New Delhi: As the cryptocurrency market is booming and attracting new investors every day, have you ever wondered what Bitcoin or crypto mining is? How to own coins without buying them from crypto exchanges?
Simply put, there is no physical existence of cryptocurrency, but they have value like any other legal tender in any nation and can be easily traded within groups or groups. people.
The year 2021 has made many new crypto fans and investors. This year has also seen a rapid rise in cryptocurrencies such as Bitcoin, Ether, and Dogecoin, but the best is yet to come.
The majority of traders buy and sell cryptos through exchanges, but it is also possible to mine the coins using powerful computer systems that solve complex mathematical equations.
Most cryptocurrencies are made using Blockchain, also known as the public ledger. It is secured using complex encryption techniques, and getting new tokens on the ledger involves solving many composite math puzzles that help verify virtual currency transactions. It is then updated on the decentralized blockchain ledger and in exchange for this work, the miners are paid with the cryptocurrency.
This complex process is called mining and miners are an essential part of this ecosystem.
How it works?
Powerful computers solve complex mathematical equations. The first person called the encoder decrypts each code to authorize the transaction and in exchange for this service, the miner will earn a small amount of the token. Once the math problem is solved and verified, the data will be added to the public ledger, called the blockchain.
How much can it cost to mine cryptocurrencies?
In 2009, when Bitcoin and other coins came into being, it was a profitable business as miners easily got 50 BTC, worth almost $ 6,000, to solve each equation.
Although the reward for mining Bitcoin has decreased over time, the value of each BTC has increased significantly. According to reports, the reward for mining a Bitcoin is $ 3.33,000 (approximately Rs. 2.47 crore).
But the cost of mining Bitcoin has increased dramatically. This is because the competition for tokens is much higher and high performance computing is now required to successfully mine tokens. As a result, the cost of energy consumed in this process could be huge depending on the location of the miner and the type of material they are using.
Can you start mining at home?
To mine a cryptocurrency you will need a high performance computer, a wallet for that crypto. After that, you can join a mining pool to maximize profitability. The group of miners in the pool can combine their resources to increase the overall mining power and the profits will be distributed evenly among all members of the pool.