Mining glossary
Mining - what is it?

Mining is a process in which numerous mathematical calculations are performed to mine cryptocurrencies to receive a reward for the work performed.

The digital coin system is fundamentally different from the classical fiat financial system. Technically, fiat money is issued in the form of coins and banknotes; this is done only by the Central Bank of a particular country. Cryptocurrencies are only electronic assets; coins are mined through certain mathematical processes. The main goal of mining is to find, through millions of calculations, a new unique block that will be validated in the system. The miner receives a reward for it.

Modern mining methods

Initially, as soon as the first cryptocurrency system, Bitcoin, was introduced, miners needed to purchase equipment with certain requirements for the characteristics of the components:

  • processor;
  • video cards;
  • operating system;
  • cooling systems;
  • power supply.

Today, this method still remains popular even though there are alternative methods - cloud mining and pool mining. In the first case, it is assumed that the miner does not need to purchase very powerful equipment, which, in terms of its computing capabilities, will correspond to the current complexity of mining different types of cryptocurrencies. He simply installs special software and rents computing power from the selected company. In this case, the disadvantages are that there is no control over all processes, and in fact, it is not always possible to personally choose what type of digital coin will be mined.

The pool is the most optimal solution for today. It consists of the fact that a participant in the cryptocurrency system purchases equipment with certain characteristics. But at the same time, he shares this computing power with other miners. As a result of the collective process, more favorable conditions are created to accelerate the extraction of new blocks in a very competitive environment.

Mining equipment

Choosing mining equipment is a very important task, the method of solving which ultimately determines the overall profitability. To start in this direction, you can create:

  • rigs are devices that are created from several elements (video cards, power supply, motherboard, cooling system);
  • farms are a larger system created from several rigs.

Companies with very solid capitalization usually launch industrial mining farms. This considers factors such as the current cost of crypto coins, energy costs, rent, or purchase of premises.

Depending on what type of cryptocurrency will be predominantly mined, the following can be used as the basis of a computing device:

  • graphics adapters are a popular option today that supports various protocols and algorithms. Therefore, they are universal in most cases;
  • ASIC chips are unique mining equipment based on integrated circuits; they are expensive, but the efficiency is many times higher, provided the system supports the required protocol.

Initially, mining was also carried out on hard drives and CPUs. Today, these methods turn out to be unpromising due to the increasing complexity of cryptocurrency mining. However, some isolated miners still use this type of equipment.