Crypto mining is a method used for the production of new cryptocurrencies, as well as the process of circulating the produced coins and confirming them on the network as a new transaction in this circulation.
Certain virtual assets are created through cryptography, known as the science of encryption. Such virtual assets, which are created and have high protection, are called cryptocurrencies.
Blockchain technology is used in the process of producing cryptocurrencies and incorporating the produced coins into circulation. People who take part in the production of cryptocurrencies produced by encrypting on blockchains are called miners.
Cryptocurrency production is carried out with the need for advanced devices with different qualifications and hardware.
Within this user-oriented production system, miners, known as cryptocurrency producers, play a major role in the continued continuity of the cryptocurrency by approving new transactions on the blockchain. Miners, who also play a major role in the name of newly added blocks on the blockchain, can have the opportunity to get rewards by solving encryption puzzles on the system. Solving such puzzles also makes a great contribution to the system.
Mining is a method by which many major cryptocurrencies such as bitcoin, new coins are produced by verifying new transactions.
It is a process that is carried out by a very large audience around the world over decentralized computer networks. The computer that supports such networks that secure and verify the blockchains is also rewarded with new coins.
The transactions that take place within cryptocurrency mining are actually in a cycle. according to the operation of this cycle; The task of people known as miners is to protect and secure the blockchain. In the next process, while the blockchain rewards coins, such coins incentivize the miners and play a big role in the maintenance of the blockchain.
What Is Crypto Mining?
Mining, which has its presence in the digital currency exchange, is known as the “digital mining” process. Cryptocurrency mining is the process of circulating virtual currencies and confirming new transactions on the network within this circulation. This process is of great importance for the maintenance and development of the blockchain. This cycle is created during the production phase of some cryptocurrencies, such as Bitcoin. In this cycle, mining requires highly advanced, highly equipped systems that can solve complex mathematical calculations. By giving the next bitcoin block to the first block that solves such calculations, the current cycle is started again.
Cryptocurrency mining has a magnetic attraction. However, it is a laborious process and is quite high in cost. Since crypto miners are rewarded with crypto tokens, high hardware and technology miners are tempted to get involved in this process.
It is said that anyone with a computer and internet can theoretically mine cryptocurrencies. Considering the requirements of special software in the process of crypto money transfer transactions, the importance of advanced hardware in solving complex problems is obvious.
How Does Mining Work?
Unlike the bank systems we are used to, cryptocurrency mining operates on a decentralized system. According to the decentralized financial system, it covers financial services operating entirely on the blockchain and does not involve intermediary institutions such as banks. For example, while mining bitcoin, bitcoin is kept in multiple places simultaneously on the blockchain, which is responsible for acting as decentralized banking, and is frequently updated by contributors on the existing network. Information that may be relevant to Bitcoin is updated by adding data blocks. When miners want to add a new transaction block to the chain, they have to do some complex calculations. This complex calculation is based on the correct calculation of random numbers on an equation. A set of existing rules in which the Bitcoin code is written; gives a certain amount of Bitcoins.
To carry out such difficult and complex calculations, it is necessary to have mining equipment with sufficient equipment. The more computing power equipment is available, the easier to mine Bitcoin will be. The importance of high processing power is an indisputable fact in terms of correctly solving the blockchain equation, correct prediction, and finding the correct answer. When a miner finds the correct answer, a group of blocks is added to the ledger. The miner who manages to solve the equation is also awarded a reward for Bitcoin and those added to the blockchain ledger. In the next process, the mining process repeats until other miners solve another equation. In this way, the next block is included in the chain and the process works.
Blockchain has grown rapidly since virtual currencies first emerged, and some needs have arisen in terms of the protection and security of these blocks. Ten years ago, anyone with a powerful computer could mine cryptocurrencies. However, with the expansion and development of the blockchain, the features sought in computer systems in terms of hardware quality and power have also increased.
Let’s take a closer look at cryptocurrency mining step by step.
- Verification of The Transaction
Each new cryptocurrency must be verified and recorded in the transaction via computers with sufficient hardware. This transaction is carried out securely on the blockchain. Verifying the blockchain requires a large amount of computing power, and miners contribute voluntarily to this process.
In cryptocurrency mining, which resembles the management of a large data center, companies aim to purchase required hardware and run it smoothly. Companies pay for the electricity needed to keep it cool. Despite these costs, the value of the coins obtained from mining should be higher than the digging costs to gain profit.
It’s like the lottery. Each computer on the network with the necessary hardware tries to guess a 64-digit hexadecimal number. This is called ‘hash’. Miners, who are the administrators of computers competing to guess this number, can win prizes if they match the number. If a miner in a race with other miners correctly guesses a number or hash value that is within the target value or slightly below the target, he/she will beat the other miners. Thus, he manages to get the…