Simply stated, crypto mining means solving complex mathematical formulas to create crypto funds, by means of hardware or software.
With mining, everything is documented on the blockchain. Everything is collected in a ‘block’, which then forms a chain of blocks in line with each other. You must remember that additions can only be made behind the block. Past transactions will always remain a part of the Blockchain and cannot be changed.
Incidentally, not only are the transactions stored, but also reference to the previous block (the hash): a difficult to crack mathematical puzzle.
The control over the transactions is usually achieved with what is called a Proof-of-Work protocol (PoW), a hashing algorithm. Or the complicated puzzle that must be solved by the miners. Thanks to PoW, there is agreement about all transactions in the records (Ledger). The computing power that the computer has provided for solving the mathematical puzzle and updating and checking the records is a proof of work. PoW. Thanks to this protocol, you do not need, for example, an accountant or auditor.
With mining, you thus contribute to the security of cryptocurrency. That is, however, not the only advantage of crypto mining. As mentioned earlier in this article, you can also receive a reward for the use of the computing power of your miner. The biggest gains, however, can lie in discovering a new block in the Blockchain. Bitcoin has become very competitive, and therefore a lot of computing power is needed to earn a little bit. This therefore costs your miner a great deal of power. With other, smaller or newer crypto coins (ALTcoins), it can be easier. The value of this currency may still increase, which means that in the long run, you can still achieve a nice return.
What do you need for mining?
How do you start mining yourself? Below you will find a list of ten things you will need if you want to start mining yourself.
A wallet for the specific coin that you want to start mining.
A good miner that is specially built for mining. The days when your own household computer was good enough are over.
A good, and most of all, reliable internet connection.
A good location. The miners can get very hot and can make a lot of noise. It is therefore not a good idea to do the mining in your living room. The best location is a cellar, attic or shed.
For the same reason, you will also need a cooling system, such as a fan or an air conditioner. It is important to keep your equipment cool.
It is advisable to become a member of an online mining pool. This is a pool that is mining the same crypto coin you are. By joining an online mining pool, you will ensure a more stable income.
When you want to sell the crypto coins, you must be a member of an online exchange where you can sell your mined coins.
And the most importantly: you have to enjoy mining and be curious about how it all works.
As you can see, the difficulty of mining continues to increase and the only way to keep up is by constantly teaching yourself about how you can improve your miners. You can think of it as a sport: the person who works the hardest ultimately achieves the best result.