Bitcoin Mining explained by 6RMB with simple words
Understanding the Mining Process
Cryptocurrency mining involves two functions — releasing new cryptocurrency into the system (similar to gold discovery), and verifying and adding transactions to the blockchain public ledger. It is performed using an internet-connected computer which is often equipped with special mining hardware devices and software programs to control and manage the mining process.
Crypto mining is a calculation-intensive, puzzle-solving-like computation process that requires high processing power along with high electricity consumption. The miner who first solves the puzzle gets to place the next block on the blockchain and claim the rewards. Rewards include the miner becoming the owner of the newly released bitcoin, or getting fees linked to the transactions performed in the block.
The cryptocurrency discovery process is configured in such a way that if more miners are working, the difficulty level goes up, while a decline in the number of miners eases the difficulty level. The rewards make mining a lucrative activity for monetary gains. As more miners attempt to grab a piece of the pie, finding new blocks gets computationally more difficult, requiring more computing power.
The process of “mining” in the “crypto” world is a system of processing the various “transactions” that have been created on a network. It’s called “mining” predominantly because of how any successfully-processed transactions are rewarded with tokens of the system you’re contributing computing resources to.
Specifically, each time you “mine” a “crypto” system, the miner is basically using their computer equipment to calculate the “hash” of a series of “cryptographic” (encryption) transactions.
These transactions are the transactions within the network itself, generated by the way in which you’re able to send “Bitcoin” (or other “currencies”) to different users. The point is that the “hashing” process is the same regardless of which system you end up doing it for, or even which equipment you end up using.
To briefly explain its history, CPU’s were originally used to calculate Bitcoin “blocks”, but as the complexity of the operations increased, people discovered that GPU’s (Graphics Processing Units) were better disposed to handle the “hashing” algorithms required by the various “cryptographic” systems.
From here, other people discovered that you could use FPGA’s (field-programmable gate array) and ASIC’s (application-specific integrated circuit) to create even more powerful hashing systems.
The latter of these (ASIC’s) has actually become somewhat recognizable as the “go-to” method of crypto mining. The various AntMiner systems (the majority of which being USB-powered) have long since taken over as the “default” mining system.
Types Of Mining Equipment
Whilst the process of “mining” the various “tokens” is the same regardless of which type of system you do it on, there are a number of systems which have been created solely to “mine” the various “crypto” tokens that are available.
The point here is that it doesn’t matter if you see someone with a PC/GPU “mining” setup, or a custom ASIC — the way in which the system works is the same (the only difference lies in the speed through which it’s processed).
This means that if you’re interested in how to “mine” the various “crypto” systems, it’s important to discern the various ways through which you can do it. There are several:
1. PC-based (CPU/GPU)
This is the mst standard form of “mining”, as you can just use over-the-counter PC components for it.
Whilst these types of setup work well for many of the smaller “coins”, they’ve been long-since superseded by the ASIC-powered “cloud” mining solutions now dominating the Bitcoin space.
If you are looking at getting into “mining” (in any capacity), you’ll want to look at the above as a major investment. Whilst you may argue that you could end up using the components yourself, the reality is that they are very highly priced and ultimately become degraded extremely quickly. They’re also power-hungry.
Ultimately, you should consider that if you want to potentially mine “coins” for a crypto system, you should be looking at this as a last-resort (typically if you don’t want to pay for an ASIC or just simply don’t feel they’re worth the price).
The most important element of this setup is having a large array of GPU’s (Graphics Processing Units). You’ll be able to find more specifics online; the point is that if you have them all working from one motherboard, it should work well for you.
2. ASIC Based (Antminer etc)
The other type of “mining” system is the ASIC. This is a custom chip which has been designed specifically to help users manage the various “hashing” calculations require for systems like Bitcoin.
As mentioned, all the “hashing” algorithms are the same, which means that you’re able to use the ASIC’s for any “crypto” system you want.
The main supplier of these systems is “BitMain”, who produce the “AntMiner” range of ASIC systems. There are many types of “Antminer”, with the ones pictured above being most powerful (have the largest number of chips).
These are left to operate on their own (you just plug them into a power outlet and ethernet port) — to which you’re able to achieve fast “hashing” which is more energy efficient & reliable than the various other systems that may be available.
As mentioned, as a “standalone” mining method, the ASIC is by far the most effective at present. Whilst there are rumours of other systems being developed, this is the most efficient available.
3. “Cloud Mining”
It is a bull-sheet, because of lots of scam apps.
4. “Mining Pools”
Enter the mining pool, which is a collection/group of miners working together to increase their chances of finding a block at the group level, compared to that at the individual level. Through such pools, miners combine their individual computational resources with those of the other members which enhances their joint processing power, and helps to achieve the desired output faster.
What’s next
In 2021, mining has become very profitable. This increases the interest of more and more people. But how can an ordinary person become a part of this industry and start earning income? 6RMB is the Alliance of Miners, we use tools from the world of Defi, which will allow everyone who wants to join us
Stage 1 — Launch our own 6RMB DEX (Decentralized Exchange)
Interesting? Jump to our website to learn about our project and strategy
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