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Crypto Mining - Everything You need to Know with an In-Depth Explanation

Crypto Mining - Miner mining a Bitcoin
    1. The meaning of crypto
    2. Two main different kinds of mining
    3. How to choose the perfect mining equipment
    4. Is mining important?
    5. Things to deal with when mining
    6. Tricks with mining
    7. The downsides of crypto mining
    8. How to get involved in crypto?
    9. What else we can do with crypto?
    10. General questions with answers

What is Cryptocurrency?

For detailed answer, this is an utopian concept saying that "The wealth of the world should be in fixed circulation. It should not be regulated by third parties or governments and should be immutable...". But we are not going to illustrate such detail today.
So, for short, cryptocurrency nowadays means "digital gold", which enforces privacy, security, and decentralization.
Due to its unique characteristics, people may ask "who's in charge of the initial supply to the market since there are no such central authorities that "forge" the coins?" The answer is the "Network". This task is broadly distributed amongst cryptocurrency users via the internet.
To be more precise, this task is accomplished by a subset of the cryptocurrency users who are also called "the miners". And, this "initial supply" action is called 'crypto mining', short for 'cryptocurrency mining'.

What is crypto mining exactly? And how does crypto mining work?

Well, "Crypto mining" is an apt metaphor for the process of competition to compete the right to submit a valid block to the cryptocurrency network. And as a result, people who win this competition will be able to collect the newly generated coins as a reward.
This competition is basically using hardwares, called crypto miner, hashing a block of data with a random nonce input until the hashed result meets the target difficulty.
So, what is your definition of mining?

What is a miner? And what is an ASIC miner?

Obviously, a crypto miner is a hardware device capable of joining the hash competition. The history of crypto miner come across four eras: computer, gpu, fpga and ASIC.
Like Bitcoin, the world's largest volume and well-known cryptocurrency, mainly uses ASIC miners as its hashing devices. (People might simply call this kind of mining equipment bit miners or a btc miner as well.) ASIC stands for "Application-specific integrated circuit".
Therefore, an ASIC miner is a specific designed circuit which can only accomplish hash competition to a predefined algorithm for a subset of cryptocurrency coins.

How do you get Bitcoins?

There are several ways for you to get or invest in Bitcoins, such as to buy from public exchange, player-to-player exchange, and mine for your own.
It is believed that to mine your own Bitcoin is not only the most valuable but also the least risky way to earn and invest in cryptocurrency. Since the only thing you need to worry about is the power bills.
So, there is one more question left. "How long does it take to mine a Bitcoin?" It depends on how much hash power the network currently has and how much hash power you own. In theory, you can find a block of 3.25+fee Bitcoins every 4 days if you have 1 Exahash(EH). That block of Bitcoins is worth around $210,000.
However, the mining process is not a simple math question. It is statistical probability. That means one day if you feel lucky, even if you own only 1 megahash, you still can find a treasure block.

What are the two main different types of mining?

Cloud mining or pool mining

Cloud mining, the same as pool mining, is the most popular way of mining. A pool operator maintains a full node of cryptocurrency, Bitcoin for example, and then releases the entry point of a pool so that everyone can connect his or her crypto miners to it.
By accumulating every single hash power, pool mining is more likely to find a block and everyone in the same pool can earn profit shares evenly. This is the fairest way, most of the time, unless you join a scam pool, for most users.

Solo mining

Solo mining is another kind of mining. A solo miner aims to mine a whole block by himself/herself. And of course, it is possible if you own a large mining farm or bitcoin farm. Therefore, solo mining may not be suitable for most people due to the heavy investment on mining devices.
Fortunately, as mentioned in the previous section, crypto mining is a probability. That means if the input samples are not infinite, the probability of finding a block is not absolutely proportional to the hash power.
As a result, some organizations like OSMU design some genius mining devices such as Bitaxe Ultra, a solo miner that takes into account of the cost and efficiency for normal people who are willing to get involved in crypto mining.
Which type do you prefer?

How do you choose your own mining devices?

It is necessary to illustrate a concept called "consensus algorithm" first before we talk about the types of mining devices. To make it easier to understand, a consensus algorithm is a "kind of math question" that crypto miners want to solve to meet the target difficulty: fx(data+random) < Difficulty

Different coins will choose their own consensus algorithm like Bitcoin uses SHA256d while Ravencoin uses KawPow instead. In other words, a crypto miner doing SHA256d hashing cannot find a block for coins using a different consensus algorithm.

Therefore, there are tons of mining devices on the market like Bitcoin miners, Doge miners, Litecoin miner etc. Each of them is designed for mining a subset of coins which use the same consensus algorithm.

So it is necessary to check your target coin's consensus algorithm before buying the mining devices or before you buy bitcoin miners.

Why is crypto mining important?

Beside joining one of the world's biggest "lottery pool" to get a chance to win a jackpot, crypto mining is very important for the cryptocurrency network, at least for the original intention of the cryptocurrency design.
The thing is, the higher level of distribution of crypto mining, meaning that more people get involved, the more security enforces network immutability.
However, as the industry grows, oligarchs who own large mining farms may influence the whole mining process if they really want to. That contradicts the intention of cryptocurrency's ecosystem.
That is why the community invent such as Bitaxe, Nerdminer etc. To lower the bar on getting involved in crypto mining. The community hopes, at least, that they can slower the oligarchization process.

Things you need to deal with when mining

Before you start mining, you can do a self-analysis to decide what kind of preparation is needed and what kind of mining rigs are chosen to be used. There are mainly two categories of miners, people whose main goal is to make money with bitcoin and with extra money on hand, and people who mine solo.

