What is cryptocurrency mining and how does it work?
Cryptocurrency mining is the process of confirming and adding transactions to the blockchain, where new cryptocurrencies are created.
As such, mining serves as a way to validate crypto transactions and incorporate them into the blockchain network.
Therefore, mining works both as a way to confirm and add new transactions to the blockchain and as a way to put more crypto into circulation.
For mining you need a computer with great computing power. This is because a computer must solve complex mathematical problems to confirm transactions.
Since problem solving takes place on the basis of trial and error. So whoever solves the problem first gets a reward for confirming the transaction.
How does cryptocurrency mining work?
Cryptocurrency mining works as a way to validate and add new transactions to the blockchain.
In this process, mining computers try to find a solution to complex equations. The solution is found based on trial and error, which requires a lot of computing power.
Cryptocurrencies are created through validations. This type of validation is called proof of work, that is, proof of work.
But not all cryptocurrencies support the mining process. This is because some cryptocurrencies work through Proof of stakethat is, proof of participation.
How much does a miner earn?
Miners earn cryptocurrencies as a reward for confirming transactions and being included in the blockchain.
In November 2021, the value of each mined block was 6.25 BTC, which corresponds to 2 million BRL.
Each block is mined on average every 10 minutes. Thus, 37.5 new units of Bitcoin are created in one hour. So, in 24 hours, 900 BTC are put into circulation.
Thus, the daily gross income of the activity amounts to almost R$ 300 million. It is worth noting that the amount paid is halved for every 210,000 mined blocks, due to halving.
Briefly, The halving serves as a deflationary factor for crypto and occurs, on average, every four years.
What do you need to be a cryptocurrency miner?
To be a cryptocurrency miner, just follow the steps below:
1- Create a virtual wallet
The first step is to have a cryptocurrency wallet. A wallet is required to be able tostore your cryptocurrencies.
To be that wallets can be online or offline. In short, online wallets, also called hot wallets, are connected to the Internet.
In contrast, offline wallets or cold wallets do not connect to the internet.
2- Buy mining hardware
The 2nd step is to buy a cryptocurrency mining hardware. For Bitcoin mining, for example, you need equipment called ASIC.
You can use computers for other cryptocurrencies powerful video cards. In any case, the general rule is that the more computing power, the more chances you have to mine.
3- Connect to mining software
Finally, you need to connect to the mining software.
In summary, Mining software is a program installed on a computer that controls the entire process of validating and producing new coins and sending them to the wallet.
Which cryptocurrencies can be mined?
Generally speaking, currencies that work through proof of work, should be mined. Some examples of this are: Bitcoin, Litecoin, Monero and Zcash.
On the other hand, currencies that work through Proof of stake, users must hold cryptocurrencies online to validate blocks. The name of this process is stake.
Some examples of cryptocurrencies that work with Proof of Stake are: Cardano, Tezos and Solana. In fact, Ethereum intends to migrate from Proof of Work to Proof of Stake.
It is worth noting that there are approx. 15 thousand crypto in the market. In general, some common rules follow.
However, it is necessary to study specifically what you intend to mine, because it can be specific rules.
Is it worth it?
It depends. For exampleBitcoin mining is more profitable for large groups that are dedicated to it.
On the other side, mining Bitcoin at home is not worth much. This is because mining requires very high costs with electricity.
However, mining other cryptocurrencies at home could pay off. However, it is not a quick process and usually takes a long time.
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Sources: Infomoney, Nubank and Exame.
