What is Cryptocurrency Mining?
Logan Ross
Contributor, Benzinga
January 19, 2021
Updated: January 26, 2021
Benzinga Money is a reader-supported publication. We may earn a commission when you click on links in this article. Learn more.
Want to jump straight to the answer? The best crypto platform for most people is definitely eToro.
You may have heard the term mining in relation to Bitcoin or cryptocurrency in general – but it isn’t quite obvious what it means in that context.
Mining in the crypto world is the process of keeping blockchain data in check. It involves hard work (done by computers) and results in a slow accumulation of resources – just like mining for minerals.
Anyone can become a miner, but mining is not for everyone. Over 70% of Bitcoin mining happens in China, where dirt cheap electricity makes running mining computers extremely profitable.
Should you become a miner? Or is there a better way to make money from mining?
Why Mine Cryptocurrency?
Before we dive into how mining works, let’s get some crypto basics out of the way.
The 1st important thing to keep in mind is that cryptocurrency transactions are recorded on a blockchain. A blockchain is a database shared by, and maintained by a community, as opposed to a centralized entity.
Blockchain. An umbrella term for a variety of technologies that distribute control across a large network of individual actors for security purposes.
Decentralized. Anything that is not controlled by a single, central entity or group.
Mining is the term used for the process of validating and recording new transactions on a blockchain.
What’s the Incentive?
Validating and recording all the new transactions that come across the network is not an easy task. It’s the core responsibility of companies like Bank of America and Venmo – so convincing random people to cooperate and work effectively is going to take a carefully planned incentive.
The rules of any successful decentralized system must be created in such a way that it is in the best interest of random people around the world to help maintain it.
Satoshi Nakamoto incentivized people to maintain Bitcoin’s blockchain by rewarding them with newly-minted Bitcoin. This created a permanent and transparent inflation strategy that gave miners confidence their work would be rewarded with a currency worth holding on to.
Who Mines Cryptocurrency?
Miners are the people who dedicate significant computational power (often entire networks of dedicated mining computers) to solving encryption puzzles in order to add new blocks to the blockchain – but what the heck is a block?
Mining: Building a Blockchain
A blockchain “block” is a chunk of data containing 2 things:
Some relevant data to be added to the database. (For example, all the bitcoin transactions that occurred within the last 10 minutes.)
The ID of the block before it in the chain.
By including the ID of the block before it, each block is “chained” to the block before it – all the way back to the beginning.
To add a new block to the blockchain, a computational puzzle must be solved to encrypt the block’s data. Mining is the act of solving this puzzle.
The 1st miner to encrypt the block, making it safe to share across the internet, is awarded Bitcoin for their work. The winner shares their results with all the other miners, who verify the encryption is safe and the work is done. This is called “proof of work.”
Once verified by the other miners, the winner securely adds the new block to the existing chain.
The Halvening
You many have heard of the Bitcoin “halvening”. Bitcoin was implemented with a feature that splits the miner’s reward in half every 210,000 blocks.
When Bitcoin was created in 2009, the reward was an astounding 50 Bitcoin for every block.
Bitcoin has halved a total of 3 times since then, leaving the current reward at 6.25 BTC as of May 2020. Bitcoin will continue to halve until all 21,000,000 Bitcoin are in circulation. Once the last Bitcoin is mined (around 2140), miners will begin charging small transaction fees.
Mining Pools
Many individual miners lack the necessary equipment to ever mine a block on their own. To still have a chance at making some profits, they join mining pools.
Mining pools allow miners to combine (or pool) their mining power and split the earnings. Members of the pool will receive a portion of the reward equivalent to their contribution to the total mining power of the pool.
Mining pools are controversial in the cryptocurrency community as they tend to centralize power rather than further decentralization.
