Steemit Crypto Academy Contest / S9W5 - "Cryptocurrency Mining"
Hello everyone! I hope you will be well and good. Today I am going to explore the wonderful topic given by the crypto academy. It is indeed a unique thing to learn about cryptocurrency mining and how it works. So if you want to explore your knowledge about this topic then you can join the crypto academy challenge.
What is cryptocurrency mining? How does it work? Can STEEM token be mined?
Cryptocurrency Mining is a process in which new crypto coins are generated by solving cryptographic equations and puzzles by processing the transactions on a blockchain network and then these transactions are added on an open ledger where these transactions can bee seen by anyone. Cryptocurrency mining requires special devices which are specially designed to mine the coins.
Working of Cryptocurrency Mining
Cryptocurrency mining needs special type of hardware and it consumes a lot of energy. The users who mine cryptocurrency are known as miners. The miners solve the complex mathematical and cryptographic equations and complex puzzles and blocks are produced in this way and tokens are also produced after the successful block generation.
Actually the cryptocurrency transactions need to be verified and in order to provide transparency mining is done. And the miners of the cryptocurrency network verify the transactions and then these are processed and the data is stored in the blockchain ledger publicly where everyone has access to those transactions.
There is always mining competition between the miners and it is known as mining difficulty. The miners are always finding the answers of the complex mathematical equations to produce the blocks, and the miner who gets the answer first produces the new block. And then this process begins again. And the reward of the block production goes to that miner who produce the block and in this way the transactions are validated by the miners or validators.
Finding the answer of the equation first needs a high mining power than other miners and to gain high mining power it requires more costly and big mining gigs. The more expensive and with latest technology mining gig you have the more easily you can mine the cryptocurrency and produce the blocks.
There are also mining pools in which the hash power of all the miners is combined and blocks are produced and similarly the rewards are distributed according to their participation in the firm of hash power. The small miners join the mining pools and in this way they have more chances to find the answer of the puzzles and cryptographic equations. In this way the completion in the production of blocks is increased and hence the mining difficulty also increased.
Mining cryptocurrency consumes a lot of energy resources and computational power and mining process increases the temperature of surroundings.
Users can also mine cryptocurrency remotely by buying hash power and by paying for the other expenditures. There are mining houses at different places and we can plant our mining gig there and they will take care of the gig and in contrast they will charge us rent.
One block production of bitcoin blockchain produces 6.25 bitcoins currently and thus reward is halved after every 4 years.
Yes steem token can be mined, the top validators in the form of steem witnesses produce the steem blocks and at the production of each block steem tokens are produced. And these steem tokens become part of the reward pool. But mining process of steem tokens is different than other cryptocurrency minin. Actually there are different blockchain consensus such as proof of work( PoW), proof of stake (PoS), and delegated proof of stake (DPoS). Bitcoins are mined through the proof of work and it's mining mechanism is different than the steem mining.
Steem tokens are mined using the delegated proof of stake (DPoS), in which the stakeholders of the steem blockchain choose the block producers according to their services and reliability for the blockchain security. Stakeholders vote for the witnesses and the witnesses produce and validate the blocks and in this way steem tokens are mined and the witnesses are rewarded in the form of steem tokens.
Name The various types of mining methods for cryptocurrency
There are different types of mining processes and methods for cryptocurrency. And every method is more unique than others and has its own procedure and mechanism. Three processes are given below:
- CPU Mining
- GPU Mining
- ASIC Mining
CPU Mining is the first mining process which uses processors to solve the cryptographic equations and complex puzzles. It uses a lot of power and cause heat and devices need to be cool down. And due to a lot of consumption of energy it wasn't approved to be an economic method for mining.
GPU Mining is another process to mine cryptocurrencies. As from the name we can understand that this method use graphics processing units to mine cryptocurrencies. GPU is a flexible mining method in which we can mine different cryptocurrencies according to the cryptocurrency trend. We can switch mining bullish cryptocurrency.
ASIC Mining is a unique cryptocurrency mining process in which specially designed devices are used to perform single tasks based on specific algorithms. These mining processes contain powerful integrated chips which are more effective than the CPU and GPU mining process.
