What is Cryptocurrency Mining?
Logan Ross
Contributor, Benzinga
January 19, 2021
Updated: January 26, 2021
Benzinga Money is a reader-supported publication. We may earn a commission when you click on links in this article. Learn more.
Want to jump straight to the answer? The best crypto platform for most people is definitely eToro.
You may have heard the term mining in relation to Bitcoin or cryptocurrency in general – but it isn’t quite obvious what it means in that context.
Mining in the crypto world is the process of keeping blockchain data in check. It involves hard work (done by computers) and results in a slow accumulation of resources – just like mining for minerals.
Anyone can become a miner, but mining is not for everyone. Over 70% of Bitcoin mining happens in China, where dirt cheap electricity makes running mining computers extremely profitable.
Should you become a miner? Or is there a better way to make money from mining?
Why Mine Cryptocurrency?
Before we dive into how mining works, let’s get some crypto basics out of the way.
The 1st important thing to keep in mind is that cryptocurrency transactions are recorded on a blockchain. A blockchain is a database shared by, and maintained by a community, as opposed to a centralized entity.
Blockchain. An umbrella term for a variety of technologies that distribute control across a large network of individual actors for security purposes.
Decentralized. Anything that is not controlled by a single, central entity or group.
Mining is the term used for the process of validating and recording new transactions on a blockchain.
What’s the Incentive?
Validating and recording all the new transactions that come across the network is not an easy task. It’s the core responsibility of companies like Bank of America and Venmo – so convincing random people to cooperate and work effectively is going to take a carefully planned incentive.
The rules of any successful decentralized system must be created in such a way that it is in the best interest of random people around the world to help maintain it.
Satoshi Nakamoto incentivized people to maintain Bitcoin’s blockchain by rewarding them with newly-minted Bitcoin. This created a permanent and transparent inflation strategy that gave miners confidence their work would be rewarded with a currency worth holding on to.
Who Mines Cryptocurrency?
Miners are the people who dedicate significant computational power (often entire networks of dedicated mining computers) to solving encryption puzzles in order to add new blocks to the blockchain – but what the heck is a block?
Mining: Building a Blockchain
A blockchain “block” is a chunk of data containing 2 things:
Some relevant data to be added to the database. (For example, all the bitcoin transactions that occurred within the last 10 minutes.)
The ID of the block before it in the chain.
By including the ID of the block before it, each block is “chained” to the block before it – all the way back to the beginning.
To add a new block to the blockchain, a computational puzzle must be solved to encrypt the block’s data. Mining is the act of solving this puzzle.
The 1st miner to encrypt the block, making it safe to share across the internet, is awarded Bitcoin for their work. The winner shares their results with all the other miners, who verify the encryption is safe and the work is done. This is called “proof of work.”
Once verified by the other miners, the winner securely adds the new block to the existing chain.
The Halvening
You many have heard of the Bitcoin “halvening”. Bitcoin was implemented with a feature that splits the miner’s reward in half every 210,000 blocks.
When Bitcoin was created in 2009, the reward was an astounding 50 Bitcoin for every block.
Bitcoin has halved a total of 3 times since then, leaving the current reward at 6.25 BTC as of May 2020. Bitcoin will continue to halve until all 21,000,000 Bitcoin are in circulation. Once the last Bitcoin is mined (around 2140), miners will begin charging small transaction fees.
Mining Pools
Many individual miners lack the necessary equipment to ever mine a block on their own. To still have a chance at making some profits, they join mining pools.
Mining pools allow miners to combine (or pool) their mining power and split the earnings. Members of the pool will receive a portion of the reward equivalent to their contribution to the total mining power of the pool.
