🧐 Mining is one of the most interesting and challenging parts of the cryptocurrency world. Together we will understand what mining is and why it is done, how to make a profit from it and what its role or impact is in the market.🤔
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• What is the mining process? ⛏
In simple words, mining is the process of extracting cryptocurrency by solving complex mathematical equations with powerful computers. This confirms network transactions and creates new units of the same cryptocurrency.
The tools and people who mine and keep the networks running are called miners.
• How and why is mining done?⚙️
Mining is done using advanced mining tools called miners, which are powerful computers that extract new blocks of currency by confirming transactions and solving complex mathematical equations.
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1. Confirm transactions:
When a transaction is recorded in a network like Bitcoin, miners confirm those transactions and add them to the blockchain. In a way, miners are observers of the events.
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2. Create a new password:
Miners are rewarded for their work, which is the newly mined cryptocurrency, the block.
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• Mining equipment and costs 🛫
1. ASIC devices: For cryptocurrencies like Bitcoin, this type of device uses several special hardware pieces like RTX and has very high power consumption, and the cost of these devices ranges from $ 5,000 to $ 15,000. Of course, there are miniature models of this device with lower power and price. In general, this device is powerful, but the cost of purchasing and maintaining it is high.⚙️
2. Graphics cards (GPU): This type of device is used for cryptocurrencies such as Ethereum or Ravencoin and costs between $400 and $2000, and is more suitable for people who want smaller and more flexible mining.📇
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It should also be noted that mining consumes a lot of electricity. In most countries of the world, the price of electricity is very high, and mining is not possible, because the cost of electricity will sometimes be several times the profit of the miner.
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• The most profitable cryptocurrencies to mine 🪙
🪙 Bitcoin (BTC): Despite its high difficulty, it is still profitable due to its high value.
💰 Litecoin (LTC): Has Scrypt algorithm and requires ASIC, but has high rewards and value.
🤑 Ethereum Classic (ETC): Suitable for light mining with a graphics card and has a high reward.
😀 Raven Coin (RVN): It is attractive to GPU miners and offers a decent reward.
🪙 Monero (XMR): Can be mined using a CPU, but doesn't have such a high reward.
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• The impact of mining on the price and market📊
1. Increase supply:
The more miners mine cryptocurrencies, the more supply there is in the market. However, most cryptocurrencies like Bitcoin have a limited supply (21 million units). However, mining can have a direct impact on the amount of supply in circulation, as miners regularly cash out their cryptocurrencies so that they can cover the costs of mining.
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2. A more secure network:
The more miners there are, the more secure the network becomes and attracts more trust. When a transaction with many blocks is confirmed, the more secure that network and user transactions become. As a result, it attracts more users and more people’s trust in the world of cryptocurrencies.
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3. Mining cost:
If the cost of mining goes up or the price of the cryptocurrency goes down and miners lose money, they will stop mining and reduce supply. This shock can drive up the price and increase demand.
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• Mining challenges and problems ⏳
1. High energy consumption:
Mining consumes a lot of energy and sometimes causes power outages, high prices and power outages.
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2. Fierce competition:
The network difficulty is constantly increasing, making it difficult for small miners to make a profit.
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3. Strict rules:
Some countries, such as China or Yemen, have restrictions on mining, and in fact, you cannot make money through this system legally and officially.
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✍️ Summary
Mining can be profitable, but you need to carefully check the costs, network difficulty, and currency type before you do it. With the right planning and equipment, you can make the most of this complex market.