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The word mining comes from the English to mine, which means to extract, and is used to refer to the process of mining digital coins.
This procedure is performed by miners, who have a reason to exist, since there is no institution or bank that mints cryptocurrencies.
The miner's job is to provide the computing power of their computers to perform validation checks using complex algorithmic calculations and determine the creation of so-called hash codes before attaching a block to a chain of previous blocks in the blockchain.
A block is a container or a limited list of all registered transactions. As soon as the block is completed—that is, when all recorded transactions are marked—the miners will insert it into the blockchain. The miner's activity is rewarded with the creation of new cryptocurrencies.
Over time, this activity spread more and more. In fact, to slow down the production of cryptocurrencies, algorithmic computing has become more difficult to solve, and mining is no longer an occupation for everyone.
Who can mine today?
Initially, mining could be done on regular computers and on regular processors. With the increasing proliferation of cryptocurrencies and the increasing complexity of verification algorithms, a simple computer has become insufficient.
Currently, for mining you need to have:
- a variety of servers and computers equipped with central processing units and graphics processors that have a more favorable ratio between computing power and electricity consumption;
- special software that interacts to perform calculations useful for completing transactions on the blockchain.
These machines, which are active specifically for mining, are assembled into so-called farms. You should also know that these servers and computers, being very powerful, also consume a lot of energy and need constant cooling, and this requires additional electricity. Therefore, the costs associated with mining have become very high and unbearable for everyone.
Cloud-mining alternative
Alternatively, if you don't have a suitable farm, you can opt for cloud mining—a paid web-based system that allows you to take advantage of companies' farms that make them specifically available. Thus, cloud mining reduces many costs for humans, including the cost of servers, graphics processors and the necessary electricity.
The cost of cloud-mining services, of course, will vary depending on the duration of the subscription and the computing power you want to purchase.