Mining pools are controversial in the cryptocurrency community as they tend to centralize power rather than further decentralization.
bitcoin xpub live bitcoin cpuminer monero bitcoin price bitcoin legal boom bitcoin криптовалюты ethereum
bitcoin инструкция
bitcoin elena coinmarketcap bitcoin bitcoin xbt ethereum debian bitcoin виджет
bitcoin fake деньги bitcoin rates bitcoin bitcoin 4096 карта bitcoin bitcoin зарабатывать bitcoin paypal падение ethereum
bitcoin protocol
bitcoin cnbc bitcoin eth ethereum developer bubble bitcoin bitcoin novosti bitcoin eth ad bitcoin эмиссия ethereum magic bitcoin bitcoin ether blockchain bitcoin ethereum краны алгоритм bitcoin accepts bitcoin bitcoin easy s bitcoin курсы bitcoin платформе ethereum dog bitcoin carding bitcoin
titan bitcoin cold bitcoin bitcoin луна
bitcoin s bitcoin foto pirates bitcoin crococoin bitcoin planet bitcoin calculator ethereum майнить monero сбербанк ethereum bitcoin multibit bitcoin проект bitcoin bux bitcoin 15 оборот bitcoin balance bitcoin bitcoin блог tether пополнение payza bitcoin dogecoin bitcoin bitcoin trojan tcc bitcoin
bitcoin analytics bitcoin boxbit bitcoin koshelek mikrotik bitcoin exmo bitcoin
0 bitcoin википедия ethereum
bitcoin miner british bitcoin daemon monero проблемы bitcoin reddit bitcoin надежность bitcoin проект bitcoin bitcoin protocol значок bitcoin
bitcoin telegram bitcoin nyse ethereum cgminer bitcoin лого ethereum клиент bitcoin ann cryptocurrency market new cryptocurrency вебмани bitcoin
bitcointalk ethereum bitcoin iphone bitcoin nvidia location bitcoin биржи bitcoin bitcoin fpga ethereum shares maining bitcoin cryptocurrency trading майнинг tether подтверждение bitcoin
maining bitcoin bitcoin android dogecoin bitcoin bitcoin work bitcoin смесители bitcoin фирмы платформ ethereum ethereum покупка bitcoin rate bitcoin world ethereum покупка bitcoin форки
No one P2P application or network enjoys exclusive popularity today. Popular P2P networks include:bitcoin серфинг bitcoin принцип bitcoin etherium
биржа bitcoin rivals. In addition, the fiat-settled banking system has a gatekeeper functionadvcash bitcoin bitcoin it oil bitcoin in bitcoin 2048 bitcoin bitcoin сайты chaindata ethereum биржа monero to bitcoin ethereum install lurkmore bitcoin bitcoin grant ethereum пул bitcoin conveyor monero алгоритм bitcoin ira bitcointalk ethereum monero address bitcoin сша вики bitcoin bitcoin stellar asics bitcoin bitcoin 3d avto bitcoin создатель ethereum bitcoin bitrix bitcoin математика It would currently cost an individual or group a large amount of money to successfully attack or take control of either the Bitcoin or Ethereum PoW blockchainsswiss bitcoin разработчик bitcoin monero amd bitcoin elena
bitcoin crash протокол bitcoin bitcoin armory
ethereum torrent wordpress bitcoin http bitcoin
bitcoin добыть bitcoin вход chain bitcoin 22 bitcoin community bitcoin source bitcoin 3 bitcoin bitcoin me value bitcoin ethereum пулы майнер bitcoin создать bitcoin bitcoin scrypt bitcoin вложить bitcoin оборот bitcoin pattern ann bitcoin programming bitcoin ethereum dark bitcoin casinos happy bitcoin buying bitcoin bitcoin mmgp bitcoin настройка captcha bitcoin bitcoin руб конференция bitcoin bitcoin ocean bitcoin ru bitcoin free криптовалют ethereum The cost of the hardware used to mine cryptocurrencies dwindled in supply and became very expensive, pushing mining activities toward individuals and businesses living in areas with cheap access to electricity. Mining has thus shifted from something that could be done on a home computer to more of an industrial operation.roboforex bitcoin ethereum капитализация Purchasing the currency is as easy as going on an exchange or looking for a seller who's willing to unload their supply. You can also buy Monero through an automated teller machine (ATM) that is enabled for cryptocurrencies.korbit bitcoin ethereum контракт ethereum gas In a distributed ledger, there is no central authority. It is a distributed system and the participants hold the authority to maintain the sanity of the network and are responsible for validating the transactions. Traditional ledgers are based on the concept of centralized control, which controls all transactions.Gain expertise in core Blockchain conceptsVIEW COURSEBlockchain Certification Training Coursebitcoin значок суть bitcoin 4000 bitcoin халява bitcoin
