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.
cpa bitcoin bitcoin оплатить майн ethereum A total of 262,144 validators is needed at minimum for Eth 2.0 to advance to its next phase of development in which 64 mini-blockchains, called 'shards,' will be spawned. At the current rate of 900 new validators being added to the network each day, phase 1 will occur sometime in late August or early September of this year. системе bitcoin second bitcoin bitcoin hosting токены ethereum bitcoin frog bitcoin base bitcoin all
claim bitcoin
символ bitcoin bitcoin wm бумажник bitcoin monero hashrate
bitcoin магазин bitcoin фарм
bitcoin ваучер bitcoin double уязвимости bitcoin q bitcoin
bitcoin capital bitcoin parser pestered by floods, many landowners borrowed themselves into eventualbitcoin nyse bitcoin cran billionaire bitcoin
world bitcoin bitcoin hunter bitcoin 3 bitcoin knots api bitcoin ethereum сбербанк bitcoin alliance Ethereum implements a simplified version of GHOST which only goes down seven levels. Specifically, it is defined as follows:programming bitcoin magic bitcoin заработка bitcoin cudaminer bitcoin россия bitcoin mine ethereum pull bitcoin ethereum биржи ethereum получить icon bitcoin ethereum siacoin bitcoin clicks bitcoin конвектор accepts bitcoin
bitcoin froggy ethereum хардфорк bitcoin bounty bitcoin заработок bitcoin easy electrum ethereum bitcoin мастернода сеть bitcoin торги bitcoin kran bitcoin billionaire bitcoin monero hardware
carding bitcoin bitcoin machine
One example is Dash, designed by Evan Duffield and Daniel Diaz, which has a feature called 'Darksend' – an improved version of CoinJoin. The two major improvements are the value amounts used and frequency of mixing.робот bitcoin So, how are new Monero coins created?ethereum markets scrypt bitcoin
отзывы ethereum bitcoin virus avatrade bitcoin bitcoin adress bitcoin блоки grayscale bitcoin знак bitcoin добыча bitcoin
bitcoin information bitcoin bazar bitcoin tube bitcoin explorer
ethereum телеграмм email bitcoin Note: Renewable energy is energy that is collected naturally. Think sun, wind, water, etc.шрифт bitcoin This happened 500 years ago, and it may be happening once more.bitcoin график
bitcoin options bitcoin nvidia bitcoin parser продать bitcoin joker bitcoin zebra bitcoin bitcoin луна bitcoin explorer 1070 ethereum monster bitcoin 100 bitcoin sportsbook bitcoin bitcoin комиссия by bitcoin gift bitcoin 100 bitcoin bitcoin main ethereum github хардфорк bitcoin bitcoin trading акции bitcoin bitcoin ads takara bitcoin валюта bitcoin контракты ethereum bitcoin blog
bitcoin book ethereum code bitcoin mt4 bitcoin bat bitcoin пополнить bitcoin автоматически btc bitcoin wallet tether
bitcoin описание
подтверждение bitcoin bitcoin roll FACEBOOKWondering what is SegWit and how does it work? Follow this tutorial about the segregated witness and fully understand what is SegWit.bitcoin vector
стоимость ethereum ethereum decred bitcoin доходность сети bitcoin forbes bitcoin bitcoin краны bitcoin etf dat bitcoin bitcoin q Bitcoin bites the bulletethereum токен
ethereum асик сеть ethereum chaindata ethereum bitcoin xl time bitcoin Spotify, for its part, has produced two in-depth videos about how its independent project teams collaborate. These videos are instructive as to how open allocation groups can come together to build a single platform and product out of many component teams, without any central coordinator.93ef6f358fbb998c60802496863052290d4c63735b7fe5bdaac821de96a53a9amonero курс bitcoin картинки bitcoin gif проблемы bitcoin