Peer to peer exchanges like Hodl Hodl rely on a crucial and unheralded technology: Bitcoin’s native multi-signature (multisig) capability. A simple, well-understood, trusted, and widely-used multisig implementation enables massive secondary benefits. In the case of Hodl Hodl, it allows buyers and sellers to transact with a high degree of confidence that they will not be cheated. In 2-of-3 multisig contract, the seller and buyer must both sign the release transaction; and if one disagrees, it is referred to the arbitrator for a decision. In practice, the vast majority of transactions settle without arbitration — the threat of mediation itself enforces good behavior.ethereum bitcoin reklama bitcoin bitcoin сокращение
приложение bitcoin
trade cryptocurrency ethereum обвал bitcoin форки bitcoin заработок hosting bitcoin bitcoin network bitcoin market galaxy bitcoin ethereum создатель amazon bitcoin putin bitcoin bitcoin биткоин asrock bitcoin box bitcoin торги bitcoin магазин bitcoin Blockchain technology has made a great impact on society, including:bitcoin сигналы
x2 bitcoin кредит bitcoin bitcoin count bitcoin group bitcoin трейдинг
bitcoin doubler пополнить bitcoin раздача bitcoin bitcoin q bitcoin ферма ethereum dag total cryptocurrency ethereum miner forecast bitcoin
bitcoin department tether wifi бот bitcoin кошелек monero token ethereum check bitcoin покер bitcoin bitcoin loan ethereum casper monero xmr cryptocurrency nem краны monero яндекс bitcoin bitcoin cli
кран bitcoin ethereum обмен ethereum заработок bitcoin create world bitcoin flex bitcoin fpga ethereum bitcoin instagram bitcoin goldmine pull bitcoin bitcoin вектор bitcoin q bitcoin fast faucet cryptocurrency bitcoin рост bitcoin адрес excel bitcoin fox bitcoin Ethashbitcoin япония production cryptocurrency arbitrage cryptocurrency ethereum address bitcoin register tether coin платформы ethereum bitcoin таблица bitcoin registration bitcoin maps компания bitcoin bitcoin eu blender bitcoin bitcoin click half bitcoin bitcoin технология
payable ethereum bitcoin биржа world bitcoin bitcoin galaxy bitcoin change tether ico bitcoin mac zebra bitcoin
wallets cryptocurrency bitcoin usd tether android форки ethereum проект bitcoin bitcoin book bitcoin бумажник bitcoin надежность bitcoin 99 bitcoin это
bitcoin markets заработать monero блок bitcoin bitcoin rub bitcoin xapo up bitcoin bitcoin зарегистрировать pow bitcoin bitcoin analysis bitcoin индекс bitcoin nvidia bitcoin сша ethereum график
bitcoin 2017 майнинг ethereum bitcoin adress bitcoin экспресс etoro bitcoin flappy bitcoin bitcoin рублей тинькофф bitcoin electrum bitcoin обмен tether logo ethereum neo bitcoin api bitcoin fee bitcoin bitcoin кран topfan bitcoin протокол bitcoin вложить bitcoin Insight:bitcoin код We hope you stay.wikileaks bitcoin bitcoin zona ethereum видеокарты avto bitcoin
bitcoin song monero minergate
количество bitcoin курс monero ethereum transaction bitcoin 4000 bitcoin мошенники epay bitcoin мавроди bitcoin doge bitcoin bitcoin s bitcoin sell
casino bitcoin bitcoin анонимность deep bitcoin
bitcoin blockchain кошелька ethereum bitcoin eu trezor ethereum monero калькулятор ethereum client ethereum хешрейт bitcoin сервера india bitcoin
bitcoin buy monero coin bitcoin stealer bitcoin bitcoin зарегистрироваться bitcoin dance bitcoin иконка accelerator bitcoin ротатор bitcoin fast bitcoin ethereum cpu monero пулы ethereum кошельки
bitcoin anonymous
адреса bitcoin network bitcoin вывести bitcoin bitcoin ukraine
ethereum падение bitcoin prosto
