How mining works

What is mining

How mining works

In the past I have already explained to you how Bitcoin works, the most famous and widespread cryptocurrency in the world, but in reality the world of cryptocurrencies is much larger and more varied and includes many cryptocurrencies, that is, many different types of digital currencies.

As you may have already noticed, the extraction of cryptocurrency to that ofgold. A somewhat stereotyped but apt image: just as miners extract metals and precious stones from veins in mines, cryptocurrency miners go in search of digital coins to convert into current currencies, such as the euro or the dollar.

The term “mining” is imported from the English verb “to mine”, or "to extract" and from the noun "mine", literally "mine". At this point you have already understood that mining is the extraction of cryptocurrencies from a mine. To dig, however, we use the computing power of computers and not the typical tools of miners.

At the origin of this mining activity is the blockchain: A accounting book distributed among all users and without a central control unit (there is no "central bank" in the world of cryptocurrencies, and this is precisely one of its most fascinating and, in some ways, formidable sides) in which all the transactions carried out with one of the thousands of existing cryptocurrencies. As reported by the website - among the most accredited real-time quotation portals for cryptocurrencies - digital currencies there are more than 10.000 and it is a number that increases day by day.

Adding a transaction to the ledger, or to the blockchain, is a far from easy operation and requires a long and complex series of calculations that can be done through computers or servers entirely dedicated to cryptocurrency mining on which programs and hardware must be installed. special ones, of which I will tell you below.

When a transaction is completed, a new cryptocurrency is created and recognized by the miner. For all the details on the blockchain, read the dedicated chapter of this guide.

Mining e mining cloud

How mining works

Once the fundamental elements have been clarified, I will illustrate you the different types of mining feasible, which can be grouped into two families. The first is in the most classic form: you have many servers and computers dedicated to mining, gathered in what in English is called “farm” (or “farm”). By installing CPU, But by the full GPU acceleration tech e specific software (Eg. MultiMiner via Windows, macOS e Linux; Awesome miner for Windows and Linux ed EasyMiner for Windows), the machines work together to solve the calculations useful for completing transactions on the blockchain.

You must know that the GPUs have a more advantageous ratio of processing capacity and power consumption. These servers and these computers, which must be powerful, they consume a lot of energy and they need to be constantly cooled, which, as you certainly imagine, requires additional electricity.

If you don't have a farm that is up to the task, you can choose the cloud mining, a paid Web-based system that allows you to take advantage of the farms of the companies that make them available. Cloud mining ti relieves you from many costs, including that of servers, hardware such as GPUs and the electricity needed for mining activities.

There are also many cloud mining services and costs are variable depending on the duration of the subscription and the computing capacity you want to purchase. Iq mining, one of the most accredited cloud services in the world, costs $ 215 to $ 254 a year (from 180 euros to 210 euros). Another popular cloud mining is CCG Mining which uses a slightly different pricing logic and applies rates that range from $ 10,99 to $ 1.990,99 per month (from 9,25 euros per month up to 1.675 euros per month), as regards Bitcoins (prices change according to the cryptocurrency to be mined).

Critical issues

How mining works

Above I wrote that not all that glitters is gold. Indeed, mining is expensive and has negative effects on the environment. But let's go in order: mining requires huge investments in software, hardware and maintenance. The servers used must be constantly maintained and, as you will read later, the costs to be incurred are huge.

There is also the environmental discourse: a study published in the journal Joule, edited by professor Christian Stoll, scientist accredited both in Germany and in the United States of America, who estimated the annual consumption of energy used for mining in 45,8 Terawattore (or 45,8 billion kilowatt hours) and carbon emissions for 22 million tons, more or less as much as one produces in a year city half a million people (GenoVa, for example).

The energy question is a very heated topic of discussion and questions the environmental sustainability mining because, according to the most critical voices, the huge energy resources used would not correspond to an adequate advantage and, in any case, only a few individuals, or the big speculators, would profit from the extraction of cryptocurrencies.

Cryptocurrency Chia, which I will tell you about shortly, was created to have a minor impact on the environment but, even in this case, opinions are divided.

The large expenditure of electricity pushes the giants of cryptocurrency mining to countries where the environmental aspects are not stringent or the cost of electricity is more affordable: among these the China and l 'Ukraine, just to mention the most common. Although in the second half of 2021, following some decisions by the Chinese government, many miners are abandoning China in favor of other locations, more convenient and "hospitable" for their purposes.

How much do you earn

How mining works

You may be wondering what the earning potential for a miner. I know you are expecting a number with many zeros but the most correct and honest answer is: it depends. It depends on the price swings of the cryptocurrency you want to mine.

That of cryptocurrencies is a real market, exactly like that of gold, oil or wood. As such it responds to logics that, in this case, are not only that of supply and demand. A strong variation in the price of cryptocurrencies can occur for the most disparate reasons: a central bank that expresses little confidence in virtual currencies, a famous entrepreneur who first announces that he wants to accept payments in Bitcoin and then changes his mind, an exchange (an operator that exchanges real coins and virtual coins) that suffers a scam ... the reasons are so many and they all contribute to making the extremely volatile cryptocurrencies.

