Cryptocurrency mining is considered one of the mysterious fields even for some technology experts, this field intersects with several other areas such as investment, energy, technological development and others.
The importance of cryptocurrency mining is not limited to the economic aspect, because technologies based on it have enabled us to reap several other benefits, including, for example, blockchain technology, which contributed to the emergence of so-called smart contracts or SMART CONTRACTS.
In this article, we discuss the concept of cryptocurrency mining, its most important cornerstones, and the requirements for starting in this area in general.
What is cryptocurrency mining
Cryptocurrency mining is a system based on several participants playing certain roles, this system is based on a mechanism through which many people around the world participate in maintaining the pace of work of crypto-networks of digital currencies.
Cryptocurrency mining is a description of the process of validating transactions that are waiting to be added to a blockchain database or blockchain, mining is necessary in blockchains that rely on a proof-of-work or Proof-of-Work system such as Bitcoin.
Cryptocurrency mining is considered one of the mysterious fields even for some technology experts, this field intersects with several other areas such as investment, energy, technological development and others.
The importance of cryptocurrency mining is not limited to the economic aspect, because technologies based on it have enabled us to reap several other benefits, for example, blockchain technology, which contributed to the emergence of so-called smart contracts or SMART CONTRACTS.
In this article, we discuss the concept of cryptocurrency mining, its most important cornerstones, and the requirements for getting started in this area in general.
In the blockchain chains of proof-of-work mining determines the chronological order of transactions, this determination is necessary to ensure that previously recorded transactions in the “open ledger” of cryptocurrencies that record these operations cannot be changed.
If a transaction is successfully confirmed and listed, it must be packaged in a block that complies with strict encryption rules through authentication processes, these authentications are verified and validated by miners on the network and without any interference from government authorities or even private companies.
The lack of subordination of cryptocurrency networks to government authorities, companies or people makes them neutral and not affected by political events, for example, this is in contrast to what happens (sometimes) to the centralized system to which ordinary financial transactions are subject.
For example, credit cards in this system depend on the verification and registration of each transaction by their issuing companies (such as VISA), that is, the entire cash flow of the modern banking system is recorded in centralized systems that can be manipulated either intentionally or by mistake.
Cryptocurrencies do not need centralized institutions to confirm the transactions made on them, with Bitcoin, for example, miners confirm these transactions, as is the case with other digital currencies, from which new coins are created during the confirmation of transactions made on them.
This process is called mining due to many similarities with gold mining and psychrometallics, also this nomenclature is due to the fact that both areas require the allocation of a large area of time and effort, and the need for a large amount of energy to extract or produce an asset of high value.
In the end, the cryptocurrency mining process rewards miners for validating transactions, this reward varies in amount from one currency to another according to the value of each currency and the energy used to set it, and of course the record of this reward is added to the coin blockchain.
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Requirements for mining digital currencies
1. Power supply
The process of mining digital currencies depends on electronic devices (computers or devices intended for mining) powered by electricity, however, this statement is considered a simplification of the amount of electrical energy that miners need to mine in a way that provides them with a profit margin.
The fact that mining devices need electrical energy does not mean treating them like any other electrical device, professional mining devices or mining Rig or even a computer that is used for mining needs a large amount of electrical energy that sometimes exceeds the need of any other device.
This amount of energy should preferably be based on a separate infrastructure from that of the place where it is located, for this mining experts advise relying on a completely separate electrical source to be intended for mining devices only.
The separate source is easy to control and adjust for safe and sufficient power distribution of mining devices. Note that securing the power supply is important to avoid a short circuit and burnout of the entire mining equipment and the place in it, which is a common occurrence in this area.
2. Ventilation
A large part of it leaks and turns into heat, this heat must be eliminated by relying on external ventilation and cooling sources and not just fans or ventilation attached to mining devices.
The average temperature of the GPU during cryptocurrency mining ranges from 60 to 70 degrees Celsius while its fans are working, this average is the safe temperature of the unit that miners often do not adhere to.
Miners simply strive to reach the highest hash rate or hash rate to achieve the highest possible return, this means that increasing the working rate of the graphic unit results in a higher hash rate, but it requires more energy and, consequently, generates more heat.