Here are different cryptocurrency mining methods:
- Solo Mining
- Pool Mining
- Cloud Mining
Solo Mining is also known as individual mining in which the miners mine cryptocurrencies independently. They mine separately and they are not connected with the third parties. Solo miners earn handsome profit on the discovery and the production of the blocks.
Solo Mining speed and capacity depends upon the hash power of the system. The more powerful system you have the more has rate you will have to mine cryptocurrencies. Solo mi IMG is profitable in this regard that all the block production reward goes to individual mining rigs owner.
Pool Mining is a mining method in which different individuals participate collectively to solve the puzzles and to mine cryptocurrency. In the pool Mining different people combine their mining hash power to produce the new blocks easily. And the block reward is distributed between the participants. The more hash power a pool has the more easily it will produce the block and ultimately the more reward will be earned.
Cloud Mining is a method of mining in which we can borrow mining power or hash rate to mine different cryptocurrencies. Third parties give has power at lease and we can use that power to mine cryptocurrencies and can get reward for mining. It is for those who can't invest a lot to buy their own mining rigs. But becareful from the scammers. They can get money from you and reward of your mining as well because the hardware in in their possession. So cloud is popular nowadays but it is risky and you can lose your money and mining reward as well if you are caught by some scammers.
Have you ever been involved in cryptocurrency mining? If yes can you share with us how you mined this coin?
No, I have never been involved in cryptocurrency mining. Actually I was getting interest in mining cryptocurrencies but when I came to know about mining rigs expenditures and use of a lot of energy and production of heat I stopped myself.
No I am just using some applications and mining some coins. I am using Bondex, Omega, and CatStar to mine respectively Bondex, OM, and CAT tokens.
Give some of the Importance and benefits of cryptocurrency mining
Cryptocurrency Mining is very important to validate the transactions and to assure the transparency within the transactions. Every transaction needs confirmation to save the people from fraud. And the miners pick the transactions and processed them using their mining rigs and confirm the transactions and after that the data is stored on the blockchain ledger publicly and anyone can see that transaction data. It enhances the transparency of the transactions.
All the data and transactions are stored in the form of blocks which are connected to each other in the form of a chain. And this chain of blocks is known as blockchain.
Transactions can't be changed once stored in the blockchain ledger and it becomes more secure and reliable.
Cryptocurrency mining enables miners to earn money for solving the complex equations. Mining makes the transactions the be processed faster and at a lower transaction fee than the traditional financial system.
Crypto miners have a full control over their mined tokens and they can easily use them and transact them anywhere.
The most important thing is that cryptocurrency mining assures the decentralisation, in which there is no involvement of a third party. It allows to keep the identity hidden.
Name some of the challenges of cryptocurrency mining
Everything in this world has challenges and difficulties. Similarly cryptocurrency mining also faces challenges and problems. It is not an easy job to mine cryptocurrencies. Here some challenges of cryptocurrency mining:
- Huge Investment: In order to mine cryptocurrencies there is a need of a handsome investment to buy the mining rigs and a wonderful hardware system. Then there is a need of proper temperature because when the mining rigs work they use a lot of energy and they produce heat due to which the temperature is increased. So besides investing in the rigs there is need of investment to control the temperature so that the mining rigs work properly otherwise due to heat up the system will not work properly.
Huge Competition: As I mentioned earlier about mining difficulty and it increases all the time with each new hash. And it makes difficult to produce the new blocks. Moreover the calculations becomes more complex and there is a need of more hash power to solve the complexities.
Environmental Change: Due to the cryptocurrency mining there arises an issue of global warming, climate change and other environmental changes. With the increase in the crypto mining carbon in the air increases which is very harmful and increased the temperature everywhere.
Due to the increase in the cryptocurrency mining there was seen an increase of 17% in the quantity of the carbon intensity in August 2021 as compared to the previous year Science Direct
Volatility: The volatility of the crypto market is another challenge for the cryptocurrency mining. If the miners mine a cryptocurrency after investing a lot of money and due to the volatility of the crypto market its price goes down then the miner will not be able to generate the profit. And miner will go in loss because the miner has invested money in buying mining rigs to mine the cryptocurrency and if the mined tokens are in less demand then ultimately it will send the miner to loss.
