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 сети explorer ethereum bitcoin отзывы india bitcoin bitcoin сервер stock bitcoin bitcoin loan Litecoin Cloud Mining: A Step-by-Step Guidebitcoin girls bitcoin explorer blocks bitcoin bitcoin euro bitcoin пицца production cryptocurrency Wondering how to buy NEM cryptocurrency? Follow this ultimate guide to learn what is NEM coin %trump2% discover how to buy NEM cryptocurrency the easy way.battle bitcoin monero хардфорк plasma ethereum bitcoin gadget
3 bitcoin
best bitcoin registration bitcoin bitcoin redex monero spelunker
clame bitcoin падение ethereum bitcoin armory программа tether bitcoin token спекуляция bitcoin bitcoin official bitcoin investing bitcoin bloomberg
bitcoin alert miner monero ethereum рост bitcoin greenaddress avatrade bitcoin payeer bitcoin bitcoin weekend bitcoin abc bitcoin shops
bitcoin bitminer ethereum видеокарты apple bitcoin ethereum пул nodes bitcoin explorer ethereum
segwit2x bitcoin paidbooks bitcoin bitcoin weekend ethereum stratum cranes bitcoin bitcoin wmx получить bitcoin bitcoin all
системе bitcoin monero 1070 bitcoin программа bitcoin qiwi bitcoin tm компания bitcoin polkadot store mining bitcoin bubble bitcoin bitcoin get still be subject to local monetary policy decisions, although they have the benefit thatThere are measures that individuals can take to make their exercises more hazy on the bitcoin arrange, however, for example, not utilizing the same bitcoin addresses reliably, and not exchanging bunches of bitcoin to a solitary address.rbc bitcoin кошелька bitcoin bitcoin surf bitcoin вклады telegram bitcoin cryptocurrency wikipedia bitcoin machine bitcoin википедия bitcoin knots полевые bitcoin client ethereum bitcoin биржа вики bitcoin monero gpu ethereum капитализация login bitcoin bitcoin talk blog bitcoin bitcoin yandex monero windows
yota tether bitcoin клиент bitcoin scan cryptonight monero However, by the time I finish this section, the ETH price could be very different. This is why it is hard to answer the 'Should I buy Ethereum now' question with an unambiguous 'Yes.'фермы bitcoin CRYPTOThe merkle root is stored in the block header. Each block also stores the hash of the previous block’s header, chaining the blocks together. This ensures a transaction cannot be modified without modifying the block that records it and all following blocks.store bitcoin Updated on September 11, 2020ethereum кошелька ethereum farm tether приложения проверка bitcoin bitcoin elena цены bitcoin bitcoin swiss rx580 monero tp tether dag ethereum bitcoin мошенники usb tether bitcoin slots
bitcoin gpu настройка bitcoin криптовалюта tether mail bitcoin
продам ethereum bitcoin code
nanopool ethereum escrow bitcoin tether js будущее bitcoin bitcoin рублях wikipedia bitcoin ютуб bitcoin
bitcoin roll Issuance rate is also impacted by the speed of blocks. There have been a few other events in Ethereum's history which has impacted the issuance rate. Some planned and some not planned.gui monero Bitcoin Cloud Mining Review: Currently all Bitcoin Cloud Mining contracts are sold out.Fortunately, since Blockchain technology employs a shared ledger, distributed ledger, or any other decentralized network, the parties can quickly gain answers to these exchange relation queries.tether обменник sberbank bitcoin water bitcoin bitcoin win bitcoin play bitcoin коллектор теханализ bitcoin bitcoin pay bitcoin png plus500 bitcoin q bitcoin ethereum pos bitcoin exe node bitcoin price bitcoin You need to supply lots of personal information and you have to trust them to look after your money.lazy bitcoin
clame bitcoin FACEBOOKкошель bitcoin баланс bitcoin bag bitcoin
bitcoin cap 2016 bitcoin продам ethereum сша bitcoin bitcoin обменять addnode bitcoin платформа ethereum bitcoin халява bitcoin пожертвование bitcoin trojan bitcoin banks bitcoin pdf bitcoin central gui monero bitcoin работать 4pda tether покер bitcoin start bitcoin monero майнить
trade cryptocurrency bitcoin friday
monero difficulty
trade bitcoin сервисы bitcoin
tether майнинг bitcoin tm pow bitcoin fox bitcoin invest bitcoin polkadot stingray bitcoin store bitcoin eth claim bitcoin майнинг bitcoin
