NxtVertexNxtVertex

    Subscribe to Updates

    Get the latest creative news from FooBar about art, design and business.

    What's Hot

    Why is a data breach a big risk for crypto traders, and how can they avoid it?

    December 23, 2022

    Betbeard’s Best Non-Stop Casino 2023

    December 23, 2022

    PS5 Pro vs. PS5 Slim release likely in 2023: While a tipster’s PlayStation 5 hardware roadmap points to the latter, Sony official comments fuel anticipation for the former.

    December 23, 2022
    Facebook Twitter Instagram
    • Tech
    • Gadgets
    • Mobiles
    Facebook Twitter Instagram Pinterest VKontakte
    NxtVertexNxtVertex
    • Home
    • Tech

      Betbeard’s Best Non-Stop Casino 2023

      December 23, 2022

      Microsoft and Netflix are rumored to join as streaming competition heats up.

      December 23, 2022

      We just learned that hackers stole encrypted LastPass password vaults.

      December 23, 2022

      Shipments of AR and VR are down, but IDC anticipates rise by 2023.

      December 22, 2022

      Autonomous P-Flap ornithopter perches like a bird using a claw.

      December 21, 2022
    • Mobiles

      With a better display, the Xiaomi Pad 6 Pro might challenge the iPad Pro.

      December 22, 2022

      Galaxy Z Fold 3 and Flip 3 prices plummet to just $585 in a refurb sale.

      December 20, 2022

      The specifications for the OnePlus Nord 3 have been announced, and they’re quite remarkable.

      March 21, 2022

      On BIS, a Redmi 10 Prime Plus appears, which could be a rebranded Note 11E 5G.

      March 21, 2022

      Realme’s insatiable appetite is expanding faster than anyone else’s, and it’s aiming squarely at Europe.

      March 18, 2022
    • Gaming
    • Gadgets
    • Crypto
    • How To
    • Contact
    NxtVertexNxtVertex
    Home»How To»How Does Crypto Mining Work?
    How To

    How Does Crypto Mining Work?

    With the cryptocurrency mania in full swing, you can't help but hear about people mining these digital currencies, which is causing the graphics processor market to become unstable. This is what "crypto mining" is all about.
    NxtvertexBy NxtvertexMarch 16, 2022Updated:March 17, 2022No Comments6 Mins Read
    Facebook Twitter Pinterest LinkedIn Tumblr Email
    image Credits [The Motely Fools]
    Share
    Facebook Twitter LinkedIn Pinterest Email

    In a nutshell, crypto mining is the process of creating new cryptocurrency units, often known as coins. This form of mining, as you might expect, does not involve calloused hands grasping pickaxe handles. Instead, computer processors handle all of the heavy liftings, slicing through difficult math problems.

    Of course, you might wonder why these digital currencies need to be mined in the first place: after all, they’re fictitious money with no backing other than what people are willing to pay for them. Real currency, the kind backed by governments, can be created by turning on a money printer, so crypto should be able to do the same.

    Blockchain
    For years, the fact that supply could not be limited was the biggest roadblock for cryptocurrency: there were a lot of ideas for how to make digital money, but no method to ensure that individuals wouldn’t just copy them at will. It becomes exceedingly difficult to govern the supply of any currency without an authority like a central bank—an agency that supervises the flow of currency.

    For decades, this issue perplexed digital currency designers until Satoshi Nakamoto (possibly a pseudonym) devised something called the blockchain. The full theory of how these function is somewhat complicated—we go into more detail in our article on “blockchain” explanation—but the simplest way to explain it is to think of it as a chain.

    Each link represents a block in this metaphor, and each block holds a specific quantity of cryptocurrency. One block, for example, contains 6.25 Bitcoin. You must answer a difficult mathematical equation to unlock a new block, which validates the block and adds it to the chain. You also have to proceed from one block to the next since the blocks are chained in a linear pattern; you can’t pick one at random.

    The Book of the Ledger
    Every time a new coin is released, it is recorded in the cryptocurrency’s ledger, a vast database that anybody can consult at any moment to discover which coins were mined when and by whom. The ledger also displays when a currency was exchanged and who was engaged in the transaction, proving that Bitcoin is not anonymous.

    To summarize, the ledger on the blockchain tracks the creation and movement of currency. Validating new blocks and obtaining access to the coins contained within is known as mining. Because the blockchain must be finite, most cryptocurrencies have a hard limit on the number of coins that can exist: Bitcoin, for example, has a maximum of 21 million coins.