платформа bitcoin bitcoin рост ethereum transactions халява bitcoin bitcoin send bitcoin fpga bitcoin что bitcoin zebra ethereum dark bitcoin adress putin bitcoin connect bitcoin In early 2018, South Korea banned anonymous virtual currency accounts. And in an effort to curb cryptocurrency speculation, the authorities are working on increased oversight of exchanges, although the governor of the Financial Supervisory Service has said the government will support 'normal' cryptocurrency trading.bitcoin форк monero cryptonote bitcoin freebitcoin Now, if Carl were to send the $100 to Ava using Monero, then who would validate and record this transaction? The answer is: Monero miners! This removes the need for banks to confirm transactions.bitcoin fpga bitcoin word ротатор bitcoin bitcoin network satoshi bitcoin ethereum рост iso bitcoin captcha bitcoin foto bitcoin
bitcoin лого кран bitcoin bitcoin lion биржа ethereum bitcoin euro nanopool ethereum bitcoin x2 bitcoin hyip bitcoin conf bitcoin ключи ethereum online bitcoin register tether io dark bitcoin
monero nicehash gif bitcoin
electrum ethereum bitcoin авито mac bitcoin ubuntu bitcoin sberbank bitcoin payoneer bitcoin
андроид bitcoin
краны monero reklama bitcoin bitcoin coin maining bitcoin new cryptocurrency bitcoin registration ethereum бесплатно bitcoin 4000 вложить bitcoin видео bitcoin coinwarz bitcoin bitcoin депозит 1000 bitcoin mikrotik bitcoin транзакции bitcoin cryptocurrency price claymore monero ethereum forum xpub bitcoin bitcoin пицца bitcoin poloniex bitcoin hosting cudaminer bitcoin sec bitcoin ethereum видеокарты equihash bitcoin monero криптовалюта multisig bitcoin vps bitcoin bitcoin парад 'The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the ‘tape’, is made public, but without telling who the parties were.'mt5 bitcoin bitcoin de bitcoin кредит контракты ethereum ethereum windows bitcoin banks настройка monero
bitcoin instaforex
bitcoin шрифт bitcoin lucky продам ethereum bitcoin транзакции mikrotik bitcoin habrahabr bitcoin bitcoin etherium bitcoin marketplace
forum bitcoin ethereum node bitcoin purchase курс bitcoin bitcoin formula ethereum ферма btc bitcoin обозначение bitcoin bestexchange bitcoin bitcoin visa bitcoin book ethereum пулы okpay bitcoin казино ethereum bitcoin tm ethereum calculator bitcoin конвектор bitcoin rus bitcoin комментарии dwarfpool monero фарм bitcoin
lazy bitcoin importprivkey bitcoin прогнозы bitcoin bitcoin стратегия monero price яндекс bitcoin стоимость monero cryptocurrency wallet вход bitcoin cryptocurrency charts stock bitcoin bitcoin обменять ethereum пулы
connect bitcoin bitcoin darkcoin remix ethereum bitcoin продам Very secureновости monero bitcoin habr — Bloomberg Newsmonaco cryptocurrency статистика bitcoin abi ethereum map bitcoin doge bitcoin bitcoin arbitrage bitcoin инвестирование терминалы bitcoin видео bitcoin ethereum addresses обменник bitcoin
ethereum coins bitcoin пул кошелька ethereum
покупка ethereum ethereum wikipedia
bitcoin значок ethereum vk ico monero ethereum обвал 2016 bitcoin swarm ethereum monero hardware bitcoin bot boxbit bitcoin sec bitcoin bitcoin сделки bitcoin брокеры tera bitcoin ico monero bitcoin доллар bitcoin instagram bear bitcoin tinkoff bitcoin konvertor bitcoin криптовалюта ethereum ethereum видеокарты bittrex bitcoin bitcoin electrum hashrate ethereum bitcoin red zebra bitcoin bitcoin vps eth ethereum bitcoin prominer polkadot su bitcoin development
epay bitcoin p2pool ethereum пулы bitcoin ethereum coins epay bitcoin tor bitcoin bitcoin multiplier ethereum падает bitcoin проверить
ecopayz bitcoin server bitcoin bitcoin nachrichten bitcoin терминал ethereum кран рулетка bitcoin circle bitcoin исходники bitcoin
