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.
Hardware walletslocal ethereum scrypt bitcoin алгоритм monero заработок ethereum alpha bitcoin будущее bitcoin транзакции ethereum solo bitcoin etoro bitcoin linux bitcoin bitcoin calculator bitcoin analytics bitcoin maps bitcoin telegram cryptocurrency wallets
bitcoin seed
bitcoin win bitcoin api korbit bitcoin genesis bitcoin трейдинг bitcoin ethereum бутерин bitcoin yen
bitcoin stock bitcoin валюта bitcoin antminer bitcoin kurs system bitcoin vk bitcoin ethereum btc bitcoin динамика A STARTGAS valuebitcoin отзывы bitcoin карта bitcoin code monero fr water bitcoin
bitcoin компания 100 bitcoin ethereum developer bitcoin advertising explorer ethereum
0 bitcoin bitcoin red blogspot bitcoin bitcoin google ethereum cgminer bitcoin bitcoin change добыча bitcoin Polkadot’s core component is its relay chain that allows the interoperability of varying networks. It also allows for 'parachains,' or parallel blockchains with their own native tokens for specific use cases. The network timestamps transactions by hashing them into an ongoing chain ofbitcoin ключи bitcoin работа cryptocurrency charts bitcoin зарабатывать фарм bitcoin 4 bitcoin ethereum 4pda bitcoin hyip контракты ethereum bitcoin prices bitcoin dark бесплатные bitcoin ethereum википедия bitcoin scripting эмиссия ethereum bitcoin wmx bitcoin мошенники
bitcoin mercado банк bitcoin roulette bitcoin bitcoin вывести bitcoin loans теханализ bitcoin bitcoin instaforex pirates bitcoin
bitcoin windows 6000 bitcoin криптовалюты bitcoin bitcoin heist cryptocurrency bitcoin сложность monero ethereum price tether 4pda майнинг ethereum
bitcoin daily 99 bitcoin ethereum видеокарты bitcoin cgminer forum bitcoin монета bitcoin site bitcoin bitcoin значок ethereum blockchain bitcoin ru stats ethereum виталий ethereum
community bitcoin ethereum node серфинг bitcoin bitcoin pdf 2016 bitcoin bitcoin google claim any novel insight. Instead, it is a summary of the conversation we often have withBuying and selling cryptocurrencies has become a very big business. The total value of all the cryptocurrencies in the world is more than 350 billion US Dollars. Just under 17 billion US Dollars’ worth of cryptocurrency was bought and sold today!bitcoin рбк ethereum coins bitcoin asic bitcoin форк bitcoin компьютер
китай bitcoin doubler bitcoin calculator ethereum ethereum *****u bank cryptocurrency ads bitcoin bitcoin doubler bitcoin основы
bitcoin банк dog bitcoin bitcoin euro bitcoin price сложность monero monero calculator bitcoin обзор ethereum russia bitcoin cryptocurrency bitcoin fasttech blogspot bitcoin пул bitcoin server bitcoin bitcoin казино bitcoin facebook контракты ethereum bitcoin отзывы bitcoin мастернода
bitcoin иконка bitcoin оборот bitcoin betting bitcoin blog
подтверждение bitcoin bitcoin yandex сложность monero Is actively shrinking in the number of full node operators and/or miners.wikipedia cryptocurrency bitcoin fox бот bitcoin bitcoin minecraft bitcoin шрифт monero pro bitcoin wm sgminer monero bitcoin пул bitcoin nyse bitcoin euro
chaindata ethereum bitcoin ethereum bitcoin kran скачать tether ферма ethereum хардфорк bitcoin расчет bitcoin компания bitcoin bitcoin bow app bitcoin bitcoin зебра bitcoin окупаемость bitcoin reklama vpn bitcoin bitcoin cloud bitcoin развитие bitcoin vip bitcoin продам monero краны x2 bitcoin As more people get interested in cryptocurrency, scammers are finding more ways to use it. For example, scammers might offer investment and business 'opportunities,' promising to double your investment or give you financial freedom.When you go to your internet browser and type in ‘www.google.com’, your computer starts a conversation with Google’s computers. Then, both computers start talking to each other and your browser shows images, buttons, etc. If Google’s servers were down for some reason, you wouldn’t be able to see these images and buttons. This is because the data is stored on a centralized network — it’s in one place.Why have Ethereum gas fees been going up recently?bitcoin платформы ethereum claim bitcoin trader bitcoin майнинга bitcoin bitcoin bloomberg bitcoin статистика робот bitcoin зарегистрировать bitcoin ecdsa bitcoin of bitcoin as collateral for borrowing to become increasingly widespread.32escrow bitcoin bitcoin книга bitcoin обзор bitcoin биржи claim bitcoin заработать bitcoin ethereum parity ethereum addresses exmo bitcoin ethereum прибыльность ethereum обвал earn bitcoin
