The introduction of the blockchain technology came with something revolutionary, and that is the cryptocurrency. The cryptocurrency was created to function as an alternative to fiat currencies while making online transactions, among other uses.
When you hear the word mining, you probably envisage digging the earth which is far from it. Cryptocurrency mining is a process that involves the verification of transactions that take place in cryptocurrency networks and added to the blockchain’s public ledger. So basically cryptocurrencies are mined from the blockchain network using special equipment called miners.
The first decentralized cryptocurrency to be created was the Bitcoin, and you can earn Bitcoin either by mining or through cryptocurrency exchanges where Bitcoin trading takes place. However, before mining can begin, you need to take some parameters and factors into consideration, these factors include:
- Power Consumption: Depending on the cryptocurrency, but most Bitcoin and altcoin mining consume lots of electricity, and that translates to more bills, so it is imperative that before you go into mining, you look at the hardware’s power requirement, and that way you have an idea about the extra cost that will be added to your electricity bills.
- Hash Rate: Your cryptocurrency mining hardware (or mining rig) constantly solves complex mathematical calculations per second, hence, hash rate simply refers to the number of calculations done per second, and this is measured using megahash per second (MH/sec), gigahash per second (GH/sec), terahash per second (TH/sec).
- Profitability: You need to know how long before you get ROI on the investment in mining hardware. There are online platforms that assist with the profitability calculations of any mining hardware. It will require you inputting the hash rate, power consumption, and current bitcoin/cryptocurrency price.
Cryptocurrency mining utilizes mining rigs for the mining of the digital currencies; these cryptocurrencies are basically divided into 3 types:
This is not as powerful as the other mining rigs, and there is nothing special about it, other than the fact that it is your regular computer with an upgradable graphics card. While you can mine cryptocurrency with your computer’s central processing unit, the process, however, takes a lot of time. But, your computer can be upgraded by adding a powerful graphics card, and you have the options of choosing graphics cards from ATI or from NVIDIA (2 great graphics card manufacturing companies).A cryptocurrency is any digital currency designed and created as a means of exchange, and the digital currency’s security structure uses cryptography, to check the verification of digital assets, and also to guide the production of additional units of the digital currency.
This is a custom built integrated circuit specifically designed for the operation of cryptocurrency mining. After building the integrated circuit rig, the Field Programmable Gate Array (FPGA) assists the mining hardware manufacturer to use many of the chips, and have them configured for cryptocurrency mining. This custom setup enhances the performance, which in turn makes the FPGA a lot better than the CPUs and GPUs.
This is the very big one; the Application Specific Integrated Circuit (ASIC) is designed mainly to mine cryptocurrencies including bitcoins at ultra-high speeds with an incredibly low rate of energy consumption.
After getting your hardware set up, here are some things you will also need:
- A wallet
- Mining software package
- Mining pool membership
- Cryptocurrency exchange membership
- Reliable internet connection
- Well ventilated location
Now you have an idea what cryptocurrency mining is, depending on how powerful your mining rig is, mining can be profitable.
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