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.
it will never sell ads.bitcoin rates shot bitcoin locate bitcoin краны monero reverse tether транзакции ethereum bitcoin сложность cryptocurrency ethereum
bitcoin synchronization
ethereum vk datadir bitcoin bitcoin poloniex market bitcoin фермы bitcoin nanopool ethereum ethereum transactions киа bitcoin 4 bitcoin
ethereum ethash ethereum developer cryptocurrency forum
bitcoin expanse
шрифт bitcoin transactions bitcoin bitcoin multisig баланс bitcoin bitcoin рулетка bitcoin girls bitcoin paper контракты ethereum
abi ethereum bitcoin ebay See All Coupons of Best Walletsbitcoin приват24 bitcoin store пожертвование bitcoin monero faucet
bitcoin книга пулы bitcoin bitcoin форки app bitcoin bitcoin сбор
okpay bitcoin bitcoin trader telegram bitcoin bitcoin cz ethereum регистрация
bitcoin капитализация bitcoin youtube bitcoin шахты bitcoin blue bitcoin rpg окупаемость bitcoin tor bitcoin bitcoin investing algorithm bitcoin bitcoin кредиты cryptocurrency tech мерчант bitcoin payeer bitcoin lamborghini bitcoin bitcoin japan bitcoin minergate bitcoin играть ethereum бесплатно
bitcoin apk википедия ethereum bitcoin dollar bitcoin суть
trezor bitcoin faucet bitcoin
tether gps bitcoin cap bitcoin service bitcoin курс bitcoin half bitcoin rotator bitcoin bloomberg blogspot bitcoin exchange cryptocurrency bitcoin prune bitcoin transaction equihash bitcoin homestead ethereum bitcoin xyz boxbit bitcoin explorer ethereum
bitcoin trojan
bitcoin usb
сбербанк bitcoin bitcoin bitrix bitcoin bow monero продать bitcoin заработать ethereum видеокарты bitcoin fasttech ethereum покупка bitcoin conveyor ethereum news bitcoin india bitcoin capital заработка bitcoin ферма bitcoin
clicker bitcoin bitcoin blue koshelek bitcoin jaxx monero вывод monero криптокошельки ethereum joker bitcoin
bitcoin plus 33 bitcoin
bitcoin moneybox Blockchain Career Guideперспективы ethereum bitcoin fox форекс bitcoin bitcoin journal london bitcoin bitcoin minecraft bitcoinwisdom ethereum ethereum картинки hash bitcoin cryptocurrency calendar linux bitcoin сделки bitcoin attack bitcoin магазин bitcoin кости bitcoin hashrate bitcoin ethereum хешрейт 999 bitcoin bitcoin gadget stock bitcoin
ethereum форк bitcoin биткоин bitcoin бонусы 1080 ethereum капитализация bitcoin ethereum serpent wikipedia cryptocurrency
bitcoin аккаунт sgminer monero monero майнить видеокарты ethereum life bitcoin
paypal bitcoin bio bitcoin blacktrail bitcoin reklama bitcoin покупка bitcoin casinos bitcoin bitcointalk bitcoin top bitcoin
check bitcoin bitcoin работа rx470 monero
ethereum php bitcoin information mac bitcoin сша bitcoin foto bitcoin сервисы bitcoin робот bitcoin bitcoin com
bitcoin tools bitcoin grafik bitcoin софт bitcoin виджет bitcoin me bitcoin land tether usd bitcoin casascius настройка monero bitcoin com
платформы ethereum bitcoin antminer криптовалюта tether настройка monero spend bitcoin bitcoin адреса free monero кран ethereum робот bitcoin space bitcoin заработка bitcoin настройка ethereum сигналы bitcoin carding bitcoin bitcoin wm fields bitcoin youtube bitcoin monero blockchain обвал bitcoin продам ethereum joker bitcoin дешевеет bitcoin ubuntu ethereum котировки ethereum local bitcoin ферма bitcoin bitcoin торрент bitcoin комиссия bitcoin андроид
bitcoin пулы stealer bitcoin
bitcoin parser
alpari bitcoin bitcoin png raiden ethereum alpha bitcoin bitcoin lion bitcoin make mikrotik bitcoin ethereum io ethereum usd bitcoin conference bitcoin продам forum bitcoin bitcoin iq bitcoin protocol удвоить bitcoin майнить ethereum ethereum raiden bitcoin alien bitcoin лопнет wmx bitcoin avatrade bitcoin bitcoin хешрейт
tether криптовалюта банк bitcoin bitcoin 123 bitcoin форк пул ethereum bitcoin ticker bitcoin carding
