Making money by mining cryptocurrencies is becoming a popular topic. People who are called miners are engaged in such mining. The very first of them appeared simultaneously with the creation of Bitcoin in 2009 and the generation of the first block in the blockchain. Users with little interest in cryptocurrency will immediately have a reasonable interest – who are the miners? What are they doing? The questions, of course, are relevant and interesting, so we will consider in detail the analyzed answers to them.
Every year, the cryptocurrency market is growing, gaining popularity, and virtual currencies are actively being introduced into various financial and economic sectors. Now there are few people who have not heard about cryptocurrencies, the rapid enrichment of digital coin holders, blockchain technology and other points from this area. Any user is initially attracted by electronic currency as a means of enrichment.
There are many ways to achieve financial well-being through cryptographic currencies – these are investing, trading on a crypto exchange, mining, participating in an ICO, developing your own altcoin, etc. Among these methods, mining stands out in a special way, which involves the extraction of cryptocoins for their further sale, exchange or use as a means of payment. This activity is carried out by miners.
Who is the miner?
All existing virtual currencies represent a polysyllabic cryptographic code or, in other words, a hash code. To form it, you need to use a special mathematical algorithm, which can work on high-performance computing equipment. As a result, a new crypto-coin is formed. This is the simplest description of the process of the emergence of new coins of any cryptocurrency.
Users who generate such codes using special equipment are called miners. In principle, everyone who is familiar with the Internet can start receiving digital money, at least superficially versed in computer technology and able to start the process of performing the necessary tasks.
More or less serious mining requires a lot of investment, since powerful computing equipment is expensive. In addition, there will be impressive energy costs. Another point that complicates the modern mining of electronic coins is the gradual complication of mining with an increase in the number of coins of a certain cryptocurrency. This is an algorithm programmed in the source code that prevents the rapid emission of the entire amount of digital money. Otherwise, an avalanche-like depreciation of this virtual currency will begin.
The fall in value is due to the loss of interest of investors and miners in a cryptographic asset due to the inexpediency of its production, a decrease in demand for such coins and their reaching a value peak, which will certainly be followed by a rapid price collapse.
Important! Despite a number of specific differences in the mining of different cryptocurrencies, in general, this process is characterized by some general patterns:
✅ The number of crypto coins was initially limited.
✅ With an increase in the volume of virtual currency in circulation, its production becomes difficult.
✅ As the value of coins rises, the difficulty of mining them also increases due to increased competition among miners!
What is the essence of mining
The process of mining cryptocurrency (mining) has a relatively simple meaning. The blockchain of virtual currency is constantly growing and new blocks are needed for this chain to accommodate new pieces of information. So the computing power of a PC or nodes of a large mining farm, processing a special algorithm, generate free blocks for the cryptocurrency blockchain. For these actions, the miner receives the earned reward. Thanks to this procedure, digital money exists.
The main elements of the device (or farm) that forms the blocks are:
✅ Motherboard with central processing unit.
✅ Power Supply.
✅ Graphics card with GPU.
It is clear that a monitor, keyboard and other parts of the system are also required so that the miner can install and run the necessary software, make settings, periodically monitor the process, etc.
On large farms, as a rule, they use sections of video cards connected to separate computers (control devices). They can work either autonomously, so to speak, as separate modules, but more often they combine them into a single complex. It turns out the most powerful computing unit.
Special groups of programmers control the clarity of the work of all modules and, if necessary, correct or optimize something in the system.
Cloud mining and pools
You can find the concept of “cloud mining“. These are large farms where one or several modules are rented via the Internet for a certain period of time. This eliminates the need to overload your computer. After the user signs the agreement and the payment for the selected tariff is made, cryptocoins will be credited to the specified account of the cryptocurrency wallet.
Another type of mining is pooling miners. People in different places organize a special community. All PCs are combined into a system to get more total power. Then, coins are mined, and at the end of a week or a month of work (this is negotiated by the community members), all crypto-money is distributed among the group members. Each receives a proportional share of the computing power provided.
Special groups of programmers control the accuracy of the work of all modules and, if necessary, correct or optimize something in the system.
Why are miners needed
It is thanks to the miners that exist in any country that cryptocurrencies can exist and perform their functions. Coin miners maintain the reliability and integrity of the virtual structure through the following actions:
✅ Support the decentralization of virtual currencies.
✅ Protect the network from introducing erroneous data.
✅ Generates blocks for the blockchain.
✅ Protect the system from attacks.
✅ Confirm the correctness of transactions.
All miners for cryptocurrency systems are the defining link. They implement the main idea of virtual money – decentralization. Due to the absence of a single regulatory node, attackers are deprived of the chance to break into a complex structure.
Miners contribute to the emergence of new crypto coins, receiving a good reward for this. As a result, the needs and requirements of all participants in the system are satisfied.