What is a mining coin?
Mining coin is the use of miner power to solve the complex algorithms of a coin. During the mining process, the miners simultaneously confirm transactions on the blockchain system and create a new block (block) to be added to the blockchain.
For instance, on Bitcoin’s blockchain system, miners will confirm the sent/received transaction information between users. Including the information: the number of BTC, time to send, receive, address of each transaction,…
After users validate to complete the task, this information will be included in a block. When that block is full, a new block is created.
Meanwhile, new coins are generated to reward miners for their work in securing the network. As distributed ledgers lack a centralized authority, the mining process is important for validating transactions. Then miners are incentivized to secure the network by participating in the transaction validation process that raises their high chances of winning newly minted coins.
To ensure that only verified crypto miners can mine and verify transactions, a proof-of-work (PoW)consensus protocol has been implemented. PoW also protects the network against any external threats or attacks.
Crypto mining is somewhat similar to mining precious metals. While miners of precious metals will discover gold, silver, or diamonds, crypto miners will trigger the release of new coins into circulation. For miners to be rewarded with new coins, they need to deploy machines that solve complex mathematical equations in the form of cryptographic hashes. A hash is a shortened digital signature of a piece of data. Hashes are generated to secure data transferred on a public network. Miners compete with their peers to zero in on a hash value generated by a crypto coin transaction, and the first miner to crack the code gets to add the block to the ledger and receive the reward.
Each block uses a hash function to refer to the previous block, forming an unbroken chain of blocks that leads back to the first block. For this reason, peers on the network can easily verify whether certain blocks are valid and whether the miners who validated each block properly solved the hash to receive the reward.
Over time, as miners deploy more advanced machines to solve PoW, the difficulty of equations on the network increases. At the same time, competition among miners rises, increasing the scarcity of cryptocurrency as a result.
Different types of mining coins
Free mining coins by smartphone
This is a very easy form of mining, you just need a phone connected to Wifi to earn coins. Cryptocurrencies that can be mined by phone are popular ones like BTC, ETH, LTC.
It is interesting that the applications are mostly games with time, so users can both mine to earn and entertain these games. However, users can earn not much money.
Mining with a miner
This is the most popular form, known by a lot of people through online articles. Keywords about miners, “buffalo plow”, even there are a few large and small FUDs in Crypto, … are also derived from mining with miners.
This can be seen as a job making real money, but requires a large amount of capital, as well as will be more or less affected by the government. Typically, China banned BTC mining, leading miners to desert the country for another one.
Use Cloud Mining services
Cloud mining is a hands-off way of earning cryptocurrency by renting computing power from third-party sources.
In this activity, there will be two parties:
- Mining service provider: They will either provide the miner or sell the hashrate remotely to the buyer. Some parties are providing this service: Minergate, Hashing 24, Hashflare and Genesis Mining.
- Service users (investors): They are investors who pay money to remotely rent/buy these miners / hashrate. And they will receive the corresponding coin share under the contract.
Use CPU mining
Moreover, there are different types of mining cryptocurrencies that require different amounts of time. In the technology’s early days, for example, CPU mining was the go-to option for most miners. However, many find CPU mining to be too slow and impractical today because it takes months to accrue even a small amount of profit, given the high electrical and cooling costs and increased difficulty across the board.
GPU mining is another kind of mining cryptocurrencies. It maximizes computational power by bringing together a set of GPUs under one mining rig. For GPU mining, a motherboard and cooling system is required for the rig.
Similarly, ASIC mining is yet another form of mining cryptocurrencies. Unlike GPU miners, ASIC miners are specifically designed to mine cryptocurrencies, so they produce more cryptocurrency units than GPUs. However, they are expensive, meaning that, as mining difficulty increases, they quickly become obsolete.
Is Crypto Mining Worth It?
Determining whether crypto mining is worthwhile depends on several factors. Whether a prospective miner chooses a CPU, GPU, ASIC miner, or cloud mining, the most important factors to consider are the mining rig’s hash rate, electric power consumption, and overall costs. Generally, crypto mining machines consume a considerable amount of electricity and emit significant heat.
For instance, the average ASIC miner will use about 72 terawatts of power to create a bitcoin in about ten minutes. These figures continue to change as technology advances and mining difficulty increases.
Even though the price of the machine matters, it is just as important to consider electricity consumption, electricity costs in the area, and cooling costs, especially with GPU and ASIC mining rigs.
It is also important to consider the level of difficulty for the cryptocurrency that an individual wants to mine, in order to determine whether the operation would even be profitable.
Conclusion: The Sustainability of Crypto Mining
For aspiring crypto miners, curiosity and a strong desire to learn are simply a must. The crypto mining space is constantly changing as new technologies emerge. The professional miners who receive the best rewards are constantly studying the space and optimizing their mining strategies to improve their performance..
Such concerns have pushed cryptocurrency communities like Ethereum to consider switching from PoW frameworks to more sustainable frameworks, such as proof-of-stake frameworks.
Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.