Given that there are myriad ways to mine cryptos, should you opt for mining them? Crypto mining refers to the process by which transactions between parties are verified and then added to a ledger. Mining is also done for introducing new crypto coins to add to a cryptocurrency’s existing supply in circulation. So, mining basically ensures that a decentralized payment system can operate without need for third- parties or intermediaries.
Should We Mine Cryptocurrencies?
- One of the biggest reasons to mine a crypto is to generate new cryptos. When you mine Bitcoins by solving complex computational problems, you end up producing new coins.
- Secondly, by solving such complicated mathematical problems, you can make the network credible and trustworthy. When cryptos are transferred from one party to another it is known as a transaction. These transactions can be made offline or online and then verified by Point-of-Sale systems, banks, and invoices. It is the same thing that miners achieve except that they do so by solving computational problems. They clump the transactions into “blocks” and then add these to a public ledger or blockchain. An identical copy of the blockchain is maintained by each and every node or computer that is part of this blockchain. So, when there is any attempt to change the data in a block, it is detected right away.
- Whenever miners add new blocks to the blockchain they ensure that data entered is accurate and genuine. This avoids “double-spending” which is a common problem where traditional currencies are concerned.
- Nakamoto had incentivized people for maintaining the Bitcoin blockchain through rewards; so, miners were rewarded with new Bitcoins on mining a block successfully every time. This led miners to become more confident in their work when they were certain they would be rewarded in currencies that were valuable.
- Mining can be done independently or by joining pools. So, for those who found it hard to afford the costs of installing and maintaining a mining rig at home, there was always the option of becoming a member of a reputed mining pool. This ensured smaller but more frequent payouts and assured them of a steady income source.
- While mining may seem like a viable alternative to earn new Bitcoins and cryptos, it is not meant for everyone. You need to consider crypto mining only when you stay in a location where you have access to cheap electricity, like in China or Russia.
- You can start mining even with home computers; earlier, it was possible to use an ordinary PC for the task but now you need machines with specialized GPU. GPUs such as the GTX 3080 are efficient and powerful enough to give you profits through mining, even in countries like US where power costs are steep. With mining becoming more popular, brands like Antminer and Bitmain came out with ASIC miners dedicated exclusively for mining cryptos. Such ASIC miners are highly specialized and typically meant for mining only a specific crypto. So, in case you have a computer with modern GPU, why not try your hand at mining cryptos?
The crypto mining space is still relatively new and there is much to happen here. Whether you should mine cryptos or not depends on your appetite for risks. Any new industry is going to be risky, but even if there is uncertainty, there are prospects for profits. According to PR Newswire reports, there are more than 100,000 Bitcoin miners as of June, 2020.