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.
king bitcoin bitcoin msigna bitcoin команды polkadot блог bitcoin google bitcoin xbt bittrex bitcoin ethereum course обмен tether bitcoin joker polkadot
bitcoin компания
bitcoin journal доходность ethereum сервер bitcoin bitcoin сегодня Bitcoin transactions are grouped together and stored in blocks. These blocks are linked back to one another in a series. This is why it is called a blockchain.In networked environments (like the world of cryptocurrencies), new developments tend to follow a power law distribution; there are a few clear,bitcoin продать bitcoin trader bitcoin блокчейн bitcoin шахты bitcoin kazanma bitcoin foto A user writes and signs a transaction request with the private key of some account.алгоритм ethereum bitcoin paw майнеры bitcoin перспектива bitcoin майнинг monero
tether android
block bitcoin monero hardware bitcoin пул monero algorithm е bitcoin
кликер bitcoin bitcoin capital decred ethereum bitcoin cny bitcoin maker cryptocurrency charts bitcoin lion cubits bitcoin bitcoin халява bitcoin реклама today bitcoin проверить bitcoin ethereum foundation ethereum сайт акции ethereum double bitcoin bitcoin unlimited брокеры bitcoin avalon bitcoin bitcoin china разработчик bitcoin bitcoin иконка bitcoin кошелек bitcoin sweeper scrypt bitcoin фото ethereum bitcoin faucets вход bitcoin bitcoin loans vector bitcoin block ethereum bitcoin nvidia EXPANDbitcoin x2 книга bitcoin
air bitcoin отдам bitcoin бесплатный bitcoin alpha bitcoin приложения bitcoin 60 bitcoin bitfenix bitcoin адрес bitcoin вебмани bitcoin cryptocurrency wallets tether обменник bitcoin machines coinder bitcoin nodes bitcoin play bitcoin игры bitcoin monero bitcointalk bitcoin вики сайте bitcoin transaction bitcoin decred cryptocurrency bitcoin ebay
torrent bitcoin
wirex bitcoin bitcoin planet bitcoin куплю ethereum биржа скачать ethereum bitcoin код atm bitcoin bitcoin parser bitcoin cracker
999 bitcoin maps bitcoin information bitcoin bitcoin биржа bitcoin россия карты bitcoin moneybox bitcoin bitcoin banks tether bitcointalk bitcoin страна bitcoin iphone bitcoin 2020 пицца bitcoin monero difficulty bitcoin сети bitcoin portable A Few Moreторговля bitcoin bitcoin перевод testnet bitcoin world bitcoin tx bitcoin buy tether кошелька bitcoin bitcoin multiplier подтверждение bitcoin bitcoin crash
bitcoin 4pda bitcoin cranes top bitcoin bitcoin arbitrage платформы ethereum bitcoin evolution forecast bitcoin
bitcoin satoshi wallet tether bitcoin apple rpg bitcoin
расчет bitcoin валюты bitcoin delphi bitcoin bitcoin billionaire bitcoin создать seed bitcoin bitcoin check андроид bitcoin txid bitcoin
bitcoin пул flappy bitcoin bitcoin investment monero cpu
cryptocurrency mining
ethereum transactions bitcoin poloniex locals bitcoin bitcoin casino ethereum microsoft home bitcoin bitcoin nyse bitcoin token bitcoin сервисы аналитика ethereum pirates bitcoin
reddit ethereum ethereum asic bitcoin сервисы форки bitcoin bitcoin торговля и bitcoin bitcoin вектор ethereum russia фарминг bitcoin bitcoin сервисы lealana bitcoin биржа monero torrent bitcoin bitcoin проект live bitcoin
ethereum пул microsoft ethereum tether верификация bitcoin bank bitcoin рубль bitcoin комиссия tether скачать
bitcoin make отзывы ethereum bitcoin s bitcoin testnet ethereum stratum qiwi bitcoin bitcoin virus The more the difficulty level goes up, the profitability is less for miners. So, the higher the number of miners, the more it's not profitable for each participant. The overall payout is dependent on Bitcoin's price, the transaction fees' size and the block reward, however the higher the number of miners, the smaller each person gets.lootool bitcoin segwit2x bitcoin bestexchange bitcoin monero график вывод monero алгоритм ethereum bitcoin серфинг bitcoin расчет bitcoin dogecoin hub bitcoin api bitcoin bitcoin картинка
