Mining is a process of creating new crypto coins by solving complex mathematical equations
Cryptocurrency is gaining in popularity with each day. Whether it is its extreme volatility or promise of high returns, people are curious and drawn towards them. These virtual coins are sort of a breather to those who feared losing money in the market at the beginning of the coronavirus pandemic, and an enigma to new investors. Usually, when people talk about cryptocurrency, they invariably refer to Bitcoin, the largest and oldest of them all. People can get Bitcoin primarily in two ways: either by directly investing through online exchanges or by mining using sophisticated computer rigs. Investing in cryptocurrency is somewhat similar to trading in stocks.
What Is Mining?
It is a process of creating new crypto coins by solving complex mathematical equations. When a person invests in a cryptocurrency, the details of the investment are entered on a distributed ledger, called the blockchain. But the process is complete only when a “miner” verifies the transaction as legitimate. Once that is done, the transaction is locked into the blockchain for everyone to see and the transaction is complete.
This verification process requires miners to solve complex equations. They are in a race against each other to solve the problem. Those who do that first are paid a fraction of the transaction as a fee for their effort. Every successful transaction leads to new coins entering into circulation.
However, it is very costly. It requires high-functioning computers, consumes a lot of time and electric energy.
How To Mine Bitcoin?
As said earlier, the computer needed for mining has to have huge processing power. Bitcoin mining requires speed, the faster the rig is the more a person would be able to mine and resultantly increase their earnings. If the computer is slow, the person may lose out to other miners. A robust graphics processing unit (GPU) or video card is essential for Bitcoin mining. Then, the person would need to create a Bitcoin wallet and join a mining pool – a group of miners who combine their resources to increase their mining power. Miners of the same pool distribute the profit among themselves.