3. Technical equipment
Cryptocurrency mining is based on a graphics processing unit or Graphics Processing Unit located in any computer. It is this module that solves the mathematical equations necessary to record the transactions made on the currency to be mined.
In other words, a computer that mines digital currencies does not differ in its basic configuration from any personal computer.
In order for the GPU to work efficiently, it must be supplied with an appropriate amount of power, this means that there is a Power Supply power supply that can provide this much and more to meet the needs of the rest of the computer components.
Of course, there are digital currencies based on other components of the computer, such as the chia currency, which is based on the hard drive, however, the most famous and most successful digital currencies rely on the GPU mainly.
The technical hardware of cryptocurrency mining varies from one metal to another, however there are several common categories of miners in this area.
The first and simplest category is the category of an ordinary computer user who owns a computer that has powerful components and wants to make additional income from them.
This category is considered the first to start mining and although it is no longer popular, it still represents a good percentage of the community of miners, the decreasing size of this category is due to the increased demand for mining digital currencies in general.
The increase in demand comes from individuals ' awareness of the profits that can be achieved through cryptocurrency mining, which has led to increased competition, of course, now you need more powerful technical gear than the average user can buy to be able to make an acceptable profit from cryptocurrency mining.
The hardware of this user is a computer with a modern graphics processing unit that has the appropriate ability to perform the mathematical operations required for mining, and a suitable power supply to supply the computer with the required power.
Also, a computer of this class has a medium-power processing unit and an access memory whose size ranges from 4 to 16 GB.
Note here that this user uses the gear he already has available for a few hours a day such as his work or sleep times, in other words this category seeks to make a little extra income and rarely specializes in or delves into the field of cryptocurrency mining.
The second category of miners is considered the previous one when specializing in the field of cryptocurrency mining.
For example, the former miner wanted to develop his method of mining and increase his profits, so he bought several graphic cards with a dedicated motherboard for mining, and this miner also equipped the place where he will transfer his new mining gear to create what is called a digital currency mining farm.
This category increases its units from time to time, sometimes reaching hundreds of fee units, sometimes this category abandons the previous method of mining and buys custom mining units or what is known as mining rig, which are computers specially designed for mining only.
As for the third and last category is the so-called category of large companies or institutions, do not be surprised, there are a good number of companies practicing the process of mining digital currencies either as part of the nature of their field or on a side or even without disclosing it officially.
Also falls under this category are companies that provide mining equipment rental service to customers for a material return, these companies provide this service either by renting or selling these devices to customers or by renting servers, which is called cloud mining.
4. Mining technique
There are three basic methods of mining, namely:
Individual style.
Mining through the platform.
Cloud mining.
The individual method of mining was the popular one until the advent of specialized cryptocurrency mining platforms. In individual mining, the miner starts the mining process himself by installing and monitoring one or several specific programs.
This method requires technical expertise in the field of computers in general and an understanding of the mechanism of digital currency mining in particular, the most important thing that distinguishes this method is its direct communication with the digital currency network that it wishes to mine.
Currently, the use of this method is limited to the category of miners owners of mining farms of varying sizes, this limitation may be due to the elimination of any additional costs such as the rental costs of mining devices in cloud mining or the percentage charged by mining platforms.
The method of mining digital currencies through a platform is considered the most popular mining method at the moment, this method is aimed at miners who are technically beginners in the field of digital currency mining but have technical equipment that allows them to mine.
The platforms play the role of a mentor for this type of miners and guide them on how to configure their devices and install mining software.these platforms also provide special sections to explain the field of mining and trading digital currencies in a safe and profitable way.
There are a huge number of cryptocurrency mining platforms, which are also called mining pools, however, the following platforms are the most popular and reliable
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platforms in the field of cryptocurrency mining:
Binance
BTC.COM
ViaBTC
Finally, cloud mining is considered the latest cryptocurrency mining methods, this method is aimed at people who have intermediate knowledge in the field of cryptocurrency mining and weak or strong technical hardware, but they do not want to use it in mining