Mining - what is it in simple words
In the last year, there was a boom in the extraction of bitcoins and other popular cryptocurrencies in the world. Video cards were bought instantly, despite the increase in prices. All this is associated with a sharp increase in the cost and popularity of cryptocurrency, especially Bitcoin. As a result, many people began to earn virtual money. I will tell you what mining is, its types and features, I will give useful tips.
Description in simple words
Mining (from the English. "Mining") - the creation of cryptocurrency by a special algorithm. The computer creates a block confirming the authenticity of payment transactions (a chain of transactions forms a blockchain). For the block found, the user is paid a reward, which depends on the type of currency being mined.
How minyat cryptocurrency
There are several ways to get crypto-money at home - for example, pooling, mining alone, renting mining facilities from individual organizations.
If you decide to engage in mining yourself, using only your equipment, you will have to:
- Buy a few expensive video cards.
- Buy a farm (PC) with a modern cooling system, a motherboard with many slots to
- Install a video card (minimum RAM - 4 GB).
- Provide high-speed and uninterrupted Internet.
- Install a mining program that is designed to extract the selected currency.
Types of mining
There are three of the most common ways to mine crypto money - pools, solos, and cloud mining.
Mining pools are coin mining servers that distribute hash (block calculation tasks) between network user capacities that are connected separately.
If at the very beginning of the emergence of cryptocurrency to cope with mining, a regular computer with average values could do it, today pools are one of the few options that allows you to really make money. An alternative option is the acquisition and maintenance of expensive equipment.
All network participants send the power pool of personal equipment to solve the cryptographic unit. For this, they get earned coins.The user will receive his fair share in any case, even in a situation if the power of his equipment is insignificant.
Advantages of pools:
- The absence of fraudulent risks (no one has the ability to influence the withdrawal of funds from the pool or stop it, unlike cloud mining);
- No need to buy expensive equipment and spend money on electricity;
- Proportional and guaranteed distribution of profits, depending on the size of the contribution of each user.
There are several criteria by which the mining pools differ - functional, cryptocurrency mined, commission for withdrawal, payment method, capacity requirements, etc.
Performed only on the equipment that is available to the user. The power of other miners are not used. If the equipment is weak, it is recommended to join the pool.
The advantage is that there is no need to share the received coins with other users, the disadvantage is a long search for the block. Moreover, today in the world of cryptocurrency there is a high competition, as a result of which it is no longer possible to find a block of such crypto money, such as ether or bitcoin.
For solomining should choose a simple coin with a low capitalization. You will also need to download the wallet from the official website of the cryptocurrency developer.
Cloud mining is the acquisition of a certain number of capacities in an organization that has opportunities for solo mining. It buys powerful equipment and delivers parts of its capacity to users.
- You do not need to spend money on purchasing your own equipment and electricity.
- It is not necessary to have technical knowledge on mining.
- No need to control the operation of devices.
- Typically, the cost of entry starts from $ 10, but there are offers from $ 1.
- Most of the “companies” on the Internet cloud mining are scammers. They close the project immediately after receiving the necessary profit from unsuspecting users.
- The duration of the contract with the organization does not exceed 24 months, so it is impossible to predict the profit and payback of the undertaking.
- The user will not have the equipment that he could sell and get extra money.
What is a Miner?
There are two interpretations of this word.
- A miner is a person engaged in mining. Some users have turned the process into a profession. Officially, it does not exist, however, many people have become rich, and continue to receive income through mining.
- Miner is a special program that allows you to earn money. It solves certain math problems. And for each correct decision receives a reward (a coin of the chosen cryptocurrency). All transfers of cryptocurrencies are recorded in the general transaction log transmitted to the miners. The program selects one hash from all existing combinations that matches the private key and transactions. When the mathematical problem is solved, the transaction block is closed, after which another problem is solved.
How much can mining bring
Earnings per day when soloining depends on several factors:
- The cost of electricity (sometimes they can reduce or zero the income).
- Power equipment (the number of video cards that are involved in the process).
- Exchange rate.
- The relevance of the chosen cryptocurrency (if it is very popular, then it will be mined all over the world, which lowers the production and complicates mathematical tasks).
If you chose cloud mining, then the profit depends on two factors:
- The amount that was invested in the project.
- The duration of a selected company’s network.
If you are lucky, you can recover costs and make a profit.
As for pools, the power of the individual equipment of the user affects the amount of earnings.
- If you decide to install a stand-alone wallet on your PC and not use the online service, be sure to copy the wallet.dat file to the USB flash drive, then print and put the paper in a safe place. If the computer suddenly breaks down and all the files on it are erased, then without a wallet. Dat you can never go to your wallet again. All earned will disappear.
- Before you engage in mining, explore alternative ways to get cryptocurrency - for example, buying coins on the stock exchange instead of directly mining them.
- Regularly track new crypto-currencies, study their prospects.Perhaps by acquiring a few cheap coins at the start of the activity, you will be able to get rich in the future dramatically.
So, mining is a risky way to make a profit, but with constant market research and a certain amount of luck, you can make good money.