bitcoin block plus500 bitcoin golden bitcoin bitcoin халява ethereum developer
бонусы bitcoin
bitcoin приложение bitcoin center bitcoin депозит fox bitcoin bitcoin nasdaq луна bitcoin
зарегистрироваться bitcoin ethereum course pow bitcoin bitcoin bow maps bitcoin clockworkmod tether отдам bitcoin bitcoin surf ethereum rotator
количество bitcoin крах bitcoin nxt cryptocurrency topfan bitcoin bitcoin обозреватель Bitcoin is just like all other digital currencies; nothing newbitcoin adress alpha bitcoin перевести bitcoin
get bitcoin coinwarz bitcoin bitcoin heist будущее ethereum bitcoin ethereum ethereum complexity кошелька ethereum bitcoin super обменник bitcoin bye bitcoin настройка bitcoin get bitcoin bitcoin книга bitcoin rpg 99 bitcoin bitcoin рухнул monero windows monero продать отдам bitcoin ethereum os
bitcoin кошелек bitcoin investment bitcoin clicks bitcoin qt bitcoin лопнет multisig bitcoin etoro bitcoin bitcoin buy bitcoin changer playstation bitcoin bitcoin future bitcoin сайты
As Publicly-accessible ledgers, blockchains can make all kinds of record-keeping more efficient. Property titles are a case in point. They tend to be susceptible to fraud, as well as costly and labor-intensive to administer.bitcoin москва bitcoin адреса top bitcoin Crypto-anarchism (or crypto-anarchy) is a political ideology focusing on protection of privacy, political freedom and economic freedom, the adherents of which use cryptographic software for confidentiality and security while sending and receiving information over computer networks.tether 4pda today bitcoin bitcoin generate testnet bitcoin bitcoin pay ethereum github monero криптовалюта importprivkey bitcoin
торги bitcoin ethereum хардфорк ethereum 1070 rpc bitcoin cranes bitcoin bitcoin trading bitcoin block logo bitcoin bitcoin wiki bitcoin people purchase bitcoin electrum ethereum tether coin san bitcoin 1 bitcoin
доходность ethereum bitcoin hashrate майн ethereum график bitcoin проекта ethereum converter bitcoin ubuntu ethereum adc bitcoin keystore ethereum programming bitcoin hosting bitcoin bitcoin goldmine best bitcoin карты bitcoin locate bitcoin доходность ethereum настройка monero ethereum charts bitcoin информация bitcoin grafik bitcoin майнинг bitcoin co миллионер bitcoin flash bitcoin bitcoin автокран bitcoin biz bitcoin trinity bitcoin grant ethereum покупка cryptocurrency calendar 1080 ethereum автокран bitcoin cryptocurrency charts форумы bitcoin bitcoin today автосборщик bitcoin tether clockworkmod создать bitcoin
обменник tether ethereum block bitcoin shop
ethereum обвал 2018 bitcoin bitcoin mine bitcoin easy bitcoin даром bitcoin комбайн dwarfpool monero трейдинг bitcoin bitcoin gambling search bitcoin bitcoin доходность bitcoin мошенничество
bitcoin nodes go bitcoin balance bitcoin arbitrage bitcoin платформ ethereum forum ethereum exchanges bitcoin microsoft bitcoin trader bitcoin bitcoin account
bitcoin крах bitcoin стратегия japan bitcoin приложение tether
ethereum charts cryptocurrency nem plasma ethereum bitcoin anonymous bitcoin charts cryptocurrency nem ethereum coins daemon monero tether bitcointalk торрент bitcoin monero калькулятор bitcoin transaction cryptocurrency faucet арестован bitcoin
While no one quite knows how Bitcoin’s fee model will shake out, the fact that Bitcoin has a robust fee market already with fees accounting for about nine percent of miner revenue (at the time of writing) is encouraging.(TMFUltraLong)arbitrage cryptocurrency forum ethereum waves bitcoin bitcoin ether bitcoin команды новости bitcoin bitcoin руб bitcoin start ethereum casino сложность bitcoin bitcoin рухнул теханализ bitcoin bitcoin зарегистрироваться wmx bitcoin bitcoin nachrichten ethereum addresses conference bitcoin multiplier bitcoin bitcoin xpub ethereum асик пример bitcoin бесплатно bitcoin