Regulatory Issues: As we know that mining cryptocurrencies is not an easy job and it consumes a lot of money and efforts to mine cryptocurrencies. But if the government announces the cryptocurrencies illegal and does not regulate the cryptocurrencies then there are threats that the government can seal mining rigs at anytime and on the other hand miners may be charged by the government because of violence. It is also a challenge for the cryptocurrency mining.
Conclusion
The process of generating new crypto coins is cryptocurrency mining. Steem tokens can also be mined with the delegated proof of stake (DPoS). There are different methods and processes of cryptocurrency mining and one can choose according to his resources to mine cryptocurrencies. There are a lot of hurdles and challenges for the cryptocurrency mining. And it is not sure that cryptocurrency mining will result in profit. But if you have good hash power then you can mine more but it also needs more resources.
Thank you very much for your participation in this week's challenge, we are very grateful. But I want to inform you that to participate in the Crypto Academy challenges you must be active. You have only 3 days posting in the last 3 months.
Invalid entry.
Thank you for the guidance.
Fantastic work @mohammadfaisal! Your entry for the Steemit Crypto Academy Contest on cryptocurrency mining is truly impressive . I was captivated by Your Detailed Explanation of the mining process and the different Mining algorithms.
Your post provides a comprehensive overview of the topic covering the Advantages and disadvantages of various mining methods. I appreciate how you delved into the technical aspects while maintaining clear and concise writing style. It's evident that you have deep Understanding of the subject matter .
Moreover your inclusion of practical tips & real-world examples adds practicality & relevance to the content. It's great to see you address the importance of considering factors like Energy efficiency and environmental impact in cryptocurrency mining.
Thank you Hamza bro for such nice comment.
Congratulations 🥳
Hello @mohammadfaisal
It provides a comprehensive overview of cryptocurrency mining and covers various aspects of the process. You explain that cryptocurrency mining involves solving complex mathematical and cryptographic equations to validate transactions and generate blocks. The difficulty of mining and the competition between miners are highlighted, as well as the use of specialized hardware and energy consumption.
You also mention various consensus mechanisms used for mining, such as Proof of Work (PoW) for Bitcoin and Delegated Proof of Stake (DPoS) for Steem. The importance of mining is emphasized for transaction validation, transparency, and decentralization, along with the benefits of earning rewards and having control over mined tokens.
Additionally, cryptocurrencies deal with mining challenges, including the significant investment required for mining equipment and competition in the field. Environmental impacts and regulatory issues associated with mining are discussed, as well as crypto market volatility, which can affect mining profitability.
Overall, it provides a balanced view of cryptocurrency mining, highlighting its importance, benefits and challenges. You have presented complete explanation of the topic in a very good way. You visited my post and gave me a great reply. I would like you to choose a good position in this competition. My best wishes are with you.
Thank you mate for your such a good review.
The DPoS method leaves the work and consumption of resources in the hands of a few and that significantly reduces costs. I liked reading your post and I hope you have success this week in the Challenges. Regards!
Yes dear fellow proof of work consumes a lot of energy and resources. And obviously it become more costly.
You have provided an accurate description of cryptocurrency mining. That's right, cryptocurrency mining involves creating new coins by solving cryptographic equations and puzzles. This process involves processing transactions on a blockchain network ,and once transactions are verified ,the information is added To an open ledger that anyone can view.
Cryptocurrency mining requires special devices specifically designed to perform the task. These devices are often referred To as miners or mining rigs ,and they are equipped with high computing power To solve complex mathematical equations.
Good luck.
Thank you dear @rezwan for stopping by here.
Hola Mohamma, pude ver que pasaste por mi post y me dejaste un agradable mensaje sin embargo has copiado y pegado el mismo mensaje a tooodos los posts, esta no es una buena practica. Debes interactuar de manera real y genuina con todos.
Sin embargo muy bien explicado tu post. Saludos
Wow what a wonderful and very informative post is here
This is showing your interest in crypto world. Your insights about crypto currency mining us very clear and appreciated. You have given real world's examples. You have described all the methods of mining very well. Have a look on my post. Good luck !