What is mining?

Have you ever heard of crypto-currency mining? It is a method of creating new units of crypto-currency. The COVID-19 pandemic has triggered a lot of interest in the crypto-currency industry, especially in mining. This article focuses on crypto-currency mining, the equipment needed, and the types of mining.

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First of all, cryptocurrencies are not controlled by any institution or group of people. Mining is about providing a service to the network of said currency in exchange for a reward. In the simplest cases, the service consists of checking the validity of a set of transactions. Each time a group of transactions is validated, it constitutes what is called a block. If this block meets the specific criteria of the blockchain, it is then added to the chain formed by the previous blocks, and the “miner” who calculated this block is rewarded for his work. During mining, computers solve mathematical problems and make complex calculations with many, many iterations in order to find a random code that gives a result that meets certain mathematical and statistical requirements. Thus, the user with the highest computing power will find the most hashes and receive a reward, for example in bitcoin. The mathematical difficulty of the problem is continuously adjusted by the protocol in such a way that the hash can be found approximately every 10 minutes. In addition, the bitcoin white paper assumes that mining is limited to 21 million coins. The bitcoin reward is halved every four years. This means that the reward for miners decreases. This forces miners to be very careful with their energy expenditure, which naturally pushes them towards green energy in faraway places.

Moreover, with the development and improvement of technical devices, a wide range of new mining tools has become available. The type of mining equipment depends on the hardware and software used. Mining is widely spread on central processing units (CPUs), graphics processing units (GPUs) and application specific integrated circuits (ASICs). The method of mining depends on the algorithms of the crypto-currency you want to mine. For example, if you want to mine bitcoin or litecoin, it is better and more cost-effective to use ASICs; GPU mining is more suitable for Ethereum or Monero.

In the early years of crypto-currency, it was enough to use a conventional central processor in your PC for mining. Today, the situation has changed and CPU-based mining is not considered by miners due to its low profitability. In other words, a CPU is barely sufficient to achieve serious rewards, but it is quite suitable for mining some altcoins. In 2010, GPU mining became available with the launch of the appropriate software. As the graphics processor of a video card is made up of hundreds of graphics cores, the process of mining on video cards has become more efficient and brings results far beyond the processing power. It allows for increased rewards for confirming transactions through the number of devices used. As a result, racks of video cards, which are connected to the motherboard by risers, have become widespread. ASIC equipment for crypto-currency mining is manufactured in the form of a chip that has sufficient power for crypto-currency mining. It is important to note that such devices as ASICs consume a lot of electricity.

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If you have any difficulties with the operation of the website, our short video help guides will answer all your questions.

Valentina BEREZA, Team bit4you

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BIT4YOU.io

BIT4YOU.io

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bit4you is an european crypto exchange platform. We are facilitating the transition between crypto currencies and traditional currencies such as euro.