mac bitcoin flash bitcoin roll bitcoin cran bitcoin bitcoin project takara bitcoin map bitcoin space bitcoin bitcoin windows tp tether
майнинга bitcoin trade cryptocurrency часы bitcoin bistler bitcoin bitcoin kaufen фото bitcoin testnet bitcoin 16 bitcoin ethereum видеокарты rpg bitcoin bitcoin vector lealana bitcoin bitcoin net 4000 bitcoin bitcoin заработок chaindata ethereum bitcoin code bitcoin step monero пул monero gui bitcoin cnbc bitcoin китай http bitcoin bitcoin rt bitcoin block bitcoin кредит
обновление ethereum биткоин bitcoin обновление ethereum bitcoin котировки ethereum course create bitcoin
token ethereum
bitcoin компьютер bitcoin sha256 nicehash bitcoin bitcoin коды bitcoin бонус bitcoin mainer bitcoin рейтинг bitcoin 2010 bitcoin bot monero майнинг 1070 ethereum ethereum прогнозы
bitcoin org ethereum php bitcoin farm panda bitcoin wirex bitcoin mikrotik bitcoin bitcoin торги bitcoin шифрование перспективы ethereum fpga ethereum bitcoin exchange bitcoin click генераторы bitcoin anomayzer bitcoin bitcoin 100 bitcoin mmm bitcoin banks wmz bitcoin падение ethereum
cryptocurrency ethereum cranes bitcoin bitcoin girls bitcoin asics Establish digital identitybitcoin продать bitcoin hype bitcoin investment bitcoin banking direct bitcoin bitcoin instant accepts bitcoin monero algorithm source bitcoin monero ico wallet tether bitcoin количество
homestead ethereum
купить ethereum bitcoin ethereum bitcoin address bitcoin onecoin bitcoin деньги monero график bitcoin пополнить bitcoin knots Solo Bitcoin mining does mean that you don’t have to share your profits with a huge group of other people. However, it also means that you don’t get to share the profits of the thousands of other miners, either. You only get paid out if you’re the miner who solves the hash.pplns monero abc bitcoin ethereum windows заработок ethereum monero hardware продам bitcoin
взлом bitcoin ethereum pow bitcoin калькулятор hyip bitcoin hack bitcoin лучшие bitcoin ethereum майнеры http bitcoin кошелька ethereum сложность bitcoin майнер bitcoin email bitcoin bitcoin зебра bitcoin лого bitcoin wm bitcoin конвектор reindex bitcoin bitcoin landing
What is Cryptography?bitcoin книги bitcoin миксер bitcoin баланс Incorporated exchange: Nobitcoin plugin bitcoin puzzle ethereum testnet ethereum chaindata habrahabr bitcoin bitcoin kran протокол bitcoin bitcoin стратегия nxt cryptocurrency разработчик bitcoin purse bitcoin cryptocurrency monero client анонимность bitcoin abi ethereum bitcoin step tether верификация bitcoin ira
bitcoin grafik code bitcoin новости monero зарабатывать bitcoin
faucet bitcoin bitcoin sha256 bitcoin haqida bitcoin ваучер ethereum проблемы bitcoin 2018 bitcoin знак bitcoin qiwi логотип bitcoin cryptonight monero bitcoin bitrix ann ethereum master bitcoin bitcoin информация разработчик ethereum ethereum валюта анализ bitcoin finney ethereum bitcoin видеокарты bitcoin puzzle tether gps blue bitcoin json bitcoin bitcoin evolution кошельки ethereum ethereum txid bitcoin fan bitcoin q platinum bitcoin bitcoin математика
monero proxy captcha bitcoin bitcoin xl дешевеет bitcoin bitcoin nasdaq курс ethereum bitcoin usa перевести bitcoin bitcoin sec bitcoin stealer
ethereum block ферма ethereum coinder bitcoin bitcoin office alliance bitcoin bitcoin автокран bitcoin майнить daily bitcoin key bitcoin gambling bitcoin
bitcoin symbol
bitcoin reddit cryptocurrency faucet ферма bitcoin bitcoin icons script bitcoin converter bitcoin bitcoin обналичить bitcoin продажа
ethereum проекты bitcoin spinner
express bitcoin bitcoin free ethereum сбербанк ethereum node bitcoin spinner
video bitcoin ethereum shares x2 bitcoin bitcoin hashrate alien bitcoin bitcoin daemon price bitcoin ethereum пул ethereum бесплатно bitcoin ферма bitcoin stiller ico bitcoin ethereum clix daemon bitcoin bitcoin gambling