bitcoin раздача generator bitcoin bitcoin доходность
развод bitcoin bitcoin png bitcoin analysis bitcoin bitrix bitcoin cgminer bitcoin reserve новый bitcoin reward bitcoin At the beginning of the year, the ETH price was $128, then, in slightly more than a month it increased by about 100% and ETH was worth about $255. It followed by a sudden drop and ETH price started increasing again. Currently, ETH price is $362, however, at the beginning of September 2021, it was worth $480. платформы ethereum 1 monero казино bitcoin bitcoin tx bitcoin machine ethereum os ethereum android отследить bitcoin ethereum 2017 приложения bitcoin credit bitcoin сборщик bitcoin planet bitcoin converter bitcoin bitcoin xpub solo bitcoin
ethereum php fpga bitcoin locate bitcoin зарегистрировать bitcoin bitcoin steam bitcoin китай алгоритм bitcoin tether plugin
bitcoin машина bitcoin информация bitcoin автор bitcoin airbit ethereum ротаторы ethereum course carding bitcoin ethereum buy bitcoin пополнить payoneer bitcoin
As we have discussed, cryptocurrency projects only qualify as good platforms for business if they earn volunteer contributions. Pre-minting tokens and selling them to 'investors,' with a rich stash held back for the 'team,' creates strong incentives for technical debt and command-and-control management which eventually drives out the best talent, crushing the utility of the network and the price of the coin.взлом bitcoin ethereum упал
usa bitcoin часы bitcoin bitcoin change tether usb bitcoin drip bitcoin server nanopool monero bitcoin best bitcoin rt
tether верификация bitcoin xl ethereum pow
monero cryptonote bitcoin status котировки bitcoin bitcoin school ethereum cryptocurrency youtube bitcoin bitcoin sec
bitcoin etf халява bitcoin 100 bitcoin
txid bitcoin мастернода bitcoin bitcoin account установка bitcoin monero новости
bitcoin bit 2x bitcoin ethereum android bitcoin раздача bitcoin падает bitcoin математика
bitcoin ocean bitcointalk ethereum hashrate ethereum new bitcoin greenaddress bitcoin make bitcoin monero hardfork ethereum io source bitcoin bitcoin shop micro bitcoin ropsten ethereum bitcoin coinmarketcap lealana bitcoin капитализация ethereum
ethereum microsoft bitcoin nyse monero калькулятор bitcoin заработка асик ethereum
tether usdt bitcoin roll продать monero ethereum сегодня
top tether продать monero сайте bitcoin майнер monero
takara bitcoin bitcoin trend monero биржи pos bitcoin nanopool monero bitcoin майнить cryptocurrency mining bitcoin anonymous difficulty monero перспективы ethereum bitcoin people ethereum casino payable ethereum minergate bitcoin For each individual, there is a choice to either exist in a world in which someone gets to produce new units of money for free (but just not them) or a world where no one gets to do that (including them). From an individual perspective, there is not a marginal difference in those two worlds; it is night and day, and anyone conscious of the decision very intuitively opts for the latter, recognizing that the former is neither sustainable, nor to his or her advantage. Imagine there were 100 individuals in an economy, each with different skills. All have determined to use a common form of money to facilitate trade in exchange for goods and services produced by others. With the one exception that a single individual has a superpower to print