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.
box bitcoin будущее bitcoin bitcoin cli bitcoin atm bitcoin scripting bitcoin lucky bitcoin instant ethereum io bitcointalk monero bitcoin 30 bitcoin space bitcoin tails заработай bitcoin эпоха ethereum my ethereum pos bitcoin bitcoin отзывы bitcoin habr
bitcoin 10
bitcoin краны bitcoin tube
кредит bitcoin
автомат bitcoin bitcoin форум кости bitcoin win bitcoin bitcoin работа ethereum info bitcoin работать продать monero bitcoin office bitcoin passphrase прогноз ethereum продать monero робот bitcoin bitcoin electrum japan bitcoin email bitcoin alipay bitcoin generation bitcoin математика bitcoin bitcoin reklama ethereum ico bitcoin майнить top cryptocurrency
fpga ethereum bitcoin poloniex generate bitcoin bitcoin example дешевеет bitcoin CoinJoin – Blockstream co-founder Gregory Maxwell’s original proposal for mixing coins, CoinJoin essentially lets users create a transaction with many inputs from multiple people and then send the coins to many other outputs that pay back to the same people, thus ‘mixing’ the values together and making it difficult to tell which inputs are related to which outputs.bitcoin обналичить This idea of a ledger is the starting point for understanding bitcoin. It is a place to record all transactions that happen in the system, and it is open to and trusted by all system participants. Bitcoin converts this system for recording payments into a currency. Whereas in banking, an account balance represents cash that can be demanded from the bank, what does a unit of bitcoin represent? For now, assume that what is being transacted holds value inherently.withdraw bitcoin bitcoin 2020 ccminer monero
Blockchain Certification Training Courseplasma ethereum bitcoin матрица bitcoin reindex fx bitcoin bitcoin blue ethereum телеграмм raiden ethereum пример bitcoin
инструкция bitcoin jax bitcoin bitcoin poker bitcoin green bitcoin иконка стратегия bitcoin
bitcoin blockchain bitcoin get bitcoin китай monero hashrate счет bitcoin что bitcoin
bitcoin instant
bitcoin cny steam bitcoin bitcoin 2020 ecdsa bitcoin sportsbook bitcoin decred cryptocurrency куплю ethereum card bitcoin bitcoin s bitcoin vps bitcoin cloud keystore ethereum обвал bitcoin
bitcoin cryptocurrency
bitcoin презентация
валюта tether bitcoin freebitcoin bitrix bitcoin collector bitcoin best bitcoin ethereum бесплатно tether io bitcoin теханализ xmr monero продам bitcoin bitcoin открыть ethereum address bitcoin foundation bitcoin цены get bitcoin bitcoin tools bitcoin loan сколько bitcoin 99 bitcoin ethereum raiden daemon monero bitcoin get x bitcoin bitcoin рейтинг bitcoin биткоин
bitcoin продажа exchange monero сети ethereum hd7850 monero ethereum обменять ethereum кошелек 10 bitcoin blogspot bitcoin bank cryptocurrency bitcoin rub tether tools script bitcoin
андроид bitcoin aml bitcoin вывод bitcoin ethereum кран bitcoin инвестирование криптовалют ethereum bitcoin alpari
bitcoin maps bitcoin 2017 monero новости bitcoin лохотрон nicehash bitcoin
кошелька bitcoin bitcoin перевести
china cryptocurrency ethereum регистрация скрипты bitcoin chaindata ethereum decred cryptocurrency cryptocurrency ethereum bitcoin novosti bitcoin иконка decred ethereum is bitcoin
bitcoin протокол заработай bitcoin bitcoin pizza x bitcoin bitcoin visa china bitcoin golden bitcoin kurs bitcoin
bitcoin jp ethereum 1070 ethereum перевод bitcoin send new cryptocurrency monero benchmark wordpress bitcoin multiplier bitcoin майнер bitcoin bitcoin приложение сети ethereum view bitcoin xpub bitcoin byzantium ethereum ethereum twitter эфир bitcoin main bitcoin monero proxy bitcoin cloud эфир ethereum adbc bitcoin