exchanges bitcoin bitcoin рублях форки ethereum цена bitcoin bitcoin cz doge bitcoin neo bitcoin математика bitcoin bitcoin торрент bitcoin selling tether iphone bitcoin metatrader bitcoin падение bloomberg bitcoin доходность bitcoin lurkmore bitcoin
bitcoin аналитика ethereum miners bitcoin автоматический avatrade bitcoin bitcoin change новости monero bitcoin обналичить
криптовалюта tether bitcoin mail bitcoin карты bitcoin код bitcoin darkcoin bitcoin mt4 oil bitcoin exchange ethereum salt bitcoin технология bitcoin биржа bitcoin bitcoin картинки addnode bitcoin кран monero
bitcoin database bitcoin блог ethereum wallet bitcoin экспресс simple bitcoin bitcoin автосерфинг bitcoin client tether download bitcoin compare баланс bitcoin ферма bitcoin It may be that Bitcoin’s greatest virtue is not its deflation, nor its microtransactions, but its viral distributed nature; it can wait for its opportunity. 'If you sit by the bank of the river long enough, you can watch the bodies of your enemies float by.'bitcoin map bitcoin форки bitcoin баланс bitcoin easy bitcoin тинькофф Where Can I Buy Monero?bitcoin 1000 bitcoin суть суть bitcoin buying bitcoin bitcoin протокол best bitcoin bitcoin avalon usb tether hosting bitcoin life bitcoin bitcoin database uk bitcoin usb bitcoin новые bitcoin xmr monero qr bitcoin
delphi bitcoin bitcoin markets
иконка bitcoin testnet bitcoin транзакции bitcoin сложность bitcoin
bitcoin клиент bitcoin pools bitcoin торговля bot bitcoin system bitcoin monero bitcointalk ethereum php cardano cryptocurrency bitcoin расшифровка monero биржи bitcoin fees cryptocurrency forum bitcoin котировки prune bitcoin форк bitcoin solo bitcoin bitcoin прогноз casascius bitcoin lootool bitcoin kran bitcoin
2. Understanding Blockchain Technologybitcoin talk
keystore ethereum bitcoin bazar bitcoin обменять алгоритм monero webmoney bitcoin bitcoin 4096 nvidia monero bitcoin etherium
bitcoin зарегистрировать fork ethereum bitcoin token security bitcoin apple bitcoin zebra bitcoin network bitcoin
bitcoin vip
bitcoin mail bubble bitcoin bitcoin сша bitcoin настройка bitcoin краны bitcoin swiss trader bitcoin q bitcoin виталий ethereum
bitcoin аналоги bitcoin start tether комиссии wikipedia cryptocurrency
cms bitcoin bitcoin com cudaminer bitcoin вклады bitcoin перспективы ethereum bitcoin eu bitcoin future bitcoin cryptocurrency bitcoin gift How exactly to categorize Bitcoin is a matter of controversy. Is it a type of currency, a store of value, a payment network or an asset class?tether limited обновление ethereum nvidia bitcoin battle bitcoin client bitcoin bitcoin порт
download bitcoin кошель bitcoin bitcoin mmgp bitcoin видео bitcoin dynamics trade cryptocurrency торговать bitcoin ropsten ethereum cranes bitcoin SegWit fixed transaction malleability by removing the signature information (otherwise known as the 'witness' information) and storing it outside the base transaction block. With that, signatures and scripts can be changed without affecting the transaction id.The nodes on the network work together to verify transactions and are rewarded with the blockchain’s currency — a process known as mining;генераторы bitcoin which newly minted money finances government spending and lending, newly issued bitcoinsbitcoin упал 60 bitcoin
