Do you know what mining cryptocurrencies is? Or did you know that there are more than a million Bitcoin miners in the world?
You may have heard of cryptocurrencies and have certain notions about the fortune that some people have made, but do you know what cryptocurrency mining is?
In this article we are going to solve your doubts. Keep reading and you will know what mining cryptocurrencies is and how you could benefit from it.
What is cryptocurrency mining?
Basically and explained in a simple way, mining cryptocurrencies consists of solving highly complex mathematical problems.
This is done through certain computational algorithms and new bitcoins are obtained as a result.
To understand a little more about what this work consists of, you can think about the following: There are those who compare mining cryptocurrencies with mining gold.
Here the objective will be to obtain this precious mineral using specialized machinery to remove earth and stones.
In the case of those who work in gold mining, they have tools that make it easier to achieve the objective and generate money with the extraction of the precious metal.
In the same way, those who are dedicated to working in bitcoin mining have professional teams to obtain fast and accurate results, while obtaining rewards for it.
These computers can be working 24 hours a day, connected and consuming power all the time.
This panorama reveals the exponential growth in the use of this technology throughout the world. With cryptocurrencies in a huge boom, the possibilities increase, not only to “trade ” or invest, but also to be able to mine cryptocurrencies .
One point to consider is that to mine cryptocurrencies there are certain requirements that could function as entry barriers for other interested parties.
In fact, this system is not suitable for everyone, however, it is increasingly accessible to start mining cryptocurrencies.
The different types of cryptocurrencies have been gaining ground as a real option for people. This is evident because it is increasingly present in the financial issues that drive the economy of countries.
Process to mine cryptocurrencies
The process for mining cryptocurrencies is simple and does not change . Complexity occurs when solving mathematical problems. With that said, here’s what to do:
1. Receive the mathematical problem.
2. Solve the problem in a period of less than 10 minutes to obtain the validation of the block.
3. Wait for the confirmation of the members of the network to acquire the reward.
The tools needed to mine cryptocurrencies
First, you will need a PC to mine. With a normal PC, you will spend more energy than you gain. Therefore its use is not recommended.
If what you want is to create a profitable business with this activity, it is necessary to have adequate equipment to do so. In the market you can find a 10 GH/sg Bitcoin miner , a minicomputer that only works for mining. They are usually not that expensive.
You can also get good software like EasyMiner or Bitcoin Core.
You should also purchase a wallet. This program allows you to save your cryptocurrencies. One of them are:
- Bitcoin Wallet,
- electrum o
You can even get an ASIC. Currently, ASICs are used , which means « Integrated Circuit for Specific Applications» .
These circuits fulfill the functions for which they are programmed, in this case, carry out cryptocurrency mining, efficiently.
ASICs work under version 0.2 of the Bitcoin software which, in essence, makes it possible for multiple processors to be used within the same system.
This makes it easier for miners to earn rewards; The speed when carrying out the mathematical processes that mining implies is key in the face of so much competition.
Aspects to consider if you want to start mining cryptocurrencies
Those who are in charge of mining cryptocurrencies play an important role in this system, since they make sure that nobody uses the same coin twice. In other words, counterfeiting within the bitcoin market is prevented .
Mainly, you must have quite advanced computer and mathematical knowledge. Since trades have to be completed in about 10 minutes to generate the desired profit, there isn’t much time to think.
It is also important that you have a team, or be part of one. Only then will it be possible for you to get ahead with your goal. These teams are often called communities, cooperatives or mining pools.
In addition, you have to take into account the following aspects:
- The equipment and its cost
- The competition in the market at the time you decide to make your operations
- The price of electricity when having the computer working for 24 hours.
- The cooling that equipment needs
- The type of cryptocurrency that you want to mine because it varies from one to another.
- The profitability that the cryptocurrency has at that moment.
You can do this activity on your own or through mining pools, which are usually more efficient than doing it on your own.
The profitability of cryptocurrency mining
It is important that you ask yourself if it is profitable for you to surrender to this financial system.
Although it sounds very exciting and the adrenaline is constantly present, to dedicate yourself to mining cryptocurrencies in the long term you will need to have a powerful ASIC.
The acquisition of this equipment is usually quite expensive, so you should consider if you have the necessary money to make this investment.
Also, keep in mind the fact that new systems are constantly being developed, which means that at any time the ASIC you own could become obsolete.
The cost of electrical services is another factor to take into account if you want to work in mining cryptocurrencies.
Depending on the power of the ASIC you have purchased and the cooperative you are in, you will require a lot of electricity. Not only for the equipment directly, but also to cool the place where it is located, guaranteeing its useful life.
As we mentioned before, the success when mining bitcoins will depend on the speed in which the mathematical problems are solved and for this, teamwork is necessary. That is why mining pools have been created.
A mining pool is a space made up of groups of miners who work to mine cryptocurrency blocks effectively and quickly. Those who are part of these groups obtain equitable benefits, which increases productivity.
Disadvantage of the mining pool
While joining a bitcoin mining cooperative is pretty much the only way to see a profit without taking too much risk, there is also risk. This risk is having to trust the pool administrators.
Unfortunately, some have kept the reward in its entirety, something that is obviously negative, due to the time and resources invested. For this reason, it is vitally important that you research the pool administrator well in order to get started.
Cryptocurrency mining rewards
Bearing in mind what mining cryptocurrencies consists of and all that it implies, you are prepared to know what rewards you will get for working on this activity.
When entering the bitcoin market, you will see that one of the rewards of working as a miner is obtaining a certain amount of coins for each validated block, without forgetting the commissions for each of the transactions.
Selling those coins can be very rewarding, but if you don’t want to get out of them completely, you can keep them as a money-saving instrument.
Of course, remember that even cryptocurrencies at some point tend to have a reduction in their value (market setbacks) so always remember to “sell when their price is high and buy when the value decreases”
If you invest in the purchase of bitcoins, you can secure your money to use it in the future when and how you want.
Do you dare to mine cryptocurrencies?
Now that you know what mining cryptocurrencies is , you will have noticed that if you carry out this activity with the correct knowledge and tools, you can generate good income.
To achieve this, good planning is necessary, some capital and of course discipline to face this new venture.
Remember that like any business you must have the steps to follow and the administration of the company well established.
The benefits can be enormous if you apply the correct investment strategies to this business. Make sure you have everything in order to start.