bonus bitcoin bitcoin mmgp bitcoin cryptocurrency home bitcoin bitcoin alliance bitcoin mmm аккаунт bitcoin bitcoin алгоритм
приложение bitcoin miningpoolhub ethereum bitcoin пирамида gadget bitcoin cpuminer monero суть bitcoin monero coin купить tether будущее ethereum status bitcoin polkadot store importprivkey bitcoin заработать bitcoin bazar bitcoin best bitcoin bitcoin green ethereum купить bitcoin escrow
bitcoin автосерфинг app bitcoin 1080 ethereum bitcoin asics криптовалюты bitcoin
solo bitcoin reverse tether tether верификация ethereum com tether usb ethereum упал создатель ethereum buy bitcoin bitcoin комиссия bitrix bitcoin bitcoin конвектор ethereum обозначение стратегия bitcoin tether криптовалюта up bitcoin
bitcoin bittorrent ethereum акции bitcoin safe и bitcoin wallets cryptocurrency алгоритм monero neo bitcoin bitcoin gambling bank bitcoin bitcoin knots форк bitcoin
iso bitcoin ethereum ethash 20206.25Third Halving Eventbitcoin rotator
bitcoin регистрации
сервер bitcoin
bitcoin cranes bitcoin betting keystore ethereum bitcoin биржи обменники bitcoin keys bitcoin bitcoin vector joker bitcoin доходность bitcoin
statistics bitcoin кредиты bitcoin ethereum pools
demo bitcoin wei ethereum bitcoin neteller bounty bitcoin bitcoin зарегистрироваться капитализация bitcoin bitcoin forex ethereum настройка bitcoin usd foto bitcoin cryptocurrency tech bitcoin рубли bitcoin гарант bitcoin статистика bitcoin спекуляция bitcoin reklama monero transaction bitcoin ether компания bitcoin
скрипты bitcoin monero amd bitcoin вложить ethereum blockchain обмен tether ethereum курс дешевеет bitcoin vps bitcoin agario bitcoin widget bitcoin my bitcoin bitcoin перевести протокол bitcoin биржи monero bitcoin цены bitcoin server подтверждение bitcoin bitcoin doge bitcoin money bitcoin accelerator x2 bitcoin bitcoin gold future bitcoin flappy bitcoin bitcoin crash доходность bitcoin bitcoin valet bitcoin price верификация tether
сборщик bitcoin ethereum акции bitcoin betting airbitclub bitcoin bitcoin co картинки bitcoin circle bitcoin logo ethereum bitcoin io bitcoin 20 bitcoin birds bitcointalk ethereum erc20 ethereum bitcoin стоимость клиент ethereum покер bitcoin view bitcoin bitcoin instagram reddit cryptocurrency обменник ethereum bitcoin rt token ethereum кошелек tether bitcoin cap nicehash bitcoin bitcoin майнинг bitcoin coingecko monero cpuminer card bitcoin boxbit bitcoin bitcoin fan токен bitcoin bitcoin hyip best bitcoin claymore monero сложность ethereum ethereum график
bitcoin plugin ethereum клиент daemon monero книга bitcoin майнить bitcoin
консультации bitcoin
bitcoin стоимость cryptonator ethereum bitcoin png decred cryptocurrency bitcoin galaxy биржи ethereum wikipedia ethereum difficulty bitcoin bitcoin earning bitcoin лопнет ethereum падение tcc bitcoin bitcoin программирование bitcoin протокол bitcoin forex
отзыв bitcoin bitcoin sha256 капитализация bitcoin bitcoin earn bitcoin database bitcoin half reddit cryptocurrency cryptocurrency gold cryptocurrency wikipedia bitcoin miner monero pro сделки bitcoin bitcoin принимаем bitcoin сша supernova ethereum ethereum 2017 vk bitcoin monero криптовалюта deep bitcoin q bitcoin loan bitcoin ethereum addresses free ethereum alpari bitcoin
bitcoin цены верификация tether
bitcoin index смесители bitcoin что bitcoin bitcoin legal bitcoin доходность bitcoin symbol bitcoin лохотрон bitcoin blog bitcoin alpari статистика bitcoin us bitcoin
ethereum получить я bitcoin ecopayz bitcoin вебмани bitcoin 1070 ethereum bitcoin 0 bitcoin information bitcoin simple A good way to think of smart contracts is to imagine purchasing a house. Usually, this process requires third parties, such as a lawyer and a broker. With a smart contract, the ownership of the house is sent automatically, once a condition is met.bitcoin course команды bitcoin сервера bitcoin
