Today, cryptocurrencies are on everyone’s lips. The concept of cryptocurrency, which exploded the Internet community, gave birth to a new industry in making money – cryptocurrency mining. Every day the number of miners is steadily growing, and mining cryptocurrencies is becoming harder and more labor-intensive! Some time ago, you could mine at home on just a home PC and earn a decent amount of bitcoins, then now for mining cryptocurrencies you need special and expensive equipment.
So what is mining? Let’s turn, for starters, to Wikipedia:
“Mining – also mining (from engl. mining – mining) – the activity of creating new structures (usually we are talking about new blocks in the blockchain) to ensure the functioning of cryptocurrency platforms. The creation of another structural unit is usually remunerated through new (issued) cryptocurrency units and/or commissions. Typically, mining is reduced to a series of calculations with a search of parameters to find a hash with specified properties. Different cryptocurrencies use different calculation models, but they are always time-consuming enough to find an acceptable variant and fast enough to verify the solution found. Such calculations are used by cryptocurrency algorithms to provide protection against repeated spending of the same units, and the reward encourages people to spend their computing power and keep the networks running.”
In simple terms, mining is about earning cryptocurrencies through the power of equipment (whether a personal computer or specialized mining farms). It is not always important and interesting for a beginner to know the “insides” of mining, it is important for him to understand how much he can earn with certain equipment. Or how much he can earn by buying certain equipment. In any case, the average miner usually does not get to the bottom of what is going on during mining.
The “explosive” growth of bitcoin has spawned a whole wave of miners who want to make money from such a phenomenon as cryptocurrencies. Initially, cryptocurrencies were treated very skeptically, but they were able to prove their consistency, independence from external regulators (banks, states) and demand from large investors. The success of bitcoin led to the emergence of more and more new cryptocurrencies with new encryption algorithms. Among other options for mining cryptocurrencies (foraging and ICO), mining is the most accessible to the average user, requiring less time investment (bought a mining farm, launched and mined).
Mining and cryptocurrencies
On the one hand, cryptocurrencies gave rise to such an activity as mining. On the other hand, the issuance of new bitcoins is impossible without mining – new bitcoins are rewarded to the person who generated the next block. That is, during mining, new blocks are generated in the blockchain, each of which is rewarded. It is sometimes quite difficult for a newcomer to understand all the intricacies of mining, but knowing the basics helps understand the meaning of mining and the algorithm of cryptocurrency accrual.
The probability of obtaining a reward by a single miner for a certain period of time is equal to the ratio of the power of his equipment to the total power of the network involved in mining. That is, when mining from a personal computer or laptop alone, the likelihood of getting any reward even for a long period of time is very, very low. In order to increase the chances of receiving rewards, miners join together in pools. In a pool, each miner looks for his or her own solutions for generating cryptocurrencies, without crossing with other participants in the pool. That is, such operations occur in parallel and cover more data. In terms of cryptocurrency systems, the pool looks like a very powerful single miner. Remuneration is distributed among the pool participants depending on the efficiency of spent resources. Payments to the miner are calculated based on the standard variants (blocks with hash that would fit if the difficulty parameter was now equal to one) sent by him to the pool. It takes an average number of standard variants equal to the current difficulty to find a block.
The dangers of mining
The increase in the number of miners and the complexity of finding blocks by tens of thousands of times has made mining bitcoin on ordinary personal computers unprofitable. Of course, there are other cryptocurrencies that are less popular, not as expensive and less in demand. Maybe it is still more or less profitable to mine them on ordinary PCs. For major cryptocurrencies, the power of a home PC is simply not enough and eventually the electricity bills will take away any desire to mine. In such cases, it is necessary to buy specialized mining farms, which have enough power to pay back the electricity, equipment and bring profit. Modern mining farms are compact in size, make little noise, and consume the minimum amount of power needed.
Fraudsters were not immune to cryptocurrencies either. Since it is virtually impossible to steal cryptocurrency, they went the other way – they began to create hidden mining programs that were installed on many personal computers with viruses and used the power of computers to mine cryptocurrency. The major antivirus software companies regularly fight such viruses.
Mining on video cards and Asics
Special processors called ASICs (colloquially, asics) have been created for Bitcoin and a number of other coins. But some cryptocurrencies, especially the popular one like Ethereum (colloquially, ether), are more efficiently mined using video cards. This has prompted major video card manufacturers to release lines of hardware for mining. Therefore, before you start mining, you need to decide on the currency (study the demand, the price, graphs of price fluctuations) and only then choose the equipment.