You’ve got crypto questions, we’ve got crypto answers.
People have been mining cryptocurrency since the introduction of Bitcoin in 2009. While mining might be popularly understood as a profitable hobby for computer nerds, it actually forms the underpinning of a new decentralized economy built on technology and cryptographic math.
This new economy has only gained momentum since its inception. But as it becomes more mature, it simultaneously gets more technical and complex. People who weren’t involved from the early days are too easily left behind, and that cuts against the elegance of this new economy: it’s radically inclusive, knowing no geographic boundaries or political dogma. All you need in order to participate is some computer hardware and an internet connection.
That’s why we’d like to start back at square one in an effort to educate people and get them up to speed on the topic of crypto mining. Let’s answer five of the most common crypto mining questions now.
What is crypto mining?
Crypto mining is the process in which transactions for various forms of cryptocurrency are verified and added to the blockchain, which is also referred to as a decentralized ledger. We’ll take an exploratory stab into the technical nitty-gritty below, but the soundbyte reduction goes like this: crypto mining is the computer math that supports decentralized cryptocurrency networks and gives them functional life.
Why does crypto mining matter?
Without crypto mining, there’d be no Bitcoin, no Ethereum, no cryptocurrency technology at all. Crypto mining matters because it forms the essential foundation for decentralized ledger technology. There’s no other way to make it happen.
It furthermore happens to be completely elegant technology. Anonymous strangers participate with each other to transact and transmit value around the world, and they do it without any governments or middlemen involved. The beating heart of crypto mining is raw mathematics, and this math is so graceful that it has political implications!
How does crypto mining work?
Let’s use Bitcoin as a specific example here.
Every Bitcoin transaction must fit into a “block,” a bundle of computer data totaling one megabyte. That’s enough room to represent about 21,000 individual transactions, and miners on the Bitcoin network can verify one block every ten minutes — this works out to be three to five transactions per second. When a crypto miner successfully verifies a block, it means their computer hardware has solved a complex math problem and entered that block of transactions into the ledger.
Again, this is all underpinned by advanced cryptographic math. There’s no easy answer to “how does crypto mining work,” but it’s all about harnessing computer hardware to solve math problems that move value from one place to another.
How do crypto miners get paid?
Every full node on a cryptocurrency network verifies transactions, ensuring that one Bitcoin sent is one Bitcoin received, for example — but not every node is a miner. Some are passively perpetuating the network and verifying transactions for free. But miners are tasked as the network’s “tiebreakers,” confirming the time at which a transaction was seen and the order in which it was processed.
Each of these transactions has a fee associated with it. Quite like Western Union, cryptocurrency users pay a little bit of money in order to send money through the network. Those collected fees go to the miner who confirms the associated block of transactions. In other words, miners are paid for preserving consensus on the ledger and maintaining a level of order that other nodes cannot.
Can anyone mine cryptocurrency?
Yes, absolutely! Crypto mining can take very different forms, but no matter how someone chooses to throw their hat into this particular ring, it all ends up serving the decentralized networks that move cryptocurrency from place to place in a low-cost, error-free manner.
Technically inclined crypto miners might operate their own mining rig at home for fun. Those who want to participate without lots of specialized knowledge might opt for a cloud mining service to harness supercharged mining hardware from afar. Cloud mining companies are industrial-scale businesses that benefit greatly from economies of scale — they enjoy access to cheap electricity and reduced prices on high-powered mining hardware purchased in bulk. By connecting to that hardware with the computer they already have, amateurs can gain access to more mining power than anyone could effectively generate from home.
Whether they’re old-school miners or green newbies, the answer is yes, anyone can mine cryptocurrency. All you need is a computer and an internet connection.
In its ten short years of history, crypto mining has gone from an obscure technical hobby to a full-blown industry. There are countless books and online classes aimed at this and related topics. From Bloomberg to CNN and beyond, cryptocurrency wins headlines at major outlets on the regular. Even Michael Keaton is paying attention.
There’s only ever going to be more to learn, but I hope your basic questions were successfully answered here.