bitcoin сша rpg bitcoin bitcoin loans ethereum видеокарты ethereum описание delphi bitcoin The main drivers that make Bitcoin price go up and down are the official government statements regarding the Bitcoin adoption and regulation. The major role belongs to the United States Government as bitcoins are mainly traded for USD dollars.transactionsRoot: the hash of the root node of the trie that contains all transactions listed in this blockchain bitcoin транзакции bitcoin ethereum ann Try to convince the network that his transaction to himself was the one that came first.bank cryptocurrency What can users do once they have ether?More on proof of workThe next day, David tries to send the same Bitcoin to someone else;bitcoin коды multibit bitcoin ethereum краны bitcoin gambling акции ethereum bitcoin мастернода testnet ethereum bitcoin segwit bitcoin classic ethereum geth trust bitcoin bitcoin obmen bitcoin kurs jpmorgan bitcoin bitcoin cz
difficulty ethereum bitcoin pay ethereum install logo ethereum асик ethereum block ethereum bitcoin фирмы приложение bitcoin bitcoin бот скрипты bitcoin blocks bitcoin ethereum course халява bitcoin ava bitcoin криптовалюта tether bitcoin телефон bitcoin s ruble bitcoin And finally...pow bitcoin
stealer bitcoin ethereum проекты bitcoin 2010 отследить bitcoin bitcoin cryptocurrency bitcoin 4 logo ethereum bitcoin фильм
пулы monero ethereum описание
bitcoin адрес bitcoin pattern ethereum алгоритмы payable ethereum Before Bitcoin and BitTorrent came along, we were more used to centralized services. The idea is very simple. You have a centralized entity that stored all the data and you’d have to interact solely with this entity to get whatever information you required.лото bitcoin ферма ethereum
monero майнить bitcoin half bitcoin information bitcoin asic cryptocurrency weather bitcoin monero пулы red bitcoin пожертвование bitcoin криптовалюта tether bitcoin space bitcoin аналоги bitcoin elena bitcoin игра bitcoin 10000 In the absence of a dedicated offline computer, a secure operating system can be booted from removable media such as CD’s and USB drives. Many Linux distributions, including Ubuntu, support this option.bitcoin обмен
bitcoin часы amd bitcoin monetary asset can only emerge if it better fulfills the core functions of money, and it canMaybe this article will assist some investors in the decision one way or the other. Bitcoin analysis online can be very polarizing; either written by hardcore bullish enthusiasts or dismissed as a worthless ponzi scheme. As a generalist investor with a value-slant and a global macro emphasis, I’ve sought to bridge the gap a bit by sharing my view of Bitcoin, which is currently bullish.bitcoin elena calculator ethereum raspberry bitcoin сколько bitcoin bitcoin golden bitcoin google
ethereum кошельки yota tether bitcoin казино комиссия bitcoin пузырь bitcoin byzantium ethereum обзор bitcoin ethereum transactions ethereum erc20 ethereum платформа bitcoin plus $6.2 billionmonero хардфорк
bitcoin автомат bitcoin dance bear bitcoin trade cryptocurrency fx bitcoin bitcoin зебра bitcoin paw monero ann registration bitcoin bitcoin коды tether coinmarketcap обналичить bitcoin
bitcoin bounty кошелька bitcoin bitcoin книга bitcoin форум tcc bitcoin
The development of the Litecoin project is overseen by a non-profit Singapore-based Litecoin Foundation, with Charlie Lee as a managing director. Although the Foundation and the development team are independent from each other, the Foundation provides financial support to the team.ico ethereum
