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How crypto currency mining works ?
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It can be said that mining consists of authorizing and recording the blockchain transactions that users carry out through transfers from account to account. For this reason, all the nodes of the network participate to solve the puzzle that the search for the block fears, where knowing a significant number and applying a cryptographic position. A hash is found as a result, a hash is a mathematical algorithm that transforms the data of a block into a new series of fixed numbers that complies with the characteristics of the block: This work requires effort and power of the mining team in TH / s and that is according to the budget generated.
Not all cryptocurrencies work in the same way, basically the way to mine depends on which system uses the blockchain or the algorithm of each cryptocurrency. But they all have something in common: the machines or miners do not perform useless operations, they are necessary to keep the network stable and secure. Since their work is very important, the mining machines collect a certain amount of money for each work performed in mining. In a matter of bitcoin, let's give an example, every time a mining machine finds a valid block, it is awarded a certain amount of bitcoins. The payment is received with coins that are stored in said vault of the currency that is being mined, this varies depending on each type of currency and at that time they enter into circulation, many people often confuse this and believe that new coins are being created by making This operation, but no, they are only introducing new reward coins that are already created and are in reserves to reward the miners.
What is Mining Difficulty?
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It is understood as a measure of how difficult it is to extract a block or a fragment of it in any cryptocurrency.
The difficulty of mining is variable, which leads to ups and downs, depending on the number of blocks obtained in the competition or in demand.
A high difficulty is when more power is needed in mining machines to extract a certain amount of specific blocks, the total hash rate (hash rate), which is measured in TH / s, this is called mining power.
The difficulty of mining is variable, which leads to being a risky business if the necessary measures are not taken and in turn adapt to the competition quickly.
What are the challenges for crypto currency miners ?
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You can start by talking about large mining farms, which consist of gigantic sheds or data centers close to power plants or found in cold parts of the world such as Canada, Ireland, Russia, Patagonia, among many other countries. This makes many people think that mining is managed solely in an entrepreneurial way or that companies have total control of it and regret starting that business as a unit.
They are right in part but not in their entirety, not because it is impossible to start, but because the competition is so great that it is very unprofitable to invest in the equipment necessary to mine on a small scale since the results greatly infer the profit generated because many Factors influence this such as the electricity bill, equipment to cool the equipment in case of not having the priorities of living in cold places, and the version of the mining equipment, all this influences and makes it a challenge for the little ones. investors who want to start small-scale mining.
The first cryptocurrency created was bitcoin and the most popular currently, today there are many varieties called altcoins.
Each of these coins is related to its mining cost by owning its own algorithms. In many it is possible to participate with a good graphics card that also depends on its version and speed to solve algorithms and in others only a script.
We will talk about Ethereum, which is considered the second most used cryptocurrency today after Bitcoin, and is mined through a graphics card and specific software. For its part, we have Monero, which was widely recognized for being mined through a browser script.
Feature that was widely used by some cybercriminals with techniques such as cryptojacking among other things.
All cryptocurrencies work in a decentralized way and outside the banking system that we know. But we can say that this type of coin is not untouchable. It is known that regulations are already being enacted in several countries regarding mining and transactions of digital currencies because not in all countries the mining of cryptocurrencies for electricity consumption is legal.
Thank you for reading my very interesting post, if you are thinking of entering the world of mining, do not forget to take all the necessary security measures, both to protect your mining equipment, and to protect the cryptocurrencies that you acquire for work and your physical integrity.
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Hello @endersontowers,
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Thank you