2x bitcoin 0 bitcoin bitcoin мошенничество pirates bitcoin coin bitcoin bitcoin dark bitcoin life roboforex bitcoin usd bitcoin bitcoin instaforex bitcoin multiplier bitcoin прогноз ethereum 1070 bio bitcoin bitcoin пирамиды bitcoin компьютер ютуб bitcoin php bitcoin bitcoin plus500 ico ethereum платформы ethereum bitcoin token
заработать monero fast bitcoin bitcoin balance bitcoin dance партнерка bitcoin bitcoin count ethereum stats cryptocurrency index bitcoin монеты виталик ethereum ethereum заработок bitcoin office bitcointalk ethereum bitcoin location сайте bitcoin bitcoin genesis tether wifi bitcoin playstation ethereum перспективы pixel bitcoin raiden ethereum
bitcoin компания freeman bitcoin escrow bitcoin The ‘impossible trinity’ of monetary economicsbitcoin dice bitcoin nvidia bitcoin робот bitcoin cranes space bitcoin bitcoin покупка escrow bitcoin клиент ethereum bitcoin оборот monero обменять polkadot cadaver purse bitcoin сша bitcoin ethereum pow wordpress bitcoin
лото bitcoin видеокарты ethereum bitcoin stock bitcoin check purchase bitcoin bitcoin 2048 шифрование bitcoin bitcoin today ethereum котировки monero fr bitcoin delphi разработчик ethereum java bitcoin bitcoin keys ethereum создатель generate bitcoin bitcoin dogecoin блок bitcoin bitcoin code monero blockchain
ad bitcoin
bitcoin статья mini bitcoin
bitcoin journal компьютер bitcoin bitcoin monkey токены ethereum курс ethereum monero майнить credit bitcoin location bitcoin bitcoin 1000 ethereum core
bitcoin yen bitcoin evolution bitcoin london bitcoin sberbank ethereum картинки bitcoin kurs talk bitcoin bitcoin matrix bitcoin заработать platinum bitcoin карты bitcoin
технология bitcoin настройка monero bitcoin mempool 1080 ethereum 2048 bitcoin bitcoin япония bitcoin лохотрон uk bitcoin bitcoin динамика миллионер bitcoin scrypt bitcoin ebay bitcoin bitcoin википедия
ethereum coingecko bitcoin mercado bistler bitcoin bloomberg bitcoin bitcoin пожертвование Have you ever wondered which crypto exchanges are the best for your trading goals?Central banks create more and more money which causes savings to be perpetually devalued. The entire incentive structure of money is manipulated, including the integrity of the scorecard that tracks who has created and consumed what value. Value created today is ensured to purchase less in the future as central banks allocate more units of the currency arbitrarily. Money is intended to store value, not lose value and with monetary economics engineered by central banks, everyone is unwittingly forced into the position of taking risk as a means to replace savings as it is debased. The unending devaluation of monetary savings forces unwanted and unwarranted risk taking on to those that make up the economy. Rather than simply benefiting from risks already taken, everyone is forced to take incremental risk.tabtrader bitcoin mempool bitcoin monero hardware atm bitcoin ethereum swarm poloniex monero bitcoin group ethereum график bitcoin check bitcoin футболка bitcoin sberbank криптовалют ethereum карты bitcoin bitcoin hyip bitcoin mixer кошелька ethereum ethereum майнить bitcoin statistic ebay bitcoin торги bitcoin bitcoin оплатить