However, we can do two calculations and, to be clearer, I refer to Bitcoin. You must know that whoever created it wanted, over time, its extraction to become more complex and therefore required both more work time and greater computing power.

How mining works

In 2019 the American technology analysis company CB insights calculated that, assuming an electricity cost of 0,06 US cents per kilowatt hour, mine a Bitcoin cost between $ 7.300 and $ 8.500 (between the 6.150 euro and the 7.200 euro). You obviously understood that if the price of Bitcoin exceeded these figures, then you would have made a profit; if, on the contrary, the price is lower, you should wait and hope that the price goes up, before you can sell them.

It should also be considered that the cost of a kilowatt hour in the city it is on average five times higher than the price used by CB Insights to make their own calculations. So, to answer the question "How much do you earn by mining cryptocurrencies", I have to remind you of my answer, which is: "depends".

How mining works

How mining works

Now that you have some background information, it's time to get a closer look how mining actually works.

The blockchain

Let's go back to the blockchain which, as already mentioned, is an accounting book in which all transactions made in cryptocurrencies are recorded. To tell you more about this, I'll use Bitcoin as an example.

The blockchain, as already mentioned, in the case of cryptocurrencies is a kind of accounting book, which is not in the possession of a single person but is distributed over a series of nodes, that is, the computers and servers intended for mining.

This means several things: the first is that cryptocurrencies are not issued by a central bank, as opposed to what happens with the euro, the dollar or the Swiss franc. It also means that each transaction must be checked and validated by multiple nodes.

But if there is no central or national bank to mint them, who issues cryptocurrencies? I miner, joining the blocks of the blockchain. A block is a container in which transactions made in cryptocurrencies are reported, as if it were a page of the ledger. When the block is complete (or, if you prefer, when the page of the accounting book is full) it must be joined, in the right order, to the blockchain.

The miners and therefore the nodes of the blockchain, through software and computing power, carry out complex algorithmic operations. These are used to compute a code, called hash and, if this code is the correct solution that allows the chaining of the blocks, the miner who calculated it comes rewarded with 6,25 Bitcoins. Figure that at the time of writing this tutorial (July 2021) is valid approximately EUR 176.000. The more miners that participated in this extraction, the more the reward is divided. You must know that, unlike real currencies such as the euro or the dollar, which have 2 decimals, cryptocurrencies have up to 8 decimal places.

Over time, in fact, miners have realized that by creating pools, or by joining groups to engage their respective computing powers, the work of mining and validating transactions has become more effective. The remuneration is usually based on the computing power used by each individual miner in a pool.

Miners calculate millions of hashes not only to mine Bitcoins, but also to verify and validate transactions made on the network. The computation of the hashes itself is fast, but the large amount of algorithms that must be computed, requires as you know the use of high-performance hardware.

The remuneration given to the miners keeps the Bitcoin network and the transactions running through it running and safe. New Bitcoins are released every 10 minutes but, over time, the amount of currency mined decreases, until "the mine" is completely exhausted. The Bitcoin's limit is 21 million and today we know they will all be undermined in the 2140.

As the number of miners participating in the gold rush grows, more and more computing power is required to mine Bitcoin. The most fascinating idea of ​​the way in which the algorithms underlying the blockchain were conceived is precisely this: the more miners there are, the more complex the calculations become.

When the last Bitcoin has been mined, miners will only have to settle for the fees that are awarded to them for validating transactions. It is a matter of a few cents of real currency and, probably, this small income it will no longer be enough to maintain the expensive infrastructure needed.

In the early years of Bitcoin's life, so starting in 2009, miners only used normal computers for mining. Over time, with the increase of miners and the computational complexity imposed by the algorithms, gods have been created processors called Asic, designed specifically for mining. Powerful hardware, with a cooling system designed specifically for the large amount of work it has to do and, last but not least, expensive.

Consider that to be truly efficient in mining operations, it takes dozens of Asic processors, mounted in cascade.

The wallet

How mining works

But, therefore, how mining works of a cryptocurrency, for example the Bitcoin?

What you need is a computer system with an'imponent calculation ability, for an mining program which must be properly configured and a certain consistency in keep the computer, or the server dedicated to the extraction of cryptocurrencies.

Also serves a wallet, which is a digital wallet in which to store your cryptocurrencies. Not all exchange, that is the platforms through which you can buy and sell virtual currencies, also act as wallets. There are many types: for PC, But also for smartphone e tablet.

Now, however, I want to show you in detail an online wallet, which therefore works on the Web and does not require installation:, which is among the most used ever.

To get started, then connect to the Binance home page and, if you prefer an interface in a language more congenial to you, select the menu English at the top right and then the language you want. For this guide I have selected the in your languagen language.

You must then enter yours email address, choose a password, check that the item is checked I have read and accepted the terms of service and click on the yellow button Create account. Also complete the captcha that is proposed to you.

How mining works

Access yours now e-mail box, open the message you received from Binance and copy the code of 6 code that you find inside, to complete the registration. Congratulations, your wallet is ready. If, then, you want other advice on this, you can take a look at this article in which I told you about the wallets that you can open through the site, reference for all miners, from which you can withdraw wallets to install on your PC or mobile devices, among others. Regardless of your choice, always remember to log out when you have finished using your online wallet, please!