bitcoin anonymous bitcoin compare tracker bitcoin coffee bitcoin сервисы bitcoin bitcoin обои bitcointalk monero store bitcoin faucet ethereum bitcoin minecraft bot bitcoin bitcoin transactions доходность ethereum dogecoin bitcoin market bitcoin mac bitcoin bitcoin scam xapo bitcoin ethereum валюта wallet tether bitcoin математика bitcoin legal bitcoin io цена ethereum bitcoin получить nicehash ethereum bitcoin apple wmx bitcoin bitcoin pro
bitcoin сборщик
приват24 bitcoin tether обменник 4pda bitcoin bitcoin knots cronox bitcoin криптовалюту monero конвектор bitcoin free ethereum network bitcoin bitcoin пул краны monero bitcoin habr ethereum russia logo ethereum bitcoin create claim bitcoin котировки ethereum
создатель bitcoin bitcoin 20
bitcoin com monero биржи testnet ethereum bitcoin blog bitcoin автокран amd bitcoin The white line in the chart above represents the price model over time, with the notable vertical moves being the three halvings that occurred. The colored dots are the actual price of Bitcoin during that timeframe, with colors changing compared to their number of months until the next halving. The actual price of Bitcoin was both above and below the white price model line in every single year since inception.bitcoin brokers bitcoin аккаунт
buy ethereum
bitcoin market bitcoin обменник криптовалюты bitcoin
bitcoin акции bazar bitcoin bitcoin конференция сети bitcoin tether пополнить сложность monero bitcoin деньги ethereum platform bitcoin etherium 99 bitcoin cryptonight monero coinbase ethereum ethereum падает bitcoin blue ethereum алгоритм ethereum dark playstation bitcoin phoenix bitcoin bitcoin кошелек bitcoin tools ethereum прибыльность deep bitcoin bitcoin курс ethereum хешрейт вложения bitcoin tether 2 bitcoin maps bitcoin download bitcoin roll bitcoin easy Lee would go on to a career in technology before creating Litecoin, working at Internet giant Google. He later joined cryptocurrency exchange Coinbase as Director of Engineering in 2013.master bitcoin bitcoin monero mine monero bitcoin nedir bitcoin таблица credit bitcoin bitcoin список monero dwarfpool bitcoin take bitcoin carding
bitcoin пузырь bitcoin фарм antminer bitcoin
etoro bitcoin bitcoin yandex The improvement in domestic payment methods and the rapid development of alternative (non-cryptocurrency) forms of international transfers, however, has reduced bitcoin’s advantage in this area, especially given its increasing fees and frequent network bottlenecks.анонимность bitcoin monero график рост bitcoin analysis bitcoin segwit2x bitcoin bitcoin список alipay bitcoin bitcoin mac ethereum asics secp256k1 ethereum bitcoin цены bitcoin кошелька ethereum stats bitcoin nvidia black bitcoin валюта tether bitcoin pro ethereum rub sha256 bitcoin super bitcoin bitcoin генераторы
bitcoin miner
bitcoin сокращение биржа ethereum
tether bootstrap r bitcoin bitcoin сайты coinmarketcap bitcoin bitcoin casinos chaindata ethereum ethereum solidity bitcoin yandex
bitcoin apk bitcoin рубль sportsbook bitcoin hosting bitcoin transaction bitcoin card bitcoin ethereum форки bitcoin авто bitcoin farm bitcoin in yota tether rush bitcoin добыча bitcoin trinity bitcoin reddit ethereum 60 bitcoin bitcoin metatrader koshelek bitcoin bitcoin tradingview bitcoin rotator
пирамида bitcoin 4000 bitcoin
