How is mining related to cryptocurrencies ?
You can't talk about mining without mentioning Bitcoin and blockchain. Why? Bitcoin is the most popular cryptocurrency. Its essence is in the absolute decentralized work in the network. That is, there cannot be a workshop for the production of cryptocurrencies by default. Every user can mine, otherwise mine or create bitcoins. But, as with any interaction with money, cryptocurrencies also love the account. In the case of paper money, the bodies that issue them are engaged in calculations. But the blockchain is responsible for accounting for bitcoins and other cryptocurrencies. This is a technology that is called a breakthrough in the ways of money circulation. In fact, this is a huge ledger where all transactions with bitcoins are recorded. And now let's imagine how much space on the computer each user will need to store the entire blockchain. Very much. In addition, such operations are carried out every second, each time the content of the blockchain is updated.
How does mining work ?
To add information about transactions to the blockchain, which we recall very, very much, it is necessary to constantly create new blocks, structural units of the blockchain. Mining is the process of forming these blocks. Miners from all over the world use processors and video cards to perform complex mathematical calculations, confirming transactions, writing blocks and receiving a reward in the form of cryptocurrencies. Mining is the only reasonable and safe way to issue bitcoin. And the more complicated the method of mining cryptocurrency, the higher its value and rate relative to real money.
How Bitcoin mining is carried out ?
The release of cryptocurrency is possible only upon completion of the block of calculations. However, in the case of bitcoins, you can use your hard-earned ones after 120 transaction confirmations from other users. Due to the maximum distribution of the calculation function, the next Bitcoin is credited in a random sequence. However, the higher the computing power of a single computer, the more chances its owner has to get the coveted profit.
There are three ways to mine bitcoins:
1) Powerful graphics card.
Graphics processors, like no other, are adapted to calculate bitcoin algorithms. Especially when it comes to a top-end board with the maximum available computing potential.
2) A board with an FPGA processor.
It is appropriate to compare performance with a video card, while energy efficiency is higher.
3) Specialized ASIC processor.
It is considered the most successful ratio of efficiency and energy consumption per unit of cryptocurrency. Additional software, as a rule, comes bundled with specialized mining equipment.
The miner can engage in solo mining (alone) or join pools (group mining, roughly speaking). But to connect to the bitcoin network, a special program will be required.
Like any investment decision, spending on mining requires a balanced and sound assessment of the possibility. To minimize the risk, I recommend novice investors to pay attention to the following points: a popular cryptocurrency, like bitcoins, is generated for an extremely long time and the costs are large. Dreams of "solo mining" at home are very vague, because specialized equipment requires considerable expenses. Less popular digital currencies have a low exchange rate relative to the US dollar, which means they reduce the profitability of mining. No cryptocurrency has any material and guarantee support. This is an absolutely virtual product and has no official status in many countries. Before you start mining, you should study the whole process in detail yourself and then only decide. That's it! Thank you for your Attention!