Mining glossary
Miner - who is it, and how does it work?

Miner participates in a decentralized system that mines new blocks and digital coins.

The cryptocurrency financial system fundamentally differs from the traditional fiat system, primarily in that coins are mined through certain computational processes. These actions are performed by miners, for which they require special software or equipment with high power potential.

The essence of the work of miners

The number of digital coins in any ecosystem is limited. Moreover, as the number of coins available for mining decreases, the calculation processes become more complicated. Miners do more than just mine cryptocurrencies. They also maintain the system's stability through special checks and validate transactions, that is, confirm their authenticity. All these processes are based on:

  • mining new blocks;
  • eliminating errors in the source code that negatively affect the stability of the ecosystem.

For each new block mined and for confirming transactions, miners receive an appropriate reward amount.

What determines the profitability of a miner?

Today, there are several ways to work in the field of cryptocurrency mining:

  • purchasing special powerful equipment or creating a mining farm from a set of suitable components;
  • cloud mining does not require your own powerful equipment. Still, you need to connect via special software via the Internet remotely to the servers of the selected company and rent its computing power.

The miner's profitability is higher in the first case since he completes the system himself, taking into account the type of cryptocurrency and its requirements, and personally controls all processes. In addition to the size of the reward for mined blocks, the profitability of mining for a particular miner is influenced by factors such as the halving cycle, market sentiment, and the correlation of the cryptocurrency's price.