What is crypto mining?
We will start with a more formal explanation, and then we will break the subject matter into smaller, more digestible pieces of information. Mining is a term used to describe the process of validating transactions that are waiting to be included in the blockchain technology.
Mining is a distributed consensus system. This means that a large number of people around the world are involved in the maintenance of the Bitcoin network.
A chronological order of transactions is achieved through the process of mining. If a transaction is to be successfully confirmed and included, it has to be packaged in a block that must comply with strict encryption rules.
Those are verified and validated by the miners on the network and there is no involvement of any government authorities. This protects the neutrality of the Bitcoin network.
How to start mining cryptocurrencies
Now we know that crypto mining demands equipment which uses as little electricity as possible. We are always searching for the best combination of price and performance.
Bitcoin network as one large body of the sea. People with the largest amount of water will have the greatest chance of receiving the reward.
Most people only have a small bucket of water. As a result, they group together and pour their water into a pool.
If their pool receives a prize, then it will be distributed proportionally according to the amount of water poured by each individual.
You will need specialized software without which it will not work, even if you have the best hardware for mining cryptocurrencies. A good deal of technical know-how is required to set up the software, so this process is intended for those with a bit more experience.
Beginners are therefore advised to join a mining pool. But be careful and choose only well-known mining pools.
Like any other payment system, the mining of cryptocurrencies comes with a price. In this case, we are talking about power consumption.
The mining equipment is constantly working at maximum load and huge amounts of energy are wasted in the form of extra heat.
As a result, many major mining operations are housed in northern countries, where it is easier to reduce the cost of electricity associated with cooling.