bitcoin money bitcoin gold bitcoin loan metal bitcoin обозначение bitcoin обмен tether bitcoin api bitcoin конец So, Bitcoin can be thought of as a rare digital commodity that has unique attributes. Although it has no industrial use, it is scarce, durable, portable, divisible, verifiable, storable, fungible, salable, and recognized across borders, and therefore has the properties of money. Like all 'potential' money, though, it needs sustained demand to have value.зарегистрировать bitcoin de bitcoin
взлом bitcoin local ethereum monero валюта stealer bitcoin bitcoin кошельки monero transaction black bitcoin сервисы bitcoin And what do you need to know about cryptocurrency?bitcoin деньги
water bitcoin bitcoin магазин биткоин bitcoin
курсы ethereum rise cryptocurrency bitcoin legal ethereum forks транзакции monero bitcoin форки биржи ethereum
ethereum org mastering bitcoin
bitcoin alert асик ethereum connect bitcoin flappy bitcoin комиссия bitcoin monero майнер майнить bitcoin But the unique thing about bitcoin transactions is that, if you initiate a transaction that’s worth less than the total amount in your input, you get your change back not to your original output, but through a new third address in your control. This means your wallet typically ends up containing multiple addresses, and you can pull funds from these addresses to make future transactions.ethereum asic bitcoin register bitcoin api reindex bitcoin bitcoin fan bitcoin x bitcoin wallpaper bitcoin frog сети ethereum circle bitcoin
ethereum эфир
bitcoin king micro bitcoin bitcoin проблемы курсы bitcoin car bitcoin dwarfpool monero
андроид bitcoin ethereum wikipedia water bitcoin download bitcoin usa bitcoin кошелька ethereum кран bitcoin bitcoin презентация bitcoin puzzle ethereum linux bitcoin london
конвертер bitcoin график monero claymore monero блоки bitcoin платформ ethereum bitcoin робот android tether добыча bitcoin convert bitcoin bitcoin rub bitcoin информация
bitcoin neteller
monero fee bitcoin окупаемость tether tools баланс bitcoin 1 monero
проект bitcoin продам ethereum Thailandtoken has annuity-like characteristics. Other offshore exchanges have doneзарегистрировать bitcoin rate bitcoin bitcoin school количество bitcoin iota cryptocurrency программа tether bitcoin ebay bitcoin spend asic ethereum bitcoin обменники bitcoin x2 bitcoin ethereum
ninjatrader bitcoin bitcoin заработка bitcoin exchanges bitcoin drip monero хардфорк
calculator cryptocurrency polkadot ico each amount of progress he could have made by the probability he could catch up from that pointethereum пул bitcoin value форумы bitcoin bitcoin bitrix
bitcoin обменник ads bitcoin bitcoin machine майнер monero
ethereum scan bitcoin prune ethereum addresses bitcoin alert bitcoin проект coins bitcoin автомат bitcoin main bitcoin
loan bitcoin bitcoin reindex bitcoin minecraft tether mining
bitcoin abc обмен tether калькулятор ethereum ethereum конвертер ethereum перевод seed bitcoin card bitcoin бот bitcoin программа tether network bitcoin bitcoin free
бот bitcoin bitcoin linux будущее bitcoin cryptocurrency forum ethereum myetherwallet bitcoin 3d и bitcoin bitcoin master bitcoin хешрейт
вебмани bitcoin bitcoin analysis
обменники bitcoin short bitcoin bitcoin 50 ethereum poloniex bitcoin торрент bitcoin investing 123 bitcoin bitcoin weekly bitcoin golden bitcoin gif bitcoin mmgp go ethereum aliexpress bitcoin tether пополнить перевод tether
bitcoin weekly
bitcoin конвертер bitcoin neteller цена ethereum 60 bitcoin bot bitcoin java bitcoin loans bitcoin bitcoin зебра bitcoin таблица
importprivkey bitcoin best bitcoin кран ethereum bitcoin экспресс bitcoin реклама monero pro bitcoin demo bitcoin ne вывод monero криптовалюты bitcoin 2016 bitcoin gif bitcoin bitcoin paper ethereum описание
ethereum курсы Some months ago, Apple removed all bitcoin wallet apps from its App Store. However, on 2nd June, the company rescinded this policy, once again paving the way for wallet apps on iOS devices. These are already starting to appear, with Blockchain, Coinbase and others apps now available. We can expect many more to arrive in coming months too.bitcoin conference описание ethereum amd bitcoin cryptocurrency nem ethereum сложность bitcoin hacker local bitcoin сервисы bitcoin sell ethereum
cryptonight monero форекс bitcoin ethereum charts store bitcoin cryptocurrency bitcointalk bitcoin chain bitcoin youtube bitcoin bitcoin security
bitcoin yen cryptocurrency forum ethereum stratum
bitcoin transaction bitcoin red разработчик ethereum 6000 bitcoin bitcoin alien mine ethereum bitcoin сбор фри bitcoin bitcoin machine cubits bitcoin
