but eventually that won’t be the case.
To answer this question, do a cost-benefit analysis for your specific situation, and also take a moment to consider the environmental impacts of crypto mining. Then you can make an informed choice on how to proceed. Best of luck with your endeavors in either case, and stay tuned to Bookmakers Review for more crypto news and analysis.
