What is cryptocurrency mining?

What is cryptocurrency mining?

What is cryptocurrency mining

Mining is one of the types of obtaining cryptocurrency, and for the main cryptocurrency, i.e. Bitcoin, it is the only way to obtain it. From the English language, the word "mining" means "mining", accordingly, a person engaged in mining is called a miner. Mining cryptocurrencies is done with special equipment or ordinary video cards for computers, which are collected in a special mining farm. But about this we will talk a little later. The essence of mining is to create a network of decentralized computers, which are called nodes in the blockchain, which will use their computing power to solve certain problems. The more of these computers in the network, the more decentralized the network will be, and its work will be many times faster.

How the process of mining cryptocurrencies takes place

The fact that mining is mining is known to almost everyone who is even a little bit in the field of cryptocurrencies, but how the process of cryptocurrency mining itself takes place is a question for which you need to have a little more information to answer. As we mentioned above, the computers connected to the network are solving mathematical tasks, set by an algorithm. You are probably wondering what kind of problems the computers are solving, so here is an example. Imagine you have a boxed sheet of paper which has the same number in each box. So, the computer is given this problem: why is this exact number in each cell? Why is it in each cell? And other questions of a similar nature.

By solving such problems, the process of recording and confirming a transaction in the blockchain takes place, which is the essence of mining. For example, a bitcoin transaction requires 6 or more confirmations from different nodes (computers) to be validated.

Types of mining

With the increasing popularity of cryptocurrencies, mining has acquired several types: 

- Conventional mining or mining with equipment; 

- Cloud mining; 

- Web mining.

Mining with equipment

When mining became mainstream, it became irrelevant using ordinary personal computers, and mining with video cards with a built-in graphics editor began to gain popularity. But now cryptocurrency mining can be done with other types of computing equipment:

- Mining with the help of the processor, the so-called CPU mining; 

- Mining with the help of graphics processors, GPU mining; 

- Advanced type of mining with video cards, called FPGA mining; 

- And of course ASIC mining. ASIC is specially designed equipment for mining cryptocurrencies.

What is cloud mining?

At the moment, cloud mining is very popular. Cloud mining is a type of mining in which the user rents the equipment from a company that provides cloud mining services. This type of mining, has gained popularity due to the difficulty of buying equipment in the CIS. Plus, if you are engaged in cloud mining, you do not need to configure and monitor the correct operation of the equipment.