How does cryptocurrency mining work?
Cryptocurrency mining has become a legend in the digital world.
The term is often associated with large farms where hundreds of assets are produced per day. Today we set out to demystify this activity by dwelling on certain key points of mining.
We break down the topic to explore other processes and thus understand in depth what it consists of.
What is cryptocurrency mining?
Mining is not simply creating new digital assets. If we go back to the general description of cryptocurrency, we find that cryptocurrencies already exist, they are defined in advance.
Consequently, cryptocurrency mining is the result of transaction verifications performed through Blockchain. For this, great computational power is required because the computers in the network must apply a cryptographic function to solve a riddle.
These high-powered computers belonging to the miners are called nodes. After getting the right answer a block with the transaction information is written. The rest of the nodes also approve the result, but only the one that submits the first resolution gets a specific number of cryptocurrencies.
In this sense, the miners’ operations are not reduced to the creation of cryptocurrencies but to maintaining the security of the network. To modify any block, the attacker would have to have more power than all the nodes.
Many companies work with this technology, such as Changelly, which follows these principles. It works like an exchange that allows you to buy bitcoins by following certain metrics and evaluating the evolution of the value of such currencies. All this is based on an intuitive and interactive platform.
How does cryptocurrency mining work?
Cryptocurrency mining goes through verification processes that may vary from one currency to another. Proof of Stake (POS) is the newest one and it is about obtaining the privilege of generating a block by the number of accumulated assets. However, the traditional one is known as Proof of Work (POW).
The purpose of POW is to solve a very complex mathematical equation to register a certain operation in the Blockchain network These calculations are impossible to perform by human reasoning. So computers with powerful graphics cards are in charge of solving the problem.
When one of the participants succeeds in performing the correct calculation, a block is added. Once this is done, the system produces new copies of the coin as a reward. The exchange of cryptocurrencies is made more secure by mining. Each participant in the network checks the contract for correctness.
Current issues in mining
One of the topics of mining concern is the negative environmental impact that computers generate while operating. This is reported by the news portal CNN, which emphasizes that the increasing difficulty of mining requires ever more powerful computers.
Currently, this activity can only be carried out using powerful ASIC computers, which stand for Application Specific Integrated Circuit. As the name suggests, these are computers with technologies developed to perform specialized functions.
In this case, the work in question is cryptocurrency mining and it is difficult for any other device to compete with these computers. However, the demand for buying digital coins, selling, or investing has saturated the verification system.
The obvious consequence is excessive energy consumption which will be 130 million metric tons of carbon by 2024 in China alone. In light of this forecast, MicroStrategy director Michael Saylor; and Elon Musk, CEO of Tesla and SpaceX, are working on a green solution.
Curiosities worldwide about cryptocurrency mining.
China is the country with the largest mining capacity in the world. This is because the energy cost is low. For the same reason Venezuela, Iran, the United States, Georgia, and Canada also top this list.
When mining did not figure out as such a competitive activity, it was possible to do the verification procedure through the cloud. It was even possible to mine from smartphones.
Among other curiosities, unusual ways of mining have been found. For example, MitFury bulbs were launched on the market in 2015 to generate small amounts of BTC. These were configured via an app or interface that controlled the mining chip integrated into the bulb.
Among other topics, CryptoSolarTech is working on a project to build the world’s largest green mining farm. It is located in Spain within the province of Malaga.
Cryptocurrency mining underpins the entire exchange system in terms of digital assets. This technological method has enabled the strengthening of business confidence and has strengthened individual finances.
Mining is the reason why more investors are joining. Thanks to this decentralized network, security in transactions have increased. Multiple platforms, such as Changelly, Binance, and Coinbase, have become an option for those seeking greater backing.