What is mining cryptocurrencies and what requirements are needed

mining cryptocurrencies

Most people only do buy Bitcoin or any other digital currency. But those who really get into this world know that beyond the cryptocurrencies themselves there is a business: mining. But, What does mining mean and how is it done?

If you want to know what this term refers to and the requirements that are needed to carry it out, pay attention because we explain it to you below.

What is cryptocurrency mining?

bitcoin coins on red background

Let's start at the beginning. The term mining cryptocurrencies relates to process by which blocks can be created that go directly to the blockchain. In reality, what those computers and systems that are part of the mining equipment do is solve a series of mathematical problems of a complicated level. As they are solved, a prize is received for doing so and this would be the cryptocurrency. But in reality it is not a virtual currency itself, but a small amount of that coin or token.

For example, imagine you mine Bitcoin. Your team makes a complex mathematical program and solves it. You do not receive a Bitcoin for it, but a part of it.

When that problem is solved and they give you the prize, the transaction is recorded through the blockchain, in such a way that the amount of tokens received for having achieved it becomes the property of that person, the "miner." And since it is recorded, there will always be a trail to verify this.

Now, can it be the case that two or more miners solve the same problem? Although it is almost impossible for that to happen, we cannot say that it will not happen at any time. However, we have not found an answer to what would happen in those cases, if both would receive tokens, if only one of them would do so, or if they would be distributed.

Types of mining

When mining, you must keep in mind that there are five types:

  • CPU mining. It is basic mining where a home computer is mainly used to work.
  • GPU mining. A more advanced level where it is the graphics card that is in charge of solving these mathematical problems.
  • ASIC mining. This is the most efficient way to mine cryptocurrencies and it is the one that many professionals use (when they dedicate themselves to it precisely).
  • Cloud mining. When you do not have the budget to be able to set up all the equipment needed to mine, many opt for this type, which is characterized by the purchase of hash power from a provider.
  • Mining in pools. In this case, you choose to work in a group, in such a way that the resources and also the hashing power are shared to solve more mathematical problems.

Requirements to mine cryptocurrencies

coin mining devices

If after what you have read you decide to start mining cryptocurrencies, the first thing is to meet all the necessary requirements. Among them are:

  • The team. We are referring to exactly the hardware that is needed to mine. The normal thing is to opt for an ASIC device, which is the best known because it is used for Bitcoin. But if you choose other virtual currencies you can use Ethereum Classic (ETC) or Zcash. Of course, it does not mean that you cannot use your own computer (although the normal thing is that the wear and tear it is subjected to makes it last much less). Within the equipment, some professionals recommend having a powerful graphics card, with at least 6 GB of RAM, as well as a stable Internet connection.
  • Software. In addition to the equipment, you will need a computer program with which to work and mine cryptocurrencies. In this sense, there are several of them, such as Claymore, AntMiner, T-rex Miner, MSI Afterburner or CGMiner. In reality there are so many that it will depend on the type of currency you want to mine (because, as with hardware, it all depends on whether it is Bitcoin, Ethereum, Litecoin... As with hardware, we must also tell you that the systems can be used common operating systems such as Windows or Mac OS to work with them.
  • Wallet. In English, this "digital wallet" is what allows you to accumulate coins. If you didn't have them, the program wouldn't know where to store them. In reality, there are several types of wallets, from hardware wallets, software wallets, online wallets or desktop wallets.

Finally, and taking into account that we are talking about mining, one of the characteristics that these devices have is that they must be turned on all the time. And to do this we have to ensure that nothing happens. Therefore, it is convenient have some refrigeration and conditioning accessories on hand. In fact, we recommend that you also have thermometers and alarms that warn you if the temperature is higher than normal, to prevent damage to the device itself.

Why mining is important

bitcoin coin sideways

Not everyone can dedicate themselves to mining cryptocurrency, although from what you have seen it seems easy. However, this activity is more important than you think, mainly because it is one of the most important pillars in the security of the cryptocurrency sector.

Note that Miners secure the cryptocurrency network. When there are many working, it is more difficult for hackers to enter or modify the transactions that are carried out.

At the same time, miners become pawns of the digital currency, outside the control of governments.

Finally, it is clear that receiving a reward for making the computer work and solving problems is very attractive.

But we must not forget that, within what is important, we must also Think about the risks involved in doing this job. And is that the energy needed to make devices work, and the increasing competition, It makes the rewards sometimes not worth it (your electricity bill will go up and on top of that you will get fewer rewards for solving problems because there are many people doing the same thing).

To that you have to add the cryptocurrency volatility, being able to be at the top or entail drastic losses for your economy.

Now you have a better idea of ​​what cryptocurrency mining is and the requirements needed to get started. Just keep in mind that the “prizes” for solving problems are not so big that you can get your hands on a Bitcoin in a short time.

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