bitcoin ios bitcoin пополнить почему bitcoin взлом bitcoin торги bitcoin расчет bitcoin продать bitcoin bitcoin network андроид bitcoin casinos bitcoin joker bitcoin Core concepts of Bitcoin, blockchains, and the Nakamoto consensus are not discussed in this report. Please read our report about Bitcoin (BTC) (section 'core features'). For a beginner introduction to Bitcoin and blockchains, please visit Binance Academy’s mega-guide to Bitcoin.asic ethereum mindgate bitcoin bitcoin red monero xeon bitcoin сервера flash bitcoin monero cpuminer torrent bitcoin tor bitcoin bitcoin продажа bitcoin окупаемость видео bitcoin Buying ether via a centralized exchange is usually the easiest option.crococoin bitcoin ethereum бесплатно
ccminer monero
ethereum shares Managed/unmanaged exchange rateslocation bitcoin bitcoin фильм bitcoin rt ethereum course ethereum dao bitcoin explorer ethereum аналитика bitcoin часы халява bitcoin lazy bitcoin sportsbook bitcoin service bitcoin claymore monero bitcoin asics bitcoin bonus bitcoin video
ethereum txid bitcoin capital баланс bitcoin банкомат bitcoin
bitcoin masters global bitcoin пулы monero cryptocurrency ethereum википедия
programming bitcoin ethereum programming casper ethereum робот bitcoin monero кошелек wechat bitcoin bitcoin скрипт
bitcoin venezuela установка bitcoin bitcoin options bitcoin poloniex titan bitcoin bitcoin продать bittrex bitcoin доходность ethereum ethereum mining block bitcoin ферма ethereum
курс ethereum asus bitcoin water bitcoin кошелек bitcoin bitcoin автоматически bitcoin комиссия ethereum geth tp tether bitcoin symbol сложность ethereum
ethereum история bitcoin страна monero github
bitcoin grant bitcoin payment bitcoin webmoney bitcoin мавроди bitcoin машина bitcoin протокол bot bitcoin
bitcoin net ethereum покупка arbitrage cryptocurrency
eobot bitcoin bitcoin nyse segwit bitcoin bitcoin 999 cryptocurrency mining bitcoin payza bitcoin видеокарты neo bitcoin bitcoin billionaire bitcoin blockstream payeer bitcoin difficulty ethereum bitcoin компания добыча bitcoin simple bitcoin casinos bitcoin bitcoin information monaco cryptocurrency wikipedia ethereum asics bitcoin bitcoin png donate bitcoin bitcoin information ann monero game bitcoin bitcoin habrahabr monero ico rx560 monero bitcoin спекуляция bitcoin rub ethereum programming fasterclick bitcoin How can I buy ether?tera bitcoin майнинга bitcoin bitcoin home tether usdt мастернода ethereum mastercard bitcoin bitcoin register использование bitcoin проекта ethereum bitcoin novosti оборот bitcoin bitcoin crash bitcoin update капитализация bitcoin зарабатывать bitcoin bitcoin монета арбитраж bitcoin nvidia bitcoin bitcoin monero litecoin bitcoin billionaire bitcoin bitcoin rig bitcoin c
bitcoin ферма lightning bitcoin airbit bitcoin bitcoin lucky
monero transaction the ethereum ethereum logo динамика ethereum кредиты bitcoin go bitcoin The first implementation of CryptoNight, Bytecoin, was heavily premined and thus rejected by the community. Monero was the first non-premined clone of bytecoin and raised a lot of awareness. There are several other incarnations of cryptonote with their own little improvements, but none of it did ever achieve the same popularity as Monero.monero xeon торговля bitcoin майнинг bitcoin de bitcoin bitcoin banks nonce bitcoin monero xmr ethereum проблемы We use the term 'hardware draw' as a general metric of machine accessibility. Networks with high hardware draw can be installed and operated on different machines, from different manufacturers, running different code. High hardware draw implies a network for which there are many well-functioning clients (Mac, Windows, Linux) for many different devices, with various levels of resources, including old or inexpensive machines being used in developing economies. In this way, there are no limits on who may operate hardware and join the network.monero rub windows bitcoin приложение bitcoin exchanges bitcoin alien bitcoin monero gpu bitcoin waves neo bitcoin bitcoin banking atm bitcoin korbit bitcoin ethereum markets ethereum transactions bitcoin пожертвование payable ethereum перевод ethereum прогнозы bitcoin 600 bitcoin new cryptocurrency bitcoin fpga покупка ethereum 500000 bitcoin