    How Does Cryptocurrency Mining Work?
    To unlock a block in the chain, you must first validate it by solving a complex equation, which is commonly expressed as a hash. A hash is a random combination of characters and numbers that, when combined with the correct key, reveal the original message; it’s a fundamental aspect of cryptography and the source of the “crypto” part of “cryptocurrency.”

    Crypto mining is, in some ways, the same as solving these exceedingly difficult mathematical riddles. If you finish it quickly enough, you’ll get a penny as a reward. You won’t get one if you’re slower than the competition. “Proof of work” is the term for this procedure.

    Hashes, on the other hand, are exceedingly difficult to solve by their own nature. It would most likely take millions of years for the phone or laptop on which you’re reading this article to solve one.

    Supercomputers Made at Home
    Of course, you can always build a supercomputer if you don’t have one. Many people interested in making money with cryptocurrencies, particularly Bitcoin, have begun doing so, frequently by connecting multiple machines to form strong networks that combine and multiply the processing capacity of each individual device.

    In this example, the most powerful single component is a graphics processing unit, or GPU, which is the part of your computer that generates the wonderful glossy graphics—if you’re using a powerful computer, that is. They’re more efficient and powerful than their cousin, the central processing unit (CPU), and a large number of them can provide substantial computational capacity.

    This introduces a new type of calculation, one in which numerous astute folks calculated that the cost of GPUs multiplied by the cost of energy came out to be a lot less than the value of one Bitcoin. This sparked a type of arms race, with these companies building bigger and better rigs to outperform their rivals.

    Aside from the competition between these parties, there’s also the issue of each subsequent block being more difficult to solve than the previous one, a safeguard built into the blockchain to prevent it from being unlocked all at once.

    As a result, the GPU market was almost decimated, with these gangs buying up all the units they could get their hands on—even stealing them in some cases—and forcing regular consumers to pay exorbitant rates even for versions that were hopelessly obsolete. Despite the fact that, as of late 2021, this arms race has slowed due to a variety of circumstances (including China’s ban on miners), the GPU industry has yet to recover.

    Cryptocurrencies that have been mined vs. those that have not been mined
    It’s worth noting, however, that not all cryptocurrencies are mined. Some cryptocurrencies, such as Cardano and Ripple, use “proof of stake” instead of proof of work. For security reasons, they continue to use blockchain, but instead of mining new blocks, you “stake” them in advance, claiming them for yourself.

    The more claims you make, the more likely you are to receive blocked. It’s a sophisticated system, even more so than mining, but it could be the way cryptocurrency evolves in the future.

    Mining in the Future
    This leads us to a crucial conclusion: cryptocurrency does require a future beyond mining. Mining new coins are not only expensive due to the cost of power and GPUs, but it is also detrimental for the environment, as this Columbia Climate School paper reveals.

    It’s difficult to say what that future will be: maybe it’ll be staking, maybe it’ll be any of the dozen other ideas crypto aficionados are concocting as you read this. We’ll have to wait and see.

    Source: howtogeek.com

    Writer: FERGUS O’SULLIVAN

    trending
    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Nxtvertex
    • Website

    Related Posts

    Why is a data breach a big risk for crypto traders, and how can they avoid it?

    December 23, 2022

    Betbeard’s Best Non-Stop Casino 2023

    December 23, 2022

    We just learned that hackers stole encrypted LastPass password vaults.

    December 23, 2022

    One of the Biggest Bitcoin Miners, Core Scientific, Files for Bankruptcy Protection

    December 21, 2022
    Add A Comment

    Leave A Reply Cancel Reply

    Editors Picks

    Betbeard’s Best Non-Stop Casino 2023

    December 23, 2022

    PS5 Pro vs. PS5 Slim release likely in 2023: While a tipster’s PlayStation 5 hardware roadmap points to the latter, Sony official comments fuel anticipation for the former.

    December 23, 2022

    Microsoft and Netflix are rumored to join as streaming competition heats up.

    December 23, 2022

    We just learned that hackers stole encrypted LastPass password vaults.

    December 23, 2022
    Top Reviews
    9.1

    Review: Mi 10 Mobile with Qualcomm Snapdragon 870 Mobile Platform

    By Nxtvertex
    8.9

    Comparison of Mobile Phone Providers: 4G Connectivity & Speed

    By Nxtvertex
    8.9

    Which LED Lights for Nail Salon Safe? Comparison of Major Brands

    By Nxtvertex
    Advertisement
    Demo
    NxtVertex
    Facebook Twitter Instagram Pinterest
    • Home
    • Tech
    • Crypto
    • Gadgets
    • Mobiles
    © 2023 Nxtvertex. All Rights Reserved.

    Type above and press Enter to search. Press Esc to cancel.