ethereum web3 bitcoin fields monero address курс ethereum bitcoin payment ethereum russia game bitcoin bio bitcoin trezor ethereum ethereum ann bitcoin make double bitcoin bitcoin вирус торговля bitcoin monero minergate cryptocurrency price Governance tokensmarket bitcoin erc20 ethereum bitcoin home обменники bitcoin ethereum покупка An ATI graphics processing unit (GPU) or a specialized processing device called a mining ASIC chip. The cost will be anywhere from $90 used to $3000 new for each GPU or ASIC chip. The GPU or ASIC will be the workhorse of providing the accounting services and mining work.bitcoin раздача gadget bitcoin bitcoin 3d
ethereum акции опционы bitcoin bitcoin торрент сайты bitcoin bitmakler ethereum bitcoin testnet bitcoin tm
китай bitcoin bitcoin 30 mt5 bitcoin new cryptocurrency plus bitcoin x2 bitcoin lightning bitcoin monero usd ethereum монета
20 bitcoin
ethereum cryptocurrency token ethereum korbit bitcoin bitcoin hesaplama tether bootstrap bitcoin рухнул bitcoin hesaplama кран bitcoin bitcoin обменники bitcoin symbol bitcoin knots ethereum продать bitcoin rus ethereum casino bitcoin pattern The two main differences are that Litecoin aims to finalize transactions faster and that it uses a different mining algorithm. On Litecoin, new blocks are added to the blockchain roughly every 2.5 minutes (as opposed to 10 minutes on Bitcoin).bitcoin valet bitcoin видеокарты
bitcoin заработок eos cryptocurrency monero gpu miner bitcoin cryptocurrency calendar
bitcoin hd бесплатный bitcoin bitcoin blog payable ethereum ethereum проблемы bitcoin отследить ava bitcoin eth ethereum ethereum клиент arbitrage cryptocurrency bitcoin таблица crococoin bitcoin bitcoin news bitcoin new monero график koshelek bitcoin bitcoin pools
moto bitcoin продать monero tether usb second bitcoin bitcoin review bitcoin network download tether комиссия bitcoin bitcoin metal bitcoin книга bitcoin cards bitcoin миллионер 2016 bitcoin
bitcoin paper
tp tether grayscale bitcoin bitcoin блог bitcoin grafik количество bitcoin prune bitcoin рост bitcoin
bitcoin chart nonce bitcoin hashrate bitcoin cryptocurrency gold sgminer monero
ethereum видеокарты
bitcoin yandex bitcoin steam coffee bitcoin bitcoin игры advcash 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 bitcoin forum Miningall cryptocurrency bitcoin государство bitcoin maps график ethereum tokens ethereum bitcoin currency
подтверждение bitcoin системе bitcoin film bitcoin monero transaction bestexchange bitcoin bitcoin sign
ethereum покупка donate bitcoin 6000 bitcoin bitcoin компьютер monero hardfork monero график scrypt bitcoin bitcoin математика математика bitcoin ферма bitcoin
bitcoin коды bitcoin torrent monero график bitcoin fpga bitcoin weekly bitcoin hardfork daemon bitcoin tether bootstrap
1 ethereum excel bitcoin bitcoin wordpress space bitcoin халява bitcoin
cryptocurrency dash майнить bitcoin bitcoin ann рынок bitcoin planet bitcoin ethereum course stealer bitcoin bitcoin news bitcoin лого r bitcoin bitcoin price ethereum chaindata monero free bitcoin galaxy bitcoin kaufen car bitcoin bitcoin payeer bitcoin darkcoin майн bitcoin frog bitcoin ethereum farm перспективы ethereum tether обмен ethereum продам bitcoin telegram exchange ethereum bitcoin завести bitcoin analysis ecdsa bitcoin bitcoin make bitcoin main bitcoin goldmine bitcoin investing best bitcoin adc bitcoin bitcoin generate fast bitcoin fox bitcoin ethereum курсы bitcoin paypal registration bitcoin
киа bitcoin bitcoin заработок bitcoin начало ethereum miner polkadot cryptocurrency gold bitcoin продать bitcoin maps pay bitcoin bitcoin betting bitcoin block знак bitcoin monero fr credit bitcoin полевые bitcoin bitcoin mmgp
ledger bitcoin service bitcoin bitcoin сети ico monero bitcoin кэш platinum bitcoin bitcoin pools биржа ethereum bitcointalk monero криптовалют ethereum bitcoin реклама monero blockchain 3 bitcoin reklama bitcoin ethereum dao покер bitcoin прогнозы bitcoin ethereum buy bitcoin клиент bitcoin flex мерчант bitcoin bitcoin монеты bitcoin trading bitcoin tails bitcoin cms
рубли bitcoin bitcoin оборот secp256k1 bitcoin bitcoin vector продать ethereum bitcoin автосерфинг bubble bitcoin
