Introduction to Cryptocurrency Mining | Steemit Crypto Academy | Lesson 4 for@besticofinder
THE MINING
Cryptocurrency mining can be very profitable if the computing power of the mining device is very high, and mining a cryptocurrency can be costly. Mining cryptocurrencies In recent times, we hear many positive and negative news about it from many sides. Many people earn billions of dollars from mining, while others have lost their computers due to their misunderstanding of cryptocurrency mining, as they download cryptocurrency blockchains onto vulnerable computers that are racing against supercomputers that have been exclusively dedicated to coin mining.
How crypto currency mining works ?
I will simplify for you, for example, you will mine [Bitcoin] on a computer dedicated to simple services. First, you must download the entire currency blockchain program, whose size currently exceeds hundreds of gigabytes, to have a copy of it (the decentralized nature of the blockchain). Then you will launch the program to race to solve a mathematical problem of the block based on those hundreds of gigabytes in which the data of all the (Bitcoin for example) transactions since its inception, the race will be with special mining computers in the network (Genesis Mining Company) so your computer will race with Genesis Mining as an example One in the Bitcoin mining network, to solve the problem, here your computer will execute the programmatic command in the blockchain that requires it to have high computing power, and electricity, (the computer is not a human being, when it feels that its energy has reached its maximum, it will expect to rest,
In the previous paragraph, we almost answered the question by 50%, and now we will delve a little deeper into the explanation. Cryptocurrency mining can be understood by very complex mathematical calculations to find the correct value to satisfy the hash function in the blockchain (to solve the block problem containing many transactions in the cryptocurrency). Those complex mathematical calculations, i.e. a computer that solves its complexity, is rewarded with a number of predetermined currencies in the blockchain for the computing power that contributed to the mining, and after the complexity is solved, the value is sent to the computer wallet that solves the complexity. Often times some people pool their computing power together in what is called a (pool) and the reward is split if the mathematical problem of the block is solved.
Many experts in the field and major miners say that a solution to the correct value or a mathematical problem is like winning in the lotto, because the solution offers a lot of money. There are countless computers with varying forces trying to find the solution to the value or mathematical problem, and whoever finds the solution, the reward is his share.
When you hear cryptocurrency mining, it is 100% intended to try to calculate the hash value (mathematical problem) specified in the block based on what was traded in the blockchain, so the result of the mathematical solution is that the transactions are applied to what was traded in the blockchain from its inception until the last block that was solved. This requires significant computing power in line with the volume of transactions in the blockchain, but given the rewards they are well worth that power
What is Mining Difficulty ?
You have to be 100% clear about this, and what affects mining? How does it in turn affect profitability? Fortunately, it is a simple concept, although many beginners do not seem to understand it, and perhaps because a good understanding will raise anxiety and doubts, and no one likes to have doubts, and the following is a simple and complete explanation of all relevant aspects.
All digital currencies are based on some type of blockchain, and the blockchain is a series of linked blocks, and each block contains transactions, and these transactions are confirmed by running the block through an algorithm that aims to reach a correct answer, and once a correct answer is found, the block is confirmed, and it is done. Attaching it to the blockchain, and how difficult or easy it is to find this answer, is automatically and dynamically adjusted so that the average time required to resolve it is a period known as "block time", and this time period varies from one digital currency to another,For example, for Bitcoin, it is 10 minutes, and for Ethereum it is 15 seconds, and so on, and the miners are rewarded for being the first to solve it by giving them some new digital currencies along with the transaction fees, so the amount received is determined by a particular digital currency, but This amount usually decreases over time, for example the bitcoin mining equivalent was 50 a few years ago, then it decreased to 25, and now it is 12.5.
GPUs work hard to find the answer as quickly as possible, and the mining difficulty is set automatically and periodically without human intervention, so the average blocking time is about what it should - say 15 seconds for Ethereum - and if more processing units are added. Graphics to the grid trying to find the answers, it will be found more quickly, which makes the difficulty of mining will increase automatically. Conversely, if only a few GPUs are running, the blocking time will start to increase, which will lead to a decrease in mining difficulty, all of which is done automatically without human intervention to try to maintain a constant rate of blocking time.
What are the challenges for crypto currency miners ?
The difficulties can be summarized in
Miners should choose protocols that consume less energy
Taking into account the update of the mining difficulty that we mentioned earlier
An increase in the market value of the currency being mined
Operating mining activities in mining facilities and mining data centers that operate on renewable hydropower as it is the best for mining.
The heat from mining should be disposed of by placing the mining sites in cool places in cold cities to reduce the costs of dissipating the heat.
Introduction to Cryptocurrency Mining | Steemit Crypto Academy | Lesson 4 for@besticofinder
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Hello @alirade37 ,
Thank you for submitting homework task 4 ! You have explained all the three topics well with facts. And the article is well organized. Nice work [7]
Thank you