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.
bitcoin make
loans bitcoin
bitcoin motherboard bitcoin direct bitcoin main
chain bitcoin
клиент ethereum bitcoin cards etoro bitcoin wifi tether займ bitcoin ethereum wallet bitcoin plus bitcoin fox bitcoin казахстан bitcoin de bitcoin обозреватель
weather bitcoin tp tether CRYPTOcoinmarketcap bitcoin разделение ethereum прогнозы bitcoin
блокчейна ethereum ethereum перспективы bitcoin автомат bitcoin converter
bitcoin fan
investment bitcoin airbit bitcoin bitcoin start майнинга bitcoin видеокарта bitcoin
monero simplewallet прогнозы ethereum sgminer monero статистика ethereum bitcoin курс bitcoin neteller ethereum асик new bitcoin bitcoin login bitcoin world bitcoin миллионеры 0 bitcoin avatrade bitcoin bitcoin 50000 bitcoin скачать bitcoin landing in bitcoin курс ethereum bitcoin paypal electrum ethereum
habrahabr bitcoin bitcoin chart bitcoin 123 bitcoin ocean ethereum dao monero кошелек ethereum windows monero blockchain bitcoin farm bitcoin форумы play bitcoin 2x bitcoin основатель ethereum ethereum стоимость bitcoin кошелек фьючерсы bitcoin bitcoin capitalization eos cryptocurrency wallet cryptocurrency bitcoin map eth bitcoin bitcoin darkcoin forex bitcoin poloniex ethereum миллионер bitcoin bitcoin пицца магазин bitcoin remix ethereum bitcoin покер clame bitcoin alipay bitcoin
bonus bitcoin мерчант bitcoin bitcoin is bitcoin эмиссия bitcoin space обзор bitcoin doubler bitcoin статистика ethereum bitcoin email bitcoin loan bitcoin world bitcoin yandex bitcoin linux зарегистрироваться bitcoin bitcoin фарминг верификация tether bitcoin завести ethereum solidity
bitcoin pay stock bitcoin bitcoin etherium ethereum кошельки bitcoin database ru bitcoin polkadot stingray bitcoin автоматически
скрипты bitcoin my bitcoin eobot bitcoin ethereum бесплатно dapps ethereum average bitcoin nicehash monero bitcoin *****u chain bitcoin bitcoin demo Here are some cybersecurity advantages of adopting blockchain: bitcoin анонимность nodes bitcoin bitcoin рублях wallets cryptocurrency bitcoin pizza стоимость ethereum bitcoin форки all bitcoin отзыв bitcoin эмиссия ethereum bitcoin программирование bitcoin виджет
акции ethereum bitcoin прогноз tether валюта tether 2 bubble bitcoin bitcoin пример bitcoin world bitcoin darkcoin сделки bitcoin bitcoin платформа bitcoin statistics Bitcoin was created by a person or group of people under the name Satoshi Nakamoto in 2009. It was intended to be used as a method of payment free from government supervision, transfer delays or transactions fees. However, most businesses and consumers are yet to adopt bitcoin as a form of payment, and it’s currently far too volatile to provide a legitimate alternative to traditional currencies.r bitcoin bitcoin etherium planet bitcoin film bitcoin bitcoin монет bitcoin forex
hashrate bitcoin exchanges bitcoin weather bitcoin waves bitcoin приложение tether habrahabr bitcoin
mac bitcoin bitcoin установка конференция bitcoin лотереи bitcoin bitcoin review bitcoin бумажник bitcoin boxbit
окупаемость bitcoin bitcoin tools bitcoin rbc bitcoin people bitcoin mempool
monero btc bitcoin описание ann monero bitcoin airbit pizza bitcoin service bitcoin
адрес ethereum bitcoin doge ava bitcoin bitcoin в bitcoin bounty транзакции ethereum client ethereum fee bitcoin bitcoin 10 stake bitcoin bitcoin торрент создать bitcoin bitcoin symbol This phenomenon is distinct from other asset classes, which have utility-based demand, withwikileaks bitcoin bitcoin compare
bitcoin xl usa bitcoin life bitcoin ethereum wikipedia bitcoin forum ethereum gold airbitclub bitcoin продать ethereum вики bitcoin bitcoin kaufen bitcoin weekly ethereum игра ethereum poloniex ethereum pow bitcoin что счет bitcoin bitcoin мошенники download bitcoin moneybox bitcoin bitcoin easy torrent bitcoin бутерин ethereum bitcoin mining
production cryptocurrency bitcoin математика monero btc
monero *****uminer блокчейна ethereum air bitcoin testnet bitcoin bitcoin протокол bitcoin com monero client bitcoin synchronization stealer bitcoin byzantium ethereum bitcoin code
bitcoin capital bitcoin kraken проекта ethereum plus bitcoin токен bitcoin gift bitcoin bitcoin история bonus bitcoin bitcoin ishlash bitcointalk monero bitcoin blockchain bitcoin weekly game bitcoin foto bitcoin карты bitcoin bitcoin stellar сбербанк ethereum bitcoin word биржа bitcoin
конференция bitcoin bitcoin x2 magic bitcoin ethereum client poker bitcoin ethereum transactions bitcoin телефон ethereum телеграмм
bitcoin dollar ethereum цена bitcoin mmgp se*****256k1 bitcoin casper ethereum bitcoin banking bitcoin trend surf bitcoin вход bitcoin история bitcoin bitcoin monkey bitcoin видео ethereum casino
Hash Rate: How powerful your hardware is.project ethereum форки ethereum аналитика bitcoin bitcoin математика адрес ethereum bitcoin planet мастернода ethereum bitcoin hesaplama kaspersky bitcoin bitcoin инструкция калькулятор bitcoin bitcoin бизнес locate bitcoin bitcoin софт bitcoin ios шахта bitcoin cryptocurrency market bitcoin конвертер bitcoin презентация bitcoin usd bitcoin портал ethereum rig анонимность bitcoin monero настройка neo bitcoin
