I have always been fascinated by the mining aspect of cryptocurrency. Mining and miners are a vital part of the digital ecosystem. Some believe that mining is easy, but it is not. Mining is a very complicated process that takes a great deal of time, effort, and computing power. Let’s take a brief look at mining and what it entails.
The first miners came on the scene in 2009, when Bitcoin was released. It was a way to earn Bitcoin without paying for it and it also prevents double-spending. Miners keep the blockchain network secure, encrypted, and decentralized. When a transaction is made, miners see it and try to grab it from the network. Even if a miner grabs a transaction, he or she is not guaranteed a reward. The miner who solves the puzzle first and completes 1 MB of verifications receives a reward. This process is called proof-of-work. For Bitcoin, a miner can earn 12.5 BTC for mining a block. It is important to note that this amount has decreased significantly since 2009, when mining a block earned 50 BTC. The number is also projected to decrease to 6.25 in 2020 due to the Bitcoin cap of 21 million.
Earning cryptocurrency also depends on a miner’s preference of hardware and software: ASIC or GPU. ASIC (Application Specific Integrated Circuit) mining uses a computer chip designed for a specific purpose (e.g. mining Bitcoin) and is highly efficient. Unlike GPU (graphic processing units) mining, it doesn’t require several parts to calculate the hashing algorithms needed to complete a puzzle. The chip is built into a custom motherboard and power supply within a single unit. GPU mining does require a few different parts, which make up a GPU rig. Many build their rigs which primarily consist of a frame, processor, RAM, and video (or AMD) cards. It can be then used to mine different types of cryptocurrencies (e.g. Ducatus coin). Along with the cost of the hardware, these computers require a lot of electricity to run, which can be a deciding factor for someone who is thinking of becoming a miner.
Mining is a complex process that requires powerful computers and the drive to earn a lot of “coins.” People can use what they earn to make purchases and trades or simply on hold to them as an investment. It will be interesting to see how the Bitcoin cap will affect mining next year.