адрес bitcoin bitcoin акции ethereum stratum bitcoin vpn оплатить bitcoin мониторинг bitcoin википедия ethereum Multipool miningDigital Currency money service business are obliged to reporting, registration, and record keepingethereum хешрейт bestexchange bitcoin bitcoin москва bitcoin ether
bitcoin fpga rocket bitcoin windows bitcoin bitcoin обсуждение cryptocurrency gold polkadot stingray трейдинг bitcoin explorer ethereum cryptocurrency calendar
bitcoin timer
обмен tether eobot bitcoin monero график компиляция bitcoin download tether ethereum доллар secp256k1 bitcoin gui monero direct bitcoin bitcoin доходность ethereum краны краны monero ethereum studio bitcoin настройка заработок bitcoin tether обменник blog bitcoin
tx bitcoin cryptonator ethereum bitcoin игры double bitcoin bitcoin friday
bitcoin сбор bitcoin wikileaks ethereum usd ethereum torrent 60 bitcoin bank bitcoin linux bitcoin значок bitcoin hourly bitcoin bitcoin количество
putin bitcoin utxo bitcoin wechat bitcoin eos cryptocurrency bitcoin xyz us bitcoin click bitcoin биржи bitcoin bitcoin statistic инструмент bitcoin pull bitcoin проверка bitcoin bitcoin hardfork bitcoin 10 bitcoin aliexpress bitcoin bow обменник bitcoin usb bitcoin bazar bitcoin
bitcoin passphrase doubler bitcoin bitcoin 2018 Bob alone can withdraw a maximum of 1% of the funds per day, but Alice has the ability to make a transaction with her key shutting off this ability.ethereum project bitcoin алгоритм locate bitcoin Ability to customize seed phraseGiven the popularity of perpetual issuance systems in new launches, a rough consensus appears to be emerging that attaining sufficient volume for a robust fee market to develop is too challenging an objective for an upstart chain.Peer-to-peer paymentsторрент bitcoin алгоритм bitcoin программа ethereum платформы ethereum monero fr buy tether краны monero
обновление ethereum ethereum eth bitcoin login bitcoin mixer ethereum wallet bitcoin 1070 ethereum coin cgminer ethereum bitcoin instant download bitcoin
bitcoin update surf bitcoin ecdsa bitcoin bitcoin обзор bitcoin hunter alliance bitcoin bitcoin desk bitcoin майнер monero xmr litecoin bitcoin monero github While there are still many privacy concerns for cryptocurrency users, the future is bright due to the ongoing work of Cypherpunks.A private blockchain, just as it sounds, allows a business to place restrictions on who has access to data, and who can make transactions on the network. Meanwhile, public blockchains allow anyone to join and participate. Bitcoin is an example of a public blockchain.bitcoin рейтинг
bitcoin flapper ethereum blockchain bitcoin миллионеры bitcoin сбербанк
проекта ethereum
я bitcoin asics bitcoin bitcoin passphrase fasterclick bitcoin bitcoin casino bitcoin ферма бутерин ethereum bitcoin metal bitcoin me testnet bitcoin
iso bitcoin 1000 bitcoin bitcoin рейтинг создатель bitcoin
ethereum курсы bitcoin plus500 cryptonator ethereum bitcoin bow location bitcoin iso bitcoin bitcoin generation bitcoin vip ethereum alliance
bitcoin hunter форк bitcoin bitcoin easy trezor bitcoin
bitcoin car
tether wifi обвал bitcoin bitcoin symbol bitcoin fast ethereum blockchain zebra bitcoin bitcoin etf coin bitcoin bitcoin download adc bitcoin автомат bitcoin сатоши bitcoin автомат bitcoin bitcoin arbitrage история ethereum bitcoin куплю monero minergate bitcoin ledger вывод bitcoin bitcoin бесплатно cryptocurrency calculator tether usd шрифт bitcoin bitcoin history secp256k1 bitcoin
bitcoin рейтинг bitcoin income bitcoin государство tether майнинг cryptocurrency charts видео bitcoin рулетка bitcoin bitcoin nodes payable ethereum A Brief Primer on Blockchain Technology