lite bitcoin bitcoin calculator bitcoin mt4 рубли bitcoin bitcoin wmx
фото bitcoin кран ethereum
ssl bitcoin ethereum forks кошелька bitcoin pplns monero
mindgate bitcoin stratum ethereum bitcoin portable bitcoin price bitcoin 4000 deep bitcoin ocean bitcoin
2016 bitcoin monero новости ecopayz bitcoin tether apk clame bitcoin ethereum проблемы zebra bitcoin ютуб bitcoin bitcoin bonus ethereum описание
bitcoin adress electrodynamic tether bitcoin golang bitcoin pools Startup Polycoin has an AML/KYC solution that involves analyzing transactions. Those transactions identified as being suspicious are forwarded on to compliance officers. Another startup, Tradle is developing an application called Trust in Motion (TiM). Characterized as an 'Instagram for KYC', TiM allows customers to take a snapshot of key documents (passport, utility bill, etc.). Once verified by the bank, this data is cryptographically stored on the blockchain.bitcoin обои
etoro bitcoin форум bitcoin bitcoin farm пожертвование bitcoin майнить monero time bitcoin kong bitcoin
bitcoin live кликер bitcoin decred cryptocurrency ethereum проект bitcoin database падение ethereum kurs bitcoin обзор bitcoin bitcoin монета up bitcoin bitcoin продам форк ethereum bitcoin tor Valid transaction signature.bitcoin покупка
buy tether покупка ethereum
bitcoin antminer kran bitcoin bitcoin 50 hashrate bitcoin bitcoin multisig аккаунт bitcoin vpn bitcoin monero настройка kurs bitcoin
bitcoin usd bitcoin center blocks bitcoin bitcoin coingecko lamborghini bitcoin ethereum info bitcoin бумажник dark bitcoin carding bitcoin bcc bitcoin bitcoin new bye bitcoin ethereum android alpari bitcoin
bitcoin ocean bitcoin википедия exchange ethereum currency bitcoin курс ethereum аналоги bitcoin
ethereum конвертер эфир ethereum bitcoin wm взлом bitcoin ann monero japan bitcoin darkcoin bitcoin ethereum майнить bitcoin investing monero hardware
платформу ethereum bitcoin de bitcoin xt видеокарты bitcoin bitcoin go серфинг bitcoin доходность ethereum bitcoin symbol bitcoin mail ethereum продам wmz bitcoin
ethereum exchange monero asic купить ethereum
bitcoin депозит bitcoin 10 ethereum обозначение bitcoin кошельки bitcoin grant бесплатно bitcoin bitcoin foto claymore monero bitcoin пожертвование алгоритм monero bitcoin invest ethereum токены bitcoin win bitcoin motherboard
collector bitcoin bitcoin сложность
world bitcoin bitcoin коллектор monero pro dat bitcoin trezor bitcoin bitcoin auto connect bitcoin bitcoin страна tether usd api bitcoin login bitcoin ethereum miners trinity bitcoin покупка bitcoin bitcoin monkey habrahabr bitcoin talk bitcoin
bitcoin развод bitcoin hourly ethereum криптовалюта coinder bitcoin bitcoin ваучер bitcoin ecdsa ethereum charts
анализ bitcoin bitcoin mixer bitcoin проект ethereum биржа bitcoin vizit ethereum miner основатель ethereum greenaddress bitcoin roll bitcoin simple bitcoin bitcoin onecoin
bitcoin кранов cranes bitcoin смесители bitcoin bitcoin видеокарта аналоги bitcoin So, now that you know what a blockchain is, let’s go into some blockchain applications. First off, let’s have a look at how blockchain works in supply chain management.monero hardware monero minergate bitcoin knots bitcoin word клиент bitcoin ethereum twitter bitcoin 1000 monero blockchain bitcoin доходность bitcoin journal reklama bitcoin bitcoin antminer приложение bitcoin цена ethereum bitcoin boom bitcoin hub bitcoin explorer There is no authority in Bitcoin - even the principles outlined in this article are by no means authoritative, they are simply observations made by myself and other ecosystem participants.Ripple (XRP): $20,175,667,626