Cryptocurrency Mining 101: A Beginner’s Guide
Aside from trading and investing in cryptocurrency, you’re likely to hear a lot about the process of crypto mining. It’s helpful to have at least a base of understanding of what mining is in terms of cryptocurrency, even if you don’t plan to partake. So what exactly is crypto mining?
In order for new cryptocurrency pieces to be released, crypto miners solve complex equations with sophisticated technology. Mining is an integral process in keeping a specific blockchain technology going and stable. It also takes a large amount of time and energy to complete and there are some concerns about negative effects on the environment.
In this article, we explain what crypto mining is, how to mine cryptocurrency, and we’ll also discuss the environmental implications on mining.
What is Crypto Mining?
The mining of Bitcoin and other cryptocurrencies refers to the process of pushing new coins and tokens into circulation. Mining is also the way a network confirms new transactions and the mining process is integral in the maintenance and development of the blockchain technology being used.
Many people are drawn to the idea of mining Bitcoin and other cryptocurrencies because of the promise of reward once you’re successful. The first miner who correctly solves a complex equation will then be rewarded with crypto tokens that can be used to invest in more cryptocurrency.
Miners also get rewarded as auditors. In this case, their job is to verify legitimacy and authenticate Bitcoin purchases. Auditors are used to prevent a problem with double-spending. Double-spending refers to instances where an owner of cryptocurrency uses the same currency more than once to make a purchase.
How to Mine Cryptocurrency
For a person to be successful in mining cryptocurrency, a miner has to be the first person to solve an incredibly complex math equation. These equations require sophisticated and expensive computer systems and take a lot of time and energy to complete.
Mining Bitcoin, in particular, is extremely competitive as there’s a circulation cap of 21 million. Once there are 21 million Bitcoins in circulation, no more can be created. The only way to get Bitcoin after the circulation cap is through investing and trading.
To mine cryptocurrency, you need to create blocks that can be stacked in the correct order. Miners use mathematical properties to encode data and the first miner to successfully complete an equation is then rewarded with a new cryptocurrency. Some networks may also pay miners with existing cryptocurrency in addition to the new mining block.
Is Crypto Mining Environmentally-Friendly?
The process of mining cryptocurrency uses a lot of physical and electronic energy. Although it’s a completely digital currency, it’s worth noting that the amount of electricity needed to power sophisticated computer systems isn’t the most environmentally sound task.
The electronic waste (e-waste) produced, paired with energy and hardware problems raise the eyebrows of many environmentalists for the negative effect this can have on the environment. While technology is continuously growing and improving, the imminent threat to the climate and environment are also at the forefront of the public mind.
The continuous growth of crypto mining also leads to the fact that the technology used becomes obsolete every couple of years. This then adds even more electronic waste to the growing environmental issue.
With that said, there are altcoins (any cryptocurrency that isn’t Bitcoin) that take on a more ethical approach. Among these altcoins are SEEDS, Dash, and NXT. SEEDS is described as a currency that aligns money with value. They also place importance on ethical energy consumption and taking care not to overuse.
Dash and NXT are other highly rated cryptocurrencies that work similarly to Bitcoin. However, they foster a different approach to mining that uses less energy and produces a smaller amount of electronic waste.
Before deciding to delve into the process of crypto mining, it’s important to note the energy required in doing so. Not only does mining take a lot of your physical time and energy, but it can lead to a significant amount of e-waste if you aren’t careful.
It’s important to make sure this is something you really want to commit to before jumping in because most times it can feel like it takes more energy than you may feel is worth it. It also requires expensive computer systems to pull off, so you need to factor in total costs in doing so.
We hope this article has helped you make a well-informed decision on whether or not to delve into cryptocurrency mining.
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