Having figured out what cryptocurrency is and started working with this tool, investors are faced with such a concept as mining. What is it? Mining is the generation of new coins, carried out in the process of performing mathematical calculations. There is no single center for generating cryptocurrencies, therefore, significant computing power is required to ensure high transaction speed. In view of this, individual mining is not popular, since the cost of acquiring equipment and paying electricity bills does not pay off. So a new trend appeared – cloud mining.
The work here is as follows: the company acquires equipment for the extraction of coins, sets it up and leases it to its customers. At the same time, all expenses for electricity and maintenance of the facilities are borne entirely by the lessor. Cloud mining cryptocurrencies is divided into two types: no investments and paid. With free mining, the company provides certain capacities without charging a commission. The principle of coin mining in cloud mining is the same as in conventional mining, only the capacity volume changes.
How does mining work? In the process of mining, new blocks with information are released, which brings a certain amount of electronic money that fall into the general “piggy bank” and are registered in the public “account book” (blockchain). In parallel, operations with existing coins are processed. They are checked on computing devices of P2P network participants and added to the block chain. The participant who first solved this task receives a reward. Such a scheme was invented in order to encourage those who donate the computing power of their PCs to maintain the network and the emergence of new coins.
Above was mentioned an important concept for the cryptocurrency market – blockchain, and it should be discussed in more detail. Blockchain is a distributed database containing data on all transactions that were carried out by participants in the system. Information is stored as a chain of blocks, and a certain number of transactions are recorded in each of these blocks. If we talk about bitcoin, then transactions here are transfers of money between users’ wallets. The transaction register is not stored in one place, it is stored at the same time at all participants in the system.
What is needed for cryptocurrency mining
- Online wallet. It is available for download on the official websites of the developers of a particular cryptocurrency. An electronic wallet is a kind of money container protected by a password.
- Software package. Today, you can find various mining programs focused on Windows, Linux OSes.
- Registration in the online pool of miners. Members of such communities combine their computing devices to make devices more efficient. Received coins are shared among all members of the community.
- Reliable internet connection. It is desirable that the speed be at least 2 Mb / s.
- Mining equipment. You can take a regular computer, but it would be better to use special computers that have more power.