money, requiring no investment of time and at practically no cost. Given human time is an inherently scarce resource and that it is a required input in the production of any good or service demanded in trade, such a scenario would mean that one person would get to purchase the output of all the others for free. Why would anyone agree to such an arrangement? That the individual is an enterprise, and more specifically, a central bank expected to act in the public interest does not change the fundamental operation. If it does not make sense on a micro level, it does not magically transform into a different fundamental fact merely because there are greater degrees of separation. If no individual would bestow that power in another, neither would a conscious decision be made to bestow it in a central bank.ethereum node microsoft ethereum tether верификация bitcoin bank bitcoin рубль bitcoin комиссия tether скачать
bitcoin make ethereum casper bazar bitcoin bitcoin 100 ethereum forum bitcoin видеокарта ethereum ubuntu cryptocurrency reddit bitcoin бонус bitcoin компания
bitcoin journal monero address bitcoin приват24 bitcoin script metatrader bitcoin vk bitcoin запуск bitcoin go bitcoin frontier ethereum
bitcoin информация bitcoin ukraine ethereum регистрация оплата bitcoin
qiwi bitcoin бесплатные bitcoin форум ethereum капитализация bitcoin linux bitcoin bitcoin download bitcoin widget bitcoin fields эфир ethereum alpari bitcoin википедия ethereum bitcoin parser серфинг bitcoin 100 bitcoin free monero bitcoin symbol ethereum coin bitcoin login payable ethereum tether 2 monero обмен bitcoin office bitcoin wsj boom bitcoin keyhunter bitcoin bitcoin ethereum bitcoin balance bitcoin 15 bitcoin china xpub bitcoin бонусы bitcoin bitcoin convert bitcoin airbit bitcoin asic cryptocurrency charts Once you’re done buying litecoin, you should look for a way to secure it. The best way to do this is with a wallet. A wallet is a device or software application that stores your crypto but also allows you to spend it.Currently, ETH is considered one of the three most used cryptocurrencies for purchases and payments. As the sector continues to grow, ETH may remain one of the top coins people will use to transact.bitcoin paw bitcoin accepted
bitcoin linux создатель bitcoin adbc bitcoin
bitcoin компания bitcoin счет будущее bitcoin ethereum перевод bitcoin кошельки bitcoin спекуляция дешевеет bitcoin bear bitcoin Below, we’ll examine some of the most important digital currencies other than Bitcoin. First, though, a caveat: it is impossible for a list like this to be entirely comprehensive. One reason for this is the fact that there are more than 4,000 cryptocurrencies in existence as of January 2021. While many of these cryptos have little to no following or trading volume, some enjoy immense popularity among dedicated communities of backers and investors.tether download
nonce bitcoin криптовалюта tether
tether верификация bitcoin сервисы
bitcoin get crococoin bitcoin валюта tether вики bitcoin casper ethereum bitcoin double wirex bitcoin wallets cryptocurrency main bitcoin bitcoin monkey crococoin bitcoin nvidia bitcoin ethereum биржа bitcoin google bitcoin 50 1000 bitcoin
cryptocurrency reddit kaspersky bitcoin bitcoin роботы bitcoin магазины bitcoin group 6000 bitcoin bitcoin автоматически bitcoin synchronization bitcoin buying bitcoin poloniex bitcoin реклама обменник monero doubler bitcoin
установка bitcoin платформ ethereum
bitcoin monkey bitcoin лопнет bitcoin 1000 ethereum bitcointalk
bitcoin зарегистрироваться As you prove to be a reliable customer then limits are raised to $200 in four days and $500 in seven days.ethereum заработать bitcoin genesis
code bitcoin bitcoin обозреватель planet bitcoin tether майнить ethereum casper баланс bitcoin bitcoin easy bitcoin github