For profit hunters who can afford medium to heavy investment :

  • Dedicated ASIC miners. The selection is various across the market such as BTC miner(aka Bit Miner), Helium miner, Sidra miner etc.
  • Basic knowledge of network setup. Since ASIC miners are already well programmed, a simple local network setup is suitable for the mining task.
  • Place to hold all ASIC miners. Instead of cutting-edge hydro miners, most mining farms still use air-cooling ASIC miners. So the place to choose must at an open enough, non cabined indoor area. Also be wary of electronic dust.
  • Sufficient and stable power supply. This is another essential criteria for running a mining farm. Therefore, hiring an electronic specialist is recommended.
  • Appropriate air cooling design. Since enormous amounts of heat will be generated during the mining process in an indoor area, appropriate air flow control is necessary.

    For solo warriors:

    • Most likely to be expected to handle with much sophistication as Tech Savvy Users
    • Crypto miner's selections for soloing mining are not as many as the professional ASIC miners. A community verified solo miner called Bitaxe Ultra and its serial is one of the best deals.
    • Solo mining pool plus crypto node setup and maintaining. Although these are not mandatory since there are a lot public solo pool you can use right away, it is highly recommended to setup your own. Otherwise, your once in a lifetime "jackpot" may slip away due to the untrusted pool operator.
    • Noise management is one of the concerns. We definitely don't want loud noise at our garage.
    • Solid experience of networking and programming. These are mandatory if you want to build your own solo mining devices. Otherwise, a legit retailer, verified by the open source mining device community, like TinyChipHub who sells pre-built solo mining device such as Bitaxe Ultra and Hex could be a good choice.

        Tricks you should be aware of when talking about crypto

        Likewise, high revenue comes with high risks. Especially for network, a place where anyone can sit behind the screen. Some crafty people may fawn you, saying that "there is a once in a lifetime chance only for you..."
        One of the common mendacities is called "Bitcoin generator". Scammer usually claims that such a device or software can generate a valid block to the Bitcoin network. Even with very limited understanding of blockchain techniques, it is obviously not possible unless a true quantum computer has released. By that time, however, all nowadays encryption methods on Earth will become meaningless.
        Another scam which is also very common in crypto is fake exchanges. Those exchanges usually list a lot altcoins or claim high rate saving gimmicks to grab people's attention. Once you make deposits into such exchanges, you may never withdraw your coins.
        Therefore, fact check is always top priority when going crypto.

        The downsides of mining

        As some may ask, 'What are the risks of crypto mining?', well, there is some stuff you should consider.
          • Energy intensive
          • Noise pollution
          • Electronic pollution due to the rapid iteration of crypto miners
          • Oligarchization weakening stabilization of crypto network

            How to get involved in crypto?

              • Get involved in crypto mining
              • Join crypto swap to increase liquidity
              • Lend your idle devices (PC, crypto miner)
              • Leave your comments or suggestion to coins' communities
              • Use it!

                What else we can do with crypto?

                There was a legendary pizza sold 13 years ago. That was the first-ever real world trading good by spending 10,000 Bitcoins. Nowadays, crypto can, for sure, not only buy things but also can do a lot interesting things.
                One publicly approved usage is crypto miner games. This usage is bound to crypto's gene by nature. Some famous games projects we could mention here:
                  • Axie Infinity - a virtual pets breeding game;
                  • The Sandbox - a metaverse that is very popular since 2 years ago.
                  • Pancake Protector - a tower defense(TD) game built on the BNB chain
                    Another usage is NFT. The NFT stands for non-fungible token. Such a thing aims to release creativity from the public. People can upload their digital art collections, like painting, songs etc., on a blockchain and others may appreciate the collections and hence buy them. As a result, the creators can earn from it.

                    To conclude...

                    Crypto is a consensus oriented Noah's Ark which is just starting its journey to better trade Utopia. Tons of concepts around crypto are blooming every second to forge the ark more and more stronger. As one of the "sailers", we should get involved in this journey. And perhaps, this is miniature of our future life.

                    Frequently asked questions about mining

                    • Is bitcoin mining profitable?
                    Yes, Bitcoin mining is profitable at most of the time if you choose a right crypto miner.
                      • Is crypto mining legal?
                      Crypto mining is legal in most countries. Some may need to provide SIN information, like the US, due to the tax issues.
                      • Are crypto miners safe?
                      It depends. It is always suggested that we should buy crypto miners from legit retailer directly. Otherwise, you may highly likely be exposed to modified or cracked miners which lead to profit loss.
                      • Can I mine Bitcoin for free?
                      Not likely. Most of the pools introduce the pool's fee. But if you can set up your own solo pool, then you can mine Bitcoin for free.
                      • Why is crypto mining noisy?
                      Traditional ASIC miners use a super powerful fan for cooling. That creates unbearable noise. Fortunately, we have other choices such as hydro-cooling ASIC miner and tiny solo miner(Bitaxe, Nerdminer, etc.).
                      • How can I mine solo?
                      The simplest way is to connect your mining devices to a verified pool which supports solo mining. Or, you could set up your own mining pool that no one joins, which effectively makes it solo.
                      • What are the benefits of solo mining?
                      You can keep all subsidies plus fees when submitting a valid block without sharing with others. For tradeoff, you will not get any until you find a block.
                      • What is the easiest solo mining coin?
                      Newly announced altcoins are usually the easiest to mine sole.

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                        1 comment

                        winston

                        winston

                        Good job! Fit for new beginner.

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