Cryptocurrency Mining — Is it still productive ?
What is cryptocurrency mining ?
Crypto mining is a process in which new coins enter a circulation. It is also the way the network ensures new transactions and is an important part of the blockchain maintenance and development of blockchain ledger. “Mining” is done using a complex hardware that solves a very complex mathematical problem. The first computer to find a solution to the problem finds the next block of bitcoins and the process begins again.
Cryptocurrency mines are complex, expensive, and sometimes rewarding. However, the mines have get much criticism from many investors who are interested in cryptocurrency because miners earn rewards for their work with crypto tokens. This may be because business types see the mines as cents from heaven. The crypto miners rewards people who contribute to the main goal of mining. Mining awards are paid to a miner who finds a solution to a complex hashing problem first, and the chances of a participant being the one who finds the solution are related to part of the total mining capacity of the network.
Why mine cryptocurrency ?
In addition to rewarding miners’ pockets and supporting the cryptocurrency ecosystem, the mines serve another important purpose: It is the only way to release a new cryptocurrency to be distributed. In other words, miners are basically making money. To earn new coins, you need to be the first miner to arrive at the right answer or the closest answer to a numeric problem or a puzzle. This process is also known as proof of work. To begin mining is to start engaging in this proof-of-work activity to find the answer to the puzzle.
No advanced mathematics or calculations really involved. You may have heard that miners solve difficult math problems — that is true but not because the calculations themselves are complex. What they are actually doing is trying to be the first miner to come up with a hexadecimal number with 64 characters (“hash”) below or equal to a target hash. So it is a total guess at the end. So it is a matter of random guesses, but with the total number of possible guesses for each of these trillion problems, it is an incredibly difficult task.
Are there any downsides of mining ?
Mining risks are usually financial and regulatory. Cryptocurrency mining is financially risky because one can go to great lengths to buy mining equipment worth hundreds or thousands of dollars so as not to profit from its investment. That being said, this risk can be reduced by joining mining ponds. Another one of the downsides of mining is the ever increasing usage of energy required by all these heavy workstations that consists of a large network of graphic cards which leads to huge carbon footprints.
Is it worth devoting this much time and spending thousands of dollars for this high risk highly rewarding activity ? What do you think ?