For security lovers, there are gods too physical wallets. These are physical devices in which store your cryptocurrencies and, unlike the software ones, they are disconnect from the Internet and therefore safer. In the event that it is lost, it is possible to restore its content thanks to a procedure that varies from manufacturer to manufacturer but which, as a rule, is based on a sequence of words.

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How Bitcoin mining works

How mining works

Now I will guide you to the Bitcoin mining. I decided to show you an easy-to-use program, so that you can get some mining experience even without having in-depth knowledge of the subject.

You need to know that many antiviruses, including Microsoft Defender which is integrated into the Windows operating system, can detect mining software as potentially malicious, as there are many malware that are designed to use victims' computers for third-party cryptocurrency mining (i.e. to enrich the bad guys who they developed them and not the owner of the PC in use). If you want to proceed with the installation, you may need to temporarily disable your antivirus: in this article I'll explain how you can do it.

If you want to install mining software other than the ones I am about to tell you, which are open source, recognized and verified continuously by the community, I don't take responsibility of what can happen to your computers because, during the use of such software and therefore while your antivirus is disabled even only partially, your PC could be exposed to serious risks.

I have personally tested EasyMiner, the program I'm about to show you, and it's safe. When moving into the vast world of mining software, remember that it is impossible to mine cryptocurrencies only from your computer or smartphone. I therefore advise you to avoid applications and programs that promise to enable you to do it yourself: sharing hardware resources is the only way forward.

You can withdraw EasyMiner by connecting to this page. The download begins by itself, five seconds after the web page loads. Once the file is downloaded, if you use Windows, start the .exe file obtained and first click on Yes, then twice on the button Next and, finally, on the buttons install e Finish, but will conclude the setup.

How mining works

Once the installation is complete, click on the button Ok & Enter and you will be asked if you want to automatically activate the chat channel that brings together the users of the mining program and within which you can give each other mutual help.

My advice is to click on Yes: if you don't need support you can still give it to someone and, in any case, you can make new friends.

You are one step away from the finish line! Now, click on the button Generate a Public Address and pay attention to the following step: in the browser of your computer a page opens through which you can generate your own public address, that is, a key that coincides with a wallet that can be used with EasyMiner that retribuisce i miner in Litecoin, another virtual currency.

You can have fun generating the address yourself or rely on automatic generation by clicking on the writing Skip which appears at the top right, just below the green bar.

How mining works

In this way you have created two keys: a public it's a private, which allows access to the wallet and therefore must be kept discreetly without disclosing it to others.

Print this page or make a pdf file of it that you can access in the future, because there will be no way to reconstruct the keys.

How mining works

Now, selecting the EasyMiner program from the taskbar again, you will find that the public key has been imported directly and you will only have to add your email address and decide whether to let the program uses only the CPU, only the GPU or both.

Also, by clicking on the item Start mining only when PC is idle, the software will only work when you are not using your computer, so you will not be slowed down during your normal activities.

How mining works

Per finire, click on your button Save&Start, quindi premi sull 'brown icon (the second top left, right next to the icon Setup) and that's it: you are undermining, congratulations!

You can manage your account on the website, from which you can also withdraw the remuneration you have accumulated over time.

How Ethereum mining works

How mining works

Now that you have a general grasp, you may be wondering if there are other profitable cryptocurrencies. Among the most quoted I point out Ethereum which, while still unable to compete with Bitcoin prices, is achieving excellent results.

To mine Ethereum the operation is similar to what I described above, including the need for a wallet. Binance, which I told you about earlier, can also be used to store, buy and sell this cryptocurrency.

For mining, however, I recommend that you consult the site, a real encyclopedia in which you can find answers to all your questions.

Again, the greater the CPU and GPU capabilities, the greater the profit. Before withdrawing a program or joining a cloud mining platform, be well informed by consulting forums and specialized sites. Both in the field of Bitcoin and in the field of Ethereum, there is a certain propensity to scam; online resources that disappear into thin air without warning, without remunerating the miners.

How Chia mining works

How mining works

I guess you've heard little of Chia, in fact, it is a recent cryptocurrency that is making a lot of talk about itself in recent weeks, precisely because of the energy consumption problem associated with the extraction of virtual currencies. The first thing you need to know is that Chia Network use a different formula for mining.

Chia Network was founded in 2017 by Bram Cohen, author of the BiTorrent protocol. Unlike its antagonists, Chia does not rely on CPU and GPU to mine currency but on disk space, which is progressively filled in as cryptographic numbers are generated that serve to solve the complex calculations on the blockchain.

Even in this case, however, the problems are not completely solved: on the one hand the price of hard drives is rising and, on the other, the heavy wear to which they are subjected which tends to generate mountains of electronic waste which must be disposed of. appropriately so that they do not constitute a cause of environmental pollution.

In fact, you must know that an SSD support - which has a limited number of writes - used for mining could be short-lived and irreparably damaged in a short time. On the official website of the cryptocurrency in question, you will find programs and portals useful for its mining.

How mining works

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