Before we get into Mining, it is important to understand Blockchain Technology which is a public ledger that pens down all the transactions happening on the network. Blockchain is a decentralized ledger of all transactions across a peer-to-peer network. Using Blockchain, transactions can be confirmed without the need for a central or federal clearing authority. Blockchain enables the existence of Cryptocurrencies (among other applications like fund transfers, settling trades, voting, and many other issues). A cryptocurrency is a medium of exchange, just like the US dollar, but is digital and uses encryption techniques to control the creation of monetary units and to verify the transfer of funds. Bitcoin and Ethereum are the best-known examples.
Cryptocurrency mining is quite similar to mining precious metals. Just like there are two ways to own gold, one is to buy it from a jewelry store, and the other is to use your own machines to dig it out from Earth. Similarly, while miners of precious metals will unearth gold, silver, or diamonds, crypto miners will trigger the release of new coins into circulation.
Mining is not simply a way of creating new coins but also involves validating cryptocurrency transactions on a blockchain network and adding them to a distributed ledger. Now since this process can be manipulated digitally, only verified miners are assigned this responsibility. Thus, new coins are generated to reward miners for their work in securing the network globally. Since there is no centralized authority for distributed ledgers, the mining process is very crucial for validating transactions on the network. And hence, miners are incentivized to secure the network by participating in the transaction validation process that increases their chances of winning newly minted coins.
To be rewarded with new coins, setting up miners means deploying machines with good hash rates that solve complex mathematical equations in the form of cryptographic hashes. A hash is a truncated digital signature of a chunk of data. Hashes are generated to secure data transferred on a public network. Miners compete with their peers to zero in on a hash value generated by a crypto coin transaction, and the first miner to crack the code gets to add the block to the ledger and receive the reward. The more the hash rate the more the mining power and returns in form of rewards.
Steps to consider and follow before starting mining:
- Understanding the market and deciding on a Crypto that you want to mine.
- Sourcing electricity at a cheaper price because the machines consume a lot of power and it can affect your profits.
- Understanding the difference between ASIC mining and mining using GPUs.
- Defining your budget, considering 4-5% monthly returns (which sometimes also peaks to 8-10%)
- Occasional maintenance and guidance required.
It is always recommended to get in touch with experts for all mining-related enquiries, research, guidance, purchases, and setups to be on a safer and secured side. And that’s where we at MBminers come into play with our years of experience, PAN India presence, expertise, global partners, and thousands of happy clients backing our portfolio. Get in touch with us today for more details and personalized experience.
MINE BETTER, MINE STRONG!