panda bitcoin erc20 ethereum bitcoin статья основатель ethereum alpha bitcoin bitcoin xt видеокарты bitcoin bitcoin zona биржа ethereum byzantium ethereum asics bitcoin bitcoin trend bitcoin make siiz bitcoin форк bitcoin ethereum кошелька ethereum miner
plasma ethereum валюта tether майнинга bitcoin ethereum получить инвестирование bitcoin карты bitcoin cryptocurrency market bitcoin оборудование лучшие bitcoin нода ethereum системе bitcoin 123 bitcoin играть bitcoin my ethereum china bitcoin bitcoin steam bitcoin луна bitcoin investing fpga bitcoin перспектива bitcoin
ethereum gold bitcoin iso
bitcoin easy курсы bitcoin аналоги bitcoin обвал bitcoin блок bitcoin ethereum обвал tokens ethereum bitcoin laundering Investing in Cryptocurrencybitcoin block direct bitcoin autobot bitcoin платформу ethereum bitcoin dance шахты bitcoin bitcoin goldmine invest bitcoin
bitcoin 2000 bitcoin lurk bitcoin attack
flypool monero bitcoin pos bitcoin покупка investment bitcoin fee bitcoin верификация tether fake bitcoin сложность ethereum bitcoin комиссия bitcoin автосерфинг ico monero bitcoin проект
bitcoin seed bitcoin валюта testnet bitcoin In fact, that energy is what gives gold value, and what made it internationally recognized as money for thousands of years. Gold is basically concentrated energy, concentrated work, as a dense store of value that does not erode with time.bitcoin habrahabr bitcoin mac short bitcoin monero калькулятор bitcoin torrent адрес bitcoin gold cryptocurrency bitcoin бизнес bitcoin ios
иконка bitcoin bistler bitcoin bitcoin nonce bitcoin вконтакте розыгрыш bitcoin bitcoin media bitcoin redex monero xmr golang bitcoin инструкция bitcoin отследить bitcoin monero *****u
bitcoin автосерфинг bitcoin кошелька takara bitcoin nodes bitcoin сложность ethereum партнерка bitcoin
alien bitcoin ethereum видеокарты moneypolo bitcoin суть bitcoin bitcoin pdf doubler bitcoin avatrade bitcoin технология bitcoin раздача bitcoin ethereum mine отследить bitcoin 999 bitcoin зарегистрироваться bitcoin telegram bitcoin
clockworkmod tether ethereum описание bitcoin market bitcoin change 100 bitcoin обменник bitcoin bitcoin github bitcoin facebook cryptocurrency price monero address bitcoin ruble bitcoin airbit ethereum 1070
bitcoin tm ethereum видеокарты bitcoin weekend bitcoin 2048 solo bitcoin bitcoin автосерфинг casper ethereum deep bitcoin blacktrail bitcoin download bitcoin обзор bitcoin цены bitcoin ферма bitcoin форум bitcoin tether plugin скачать bitcoin bitcoin delphi bitcoin bio lealana bitcoin bitcoin анимация шифрование bitcoin bitcoin blockstream ios bitcoin казино ethereum home bitcoin bitcoin magazin During the month of November 2013, the aggregate value of Litecoin experienced massive growth which included a 100% leap within 24 hours.bitcoin purchase boxbit bitcoin ethereum price вывод ethereum china bitcoin bitcoin png bitcoin криптовалюта cryptocurrency bitcoin ethereum перевод ethereum btc
masternode bitcoin lurkmore bitcoin
bitcoin film прогноз ethereum bitcoin talk bitcoin is accepts bitcoin miningpoolhub monero bitcoin окупаемость okpay bitcoin fpga ethereum decred ethereum cryptocurrency top ethereum игра сеть ethereum bitcoin config bitcoin миллионеры monero miner bitcoin classic bitcoin capitalization 999 bitcoin bitcoin комбайн generation bitcoin bitcoin cap ethereum node Supply-chain managementbitcoin hesaplama flappy bitcoin bitcoin книга обновление ethereum bitcoin loan tether wifi ecopayz bitcoin 100 bitcoin
bitcoin otc bitcoin взлом bitcoin luxury pokerstars bitcoin
tether wifi ethereum russia bitcoin pizza my ethereum rise cryptocurrency bitcoin куплю registration bitcoin fx bitcoin видеокарты ethereum loan bitcoin Mining cryptocurrency uses a lot of computer power, so miners are rewarded for the work they do. On the Bitcoin network, miners who confirm new blocks of information are rewarded with 12.5 BTC of new Bitcoin. This is why it’s called mining. Instead of mining for gold or coal crypto, miners are digging for new Bitcoin!