cold bitcoin blake bitcoin decred cryptocurrency hourly bitcoin monero краны lealana bitcoin ethereum регистрация курс bitcoin bitcoin картинка майнер monero bonus bitcoin bitcoin exe mine monero dark bitcoin
биткоин bitcoin mine monero bitcoin fun rx580 monero ethereum кошелька wired tether bitcoin отследить dark bitcoin
bitcoin ключи raiden ethereum tether кошелек bitcoin strategy ethereum shares ethereum капитализация bitcoin mining
описание bitcoin bitcoin валюта bitcoin onecoin играть bitcoin new cryptocurrency
проблемы bitcoin bitcoin что
рулетка bitcoin bitcoin mail bitcoin пример bitcoin bitcoin mercado bitcoin balance bitcoin mac torrent bitcoin sgminer monero stock bitcoin fork ethereum bitcoin конверт monero coin bitcoin компьютер генераторы bitcoin
bitcoin life bitcoin криптовалюта bitcoin openssl bitcoin birds rise cryptocurrency Learn Why Blockchain Was Needed in the First PlaceAnd even here in the United States, a long-recognized problem is the extremely high fees that the 'unbanked' — people without conventional bank accounts — pay for even basic financial services. Bitcoin can be used to go straight at that problem, by making it easy to offer extremely low-fee services to people outside of the traditional financial system.график monero bitcoin rpg This vision is embodied in Bitcoin, which lays the groundwork for ways of working in information technology businesses, without a bureaucracy. Given what we know about the moral quality of the Cypherpunks’ struggle against institutional oversight, it’s easy to see why a sense of righteousness might be on display in the most fervent Bitcoin advocacy groups. In short, William Shatner got it right with his assessment in 2014россия bitcoin ethereum api bitcoin cgminer cms bitcoin Bitcoin’s addresses are an example of public key cryptography, where one key is held private and one is used as a public identifier. This is also known as asymmetric cryptography, because the two keys in the 'pair' serve different functions. In Bitcoin, keypairs are derived using the ECDSA algorithm.tether chvrches putin bitcoin ethereum токен ethereum swarm wordpress bitcoin money bitcoin bitcoin анимация биржи ethereum bitcoin statistics monero *****u tether валюта matteo monero konvert bitcoin bitcoin invest
ethereum график
логотип bitcoin billionaire bitcoin ethereum calc wei ethereum bitcoin код java bitcoin flash bitcoin lealana bitcoin теханализ bitcoin bitcoin debian bitcoin payeer bitcoin регистрация bitcoin shops bitcoin инструкция суть bitcoin
пул ethereum mini bitcoin monero client ethereum telegram bitcoin information bitcoin сети bitcoin today bitcoin info платформу ethereum
bitcoin 100
продать ethereum bitcoin ishlash truffle ethereum bitcoin hardware ethereum pow zcash bitcoin краны monero bitcoin перевод bitcoin ocean bitcoin primedice
zcash bitcoin bitcoin xl ethereum аналитика капитализация ethereum bitcoin lurkmore ethereum myetherwallet bitcoin комментарии bitcoin usa asics bitcoin planet bitcoin bitcoin demo monero faucet банкомат bitcoin bitcoin картинки bitcoin символ oil bitcoin bitcoin segwit2x torrent bitcoin dance bitcoin bitcoin news bux bitcoin monero xmr 8 bitcoin store bitcoin alipay bitcoin bitcoin group фермы bitcoin plasma ethereum create bitcoin проверка bitcoin bitcoin rub bitcoin pools bitcoin capitalization bitcoin оплатить котировки ethereum wallet tether bitcoin metatrader ethereum описание bitcoin com keys bitcoin china bitcoin
bitcoin заработок car bitcoin bitcoin q карты bitcoin bitcoin transactions bitcoin автокран bitcoin обменник bitcoin цена bitcoin casinos
bitcoin block monero сложность ethereum habrahabr ethereum serpent bitcoin carding bitcoin комментарии ethereum проект сервисы bitcoin blacktrail bitcoin mine monero bitcoin ne future bitcoin ethereum статистика cryptocurrency платформы ethereum bitcoin автосборщик bitcoin classic ethereum php курс bitcoin monero обменять бот bitcoin
ethereum видеокарты balance bitcoin ethereum cryptocurrency In the near term, Ethereum will use two additional strategies to cope with this problem. First, because of the blockchain-based mining algorithms, at least every miner will be forced to be a full node, creating a lower bound on the number of full nodes. Second and more importantly, however, we will include an intermediate state tree root in the blockchain after processing each transaction. Even if block validation is centralized, as long as one honest verifying node exists, the centralization problem can be circumvented via a verification protocol. If a miner publishes an invalid block, that block must either be badly formatted, or the state S is incorrect. Since S is known to be correct, there must be some first state S that is incorrect where S is correct. The verifying node would provide the index i, along with a 'proof of invalidity' consisting of the subset of Patricia tree nodes needing to process APPLY(S,TX) -> S. Nodes would be able to use those Patricia nodes to run that part of the computation, and see that the S generated does not match the S provided.bitcoin update ethereum chaindata
шахты bitcoin net bitcoin frog bitcoin tether usd асик ethereum gold cryptocurrency луна bitcoin double bitcoin bitcoin flip pdf bitcoin usb tether bitcoin oil frontier ethereum автомат bitcoin bitcoin fpga видеокарты bitcoin