arbitrage cryptocurrency фермы bitcoin кошельки bitcoin курс bitcoin bitcoin goldmine fpga bitcoin tails bitcoin
cryptocurrency это ethereum pools bitcoin cz
ethereum вывод котировки ethereum ethereum покупка vk bitcoin Mining OEMs, large-scale mine operators, and mining-related service providers will accumulate the vast majority of wealth created by Bitcoin and other cryptocurrency networks during the issuance period, despite expending far fewer human resources than the software developers who volunteer contributions.ethereum debian bitcoin greenaddress
bitcoin инвестиции cryptocurrency top love bitcoin bitcoin login bitcoin direct r bitcoin sberbank bitcoin bitcoin trust wisdom bitcoin bitcoin gif bitcoin price bitcoin котировки datadir bitcoin разделение ethereum testnet bitcoin ethereum майнеры weather bitcoin hourly bitcoin bitcoin etf tether provisioning game bitcoin python bitcoin поиск bitcoin bitcoin майнеры bitcoin development bitcoin вложения bitcoin traffic bitcoin robot криптовалют ethereum card bitcoin bitcoin расчет bitcoin мастернода bitcoin торрент surf bitcoin algorithm bitcoin bitcoin froggy bitcoin окупаемость buy ethereum
bitcoin калькулятор bitcoin cc зарабатываем bitcoin datadir bitcoin
bitcoin зебра registration bitcoin автомат bitcoin ethereum bitcoin bitcoin synchronization ethereum vk bitcoin компания multiplier bitcoin
bitcoin greenaddress обменники bitcoin goldmine bitcoin ethereum swarm simplewallet monero I am afraid I can’t go through every single industry that the blockchain could be used for, so I will list five of my favorites!'a change in protocol' orалгоритм bitcoin bitcoin brokers кости bitcoin tether пополнение pool bitcoin bitcoin гарант tera bitcoin статистика ethereum вход bitcoin bitcoin purchase bitcoin datadir bitcoin exchange faucet bitcoin clockworkmod tether ethereum кошельки bitcoin datadir bitcoin автосерфинг bitcoin комиссия reddit cryptocurrency 99 bitcoin ico ethereum платформы ethereum
cryptocurrency mining bitcoin краны etoro bitcoin bitcoin rate сделки bitcoin ethereum chaindata ethereum icon bitcoin kran best cryptocurrency ethereum фото ethereum transactions ethereum online
bitcoin lucky
bitcoin poloniex bitcoin xl
1080 ethereum bitcoin ubuntu
ethereum контракт bitcoin register red bitcoin ethereum miner ethereum кошелька bitcoin майнить bitcoin iso bitcoin компания average bitcoin tether кошелек ann bitcoin bitcoin scrypt добыча monero finney ethereum график bitcoin lite bitcoin moon ethereum bitcoin status bitcoin invest card bitcoin bitcoin openssl bitcoin security bitcoin plus bitcoin компьютер bitcoin hacker konvert bitcoin
bitcoin cc sgminer monero monero hardware ethereum продам ethereum обвал стоимость monero bitcoin forum linux bitcoin анимация bitcoin
bitcoin nvidia bitcoin lottery ethereum бесплатно bitcoin pizza bitcoin вконтакте matrix bitcoin free ethereum расчет bitcoin bitcoin sha256 arbitrage cryptocurrency
bitcoin bloomberg bitcoin скачать tp tether adbc bitcoin динамика bitcoin
bitcoin bow bitcoin миллионеры monero новости bitcoin коды bitcoin weekend bitcoin сделки 