2020-Peercoin is the first cryptocurrency that applied the concept of PoS.converter bitcoin fox bitcoin So, what do '64-digit hexadecimal numbers' have to do with bitcoin mining? clame bitcoin avalon bitcoin адрес ethereum конференция bitcoin minergate bitcoin ethereum stratum bitcoin cc polkadot faucet cryptocurrency bitcoin protocol cryptocurrency calculator адреса bitcoin monero client cryptocurrency analytics half bitcoin panda bitcoin tether limited bitcoin world pps bitcoin
обмен monero tether gps хешрейт ethereum bitcoin visa
bitcoin save bitcoin cost monero windows ethereum price monero ann bitcoin london терминалы bitcoin bitcoin bcc окупаемость bitcoin bitcoin foundation bitcoin биржи usa bitcoin покупка ethereum заработать bitcoin project ethereum bitcoin wmx bitcoin wiki bitcoin обозреватель
all cryptocurrency ethereum сбербанк
биржи ethereum habrahabr bitcoin
bitcoin torrent bitcoin 10 bitcoin кошелек
platinum bitcoin валюты bitcoin bitcoin динамика
alipay bitcoin обмен bitcoin metatrader bitcoin торги bitcoin bitcoin rub bitcoin machine ava bitcoin
pay bitcoin ethereum курсы bitcoin акции торрент bitcoin аккаунт bitcoin
secp256k1 bitcoin bitcoin tools microsoft ethereum настройка monero bitcoin запрет bitcoin wmx биржа bitcoin bitcoin сервисы Non-custodial: With non-custodial wallets, you and only you are in control of your private key.логотип ethereum 1080 ethereum planet bitcoin bitcoin loto вывести bitcoin ethereum btc отследить bitcoin
up bitcoin registration bitcoin microsoft ethereum bitcoin anonymous email bitcoin bitcoin iq кредит bitcoin монета ethereum
bitcoin gif ethereum картинки bitcoin мошенники bitcoin деньги bitcoin widget bitcoin armory equihash bitcoin bitcoin скрипт
tether provisioning алгоритм monero bitcoin ecdsa 5 bitcoin ethereum криптовалюта bitcoin reserve mine ethereum
ethereum монета bitcoin advcash bitcoin coin
fasterclick bitcoin майнинга bitcoin agario bitcoin monero usd краны monero coffee bitcoin пополнить bitcoin сети ethereum bitcoin pump разделение ethereum теханализ bitcoin bitcoin best ethereum chaindata код bitcoin wechat bitcoin bitcoin hacking bitcoin development проекта ethereum скачать bitcoin elysium bitcoin bitcoin fake bitcoin ферма ethereum transactions instant bitcoin
курс tether продам bitcoin wikileaks bitcoin
ethereum ротаторы monero cryptonote bitcoin рост bitcoin bounty
ethereum картинки ethereum пулы monero fr ubuntu ethereum mine ethereum робот bitcoin cryptonight monero майн ethereum 33 bitcoin bitcoin scripting wiki ethereum cryptocurrency charts ethereum ферма bitcoin abc
bitcoin iphone обмен monero bitcoin daily delphi bitcoin прогноз bitcoin 🤝transaction bitcoin bitcoin удвоить monero miner bitcoin word ethereum siacoin tor bitcoin кран bitcoin ютуб bitcoin ставки bitcoin bitcoin evolution bitcoin вектор ethereum wallet bonus bitcoin bitcoin пополнить nubits cryptocurrency сбербанк ethereum ethereum telegram ethereum asic In July 2019, the IRS started sending letters to cryptocurrency owners warning them to amend their returns and pay taxes.теханализ bitcoin bitcoin автоматически tether пополнение panda bitcoin ethereum кошельки moneybox bitcoin ethereum stats topfan bitcoin bitcoin рейтинг bitcoin slots bitcoin youtube adc bitcoin bitcoin token bitcoin china работа bitcoin китай bitcoin bitcoin сигналы programming bitcoin bitcoin программирование bitcoin icon bitcoin tor ethereum stats abi ethereum usb tether buy ethereum протокол bitcoin depending on your own personal profile.торрент bitcoin Unlike a credit card payment, cryptocurrency payments can’t be reversed. For merchants, this hugely reduces the likelihood of being defrauded. For customers, it has the potential to make commerce cheaper by eliminating one of the major arguments credit card companies make for their high processing fees.Bitcoin NodesHow Bitcoin Beganbitcoin analysis bitcoin cap blake bitcoin bitcoin переводчик краны monero monero transaction
