Nowadays, people seem obsessed with cryptocurrencies, especially with how they can make a profit from this new age currency. One of the most popular ways to make money from virtual currencies is through cryptocurrency mining. But what exactly is crypto mining? Let’s have a look.
What is Cryptocurrency Mining?
Mining cryptocurrencies is basically a process by which transactions within a virtual currency’s network are validated and added to the blockchain (the virtual currency’s public ledger). Anyone can mine – all that’s needed is an internet connection and appropriate hardware.
How Does it Work?
The mining process works by trying to resolve a complex computational challenge in order to create a block out of recent transactions. The challenges vary in difficulty. What most people find most interesting about mining is that miners get a financial reward in the form of cryptocurrency for their mining effort. Those who can solve more complex puzzles get greater rewards; as do those who can solve a larger amount of challenges in a short period of time.
What is a Mining Pool?
As the name suggests, in a mining pool, people come together to mine cryptocurrencies. In this arrangement, the miners share resources to create greater mining power and whatever rewards they get out of the mining network are shared among the members. One upside of being part of a mining pool is that their income flow from the mining process is steadier since a larger mining network has better chances of finding puzzles to solve than a standalone mining rig setup.
What is a Mining Rig?
Basically, a mining rig is a computer setup that is used to mine cryptocurrencies. Some of these setups are specifically designed to do mining and nothing else. But some mining rigs are typical computer systems that also serve other roles. But now that mining has drawn the interest of so many people today, most mining rigs are computer systems specifically dedicated to this role. That is because mining has become a little more challenging than it was previously.
How Can You Mine Without a Rig?
You don’t need a rig to be a cryptocurrency miner. This can help you sidestep the challenges of having to set up mining hardware and managing it yourself. One way of doing this is to use cloud mining services. With this kind of mining, you use shared processing power from remotely located data centers to mine cryptocurrencies. You can pay for as much computing power as you need.
You can also buy hashing power in a hashing power marketplace. This is a lot like cloud mining, but the difference is that the marketplace consists of people seeking to sell access to their mining rigs and people in need of this hardware to mine cryptocurrencies.
What is a Mining Contract?
In a mining contract, you get into an agreement with a cloud mining company whereby in exchange for a certain amount of computing power, you will mine cryptocurrency coins, which will be yours. However, as you enter into these contracts, proper vetting is important to ensure that they give you a return – some turn a profit while others do not.
In conclusion, mining has become big business. And with many people now interested in making money through crypto mining, the industry has become a bit clouded. That is why you should consider joining mining pools or even using cloud mining services or signing lucrative mining contracts to turn a profit. Building a mining rig has become less profitable and complex – a task better left to bonafide mining hobbyist.