We hear many questions about the mining and mining hardware. But what is it exactly and how does it work? Is it expensive? Is it even profitable? We will try to answer all of those questions below.
What is mining hardware and how does it work?
It can be a computer or a single graphics card. Most often it's a combination of graphics cards or ASICs (application-specific integrated circuit). They must meet the appropriate requirements, primarily in terms of power. The very process of "mining" cryptocurrencies is the approval of new blocks and attaching them to an already existing chain - the so-called blockchain.
New transactions are saved on each block, but new coins are also issued. It is necessary to solve the cryptographic problem to mine a new block. It requires finding the string of characters, i.e. hash. Considering the fact that the cryptocurrency protocol is open-source - you can check the problem that is solved at any given moment. The transactions and hashes of the previous block play the role of the output data. People involved in mining announce the solution they found in the network, while the other participants of the process check, it is correct. If this solution is approved, a new block is considered to be mined, and the person responsible for it receives a certain amount of digital coins.
The performance of the mining hardware is measured in hashes per second (H / sec).
Mining cryptocurrencies is nothing more than confirming transactions in a distributed database. Simply speaking - it is about approving new blocks and attaching them to the already existing chain of the blockchain (as mentioned above). The name of this activity is related to the idea of "gold mining".
The most popular methods of mining include Proof of Work and Proof of Stake.
Proof of Stake is not about solving complicated mathematical problems. This method depends heavily on the number of coins kept on the cryptocurrency wallet.
This algorithm evaluates and ultimately decides which miners will confirm the transaction and receive a commission. Simply put - the more coins someone has, the greater the chance of making a profit from mining.
This method, however, does not require the purchase of appropriate cryptocurrency equipment (graphics cards, etc.).
Proof of Work method relies on extracting tokens by performing appropriate mathematical calculations using hardware.
It is important to note, that BTC requires mining on highly specialized equipment, while other cryptocurrencies can be mined by the graphics card only. As you can see, the investment costs of the Bitcoin mining are much higher.
Also important is huge electricity consumption. The mining hardware, for efficient and effective functioning, needs power, much of it. There is also a factor of the cryptocurrency price, which changes almost every day.
Profitability, therefore, depends on many issues, and each individual mining hardware can bring profits only when the given currency reaches a high price point.
So is it really profitable to mine cryptocurrencies?
Considering the technological aspect - definitely yes. Because we are taking part in a real technological revolution that changes many industries, it is really difficult to say when it will be useful to configure the blockchain technology node.
When considering the financial aspect, it is not so easy to decide. The difficulty of mining virtual tokens data should be considered. In addition, electricity consumption should also be taken into account, as well as the relatively high purchase cost of mining hardware.
Price of mining hardware
Again, it depends on which cryptocurrency we want to mine. The most popular crypto is Bitcoin, which is also the most expensive. The equipment for BTC mining is extensive and requires the expenditure of a few thousand dollars.
Cryptocurrency mining has become extremely popular, and consequently, the prices of hardware have clearly increased. Stores and wholesalers often do not have enough hardware to meet the needs of all customers, so the waiting time also increases.
There is a possibility of online mining, by creating special browsers or plugins for those already existing, e.g. Firefox or Chrome. In the browser, the script mines tokens in the background. The user can set the speed at which the mining should operate.
Just like on a PC, it is also possible to mine cryptocurrency on your smartphone. However, you will need a phone with a powerful processor. Preferably one you do not use every day. Then nothing should slow down the CPU.
Calculators are mainly used to calculate the profitability of mining the most popular cryptocurrencies in PLN. Most of them calculate daily, weekly, monthly and yearly mining (including earnings). Again, Bitcoin is in the lead in the popularity chart, and many calculators are adapted to the mining hardware extracting BTC.
Mining in 2019
In 2019, crypto mining has become very common, but the cost of electricity does not decrease. The price of cryptocurrencies, on the other hand, is falling. Using the graphics cards has become so unprofitable that many large mines had to be closed.