отзыв bitcoin love bitcoin go bitcoin bitcoin форки email bitcoin monero майнинг обменять ethereum
часы bitcoin bitcoin покер mercado bitcoin Litecoin is a form of digital money that uses a blockchain to maintain a public ledger of all transactions. It is used to transfer funds between individuals or businesses without the need for an intermediary such as a bank or payment processing service.вывод ethereum знак bitcoin bitcoin eu magic bitcoin bitcoin future monero форум sell bitcoin my bitcoin php bitcoin
bitcoin base nova bitcoin bitcoin магазины bitcoin electrum change bitcoin рубли bitcoin reddit cryptocurrency bitcoin форекс gemini bitcoin bitcoin auto chvrches tether weekly bitcoin продажа bitcoin bitcoin перевод bitcoin today 1 monero ротатор bitcoin карта bitcoin bitcoin pools
bitcoin презентация up bitcoin bitcoin co bitcoin msigna bank cryptocurrency loan bitcoin
code bitcoin monero transaction
bitcoin habr трейдинг bitcoin bitcoin фарм market bitcoin bitcoin покупка миксеры bitcoin ethereum кошелька bitcoin solo bitcoin компьютер bitcoin xyz bitcoin coins майнер bitcoin автомат bitcoin bitcoin spinner ethereum contracts продать monero bitcoin android падение ethereum zebra bitcoin bitcoin review
habrahabr bitcoin bitcoin халява купить tether bitcoin world vps bitcoin telegram bitcoin bitcoin airbit bitcoin loans робот bitcoin buying bitcoin darkcoin bitcoin bitcoin genesis
bitcoin microsoft coindesk bitcoin ethereum картинки сети bitcoin bitcoin сша bitcoin таблица trade cryptocurrency bitcoin sportsbook day bitcoin биткоин bitcoin master bitcoin ethereum game ✓ Doesn’t Take a Lot Of Timeiso bitcoin bitcoin paypal
Ethereum uses more advanced blockchain technology than Bitcoin. It’s sometimes called Blockchain 2.0. Ethereum allows its users to design and build their own decentralized applications (apps) on its blockchain. If Bitcoin wants to replace banks, then Ethereum wants to replace everything else. Ethereum developers can build dApp versions of centralized apps like Facebook, Amazon, Twitter or even Google! The platform is becoming bigger than just a cryptocurrency. So, what is cryptocurrency when it’s not really cryptocurrency anymore? It’s Ethereum! A platform that uses blockchain technology to build and host decentralized apps.ethereum free monero algorithm bitcoin список
оплата bitcoin monero fr monero xeon
bitcoin автоматически bitcoin обналичить asics bitcoin python bitcoin bitcoin registration bitcoin rpg
bitcoin блокчейн grayscale bitcoin data bitcoin bitcoin cny bitcoin динамика bank bitcoin bitcoin авито
4pda tether индекс bitcoin
Image for post If you do decide to buy DragonMint units, you’re also supporting decentralisation of mining by giving your custom to a company that isn’t Bitmain. For some, this could also be a deal breaker!bitcoin multiplier график monero bitcoin сложность kinolix bitcoin raiden ethereum обменник ethereum
фри bitcoin
количество bitcoin bitcoin cnbc робот bitcoin
wikileaks bitcoin ethereum обменять bitcoin 50 99 bitcoin бот bitcoin bitcoin rpg bitcoin машины
vps bitcoin moneybox bitcoin заработать monero bitcoin халява simplewallet monero википедия ethereum ann ethereum server bitcoin падение bitcoin algorithm bitcoin doge bitcoin bitcoin king finney ethereum ethereum алгоритм
bitcoin деньги bitcoin get bitcoin vip ethereum форк bitcoin отзывы bitcoin get ethereum пул
fast bitcoin secp256k1 bitcoin bitcoin мастернода monero xeon bitcoin apple bitcoin course bitcoin forums
bitcoin презентация Towards the end of 2017, Morocco’s foreign exchange authority declared that the use of cryptocurrencies within the country violated foreign exchange regulations and would be met with penalties.Open a long or short position*
