Cryptocurrency Mining: What It Is, How It Works And Who’s Making Money Off It | Benzinga

The role of miners is to secure the network and to process every Bitcoin transaction.

Miners achieve this by solving a computational problem which allows them to chain together blocks of transactions (hence Bitcoin’s famous “blockchain”).

For this service, miners are rewarded with newly-created Bitcoins and transaction fees.

Miners are paid rewards for their service every 10 minutes in the form of new bitcoins.

What is the point of Bitcoin mining? This is something we’re asked everyday!

There are many aspects and functions of Bitcoin mining and we’ll go over them here. They are:

Traditional currencies–like the dollar or euro–are issued by central banks.

The role of miners is to secure the network and to process every Bitcoin transaction.

Miners achieve this by solving a computational problem which allows them to chain together blocks of transactions (hence Bitcoin’s famous “blockchain”).

For this service, miners are rewarded with newly-created Bitcoins and transaction fees.

Miners are paid rewards for their service every 10 minutes in the form of new bitcoins.

What is the point of Bitcoin mining? This is something we’re asked everyday!

There are many aspects and functions of Bitcoin mining and we’ll go over them here. They are:

Traditional currencies–like the dollar or euro–are issued by central banks.

Now that you have Bitcoin mining hardware, your next step is to join a Bitcoin mining pool.

Mining pools are groups of cooperating miners who agree to share block rewards in proportion to their contributed mining hash power.

While mining pools are desirable to the average miner as they smooth out rewards and make them more predictable, they unfortunately concentrate power to the mining pool’s owner.

Miners can, however, choose to redirect their hashing power to a different mining pool at anytime.

Before we get into the best mining pools to join, it’s important to note that most mining pools are in China.

Many only have Chinese websites and support.

Mining centralization in China is one of Bitcoin’s biggest issues at the moment.

There are about 20 major mining pools.

Hobby Bitcoin mining can still be fun and even profitable if you have cheap electricity and get the best and most efficient Bitcoin mining hardware.

Bitcoin mining is competitive. It’s not ideal for the average person to mine since China’s cheap electricity has allowed it to dominate the mining market. If you want bitcoins then you are better off buying bitcoins.

Since it’s now impossible to profitably mine Bitcoin with your computer, you’ll need specialized hardware called ASICs.

Originally, Bitcoin’s creator intended for Bitcoin to be mined on CPUs (your laptop or desktop computer). However, Bitcoin miners discovered they could get more hashing power from graphic cards.

Now that you already know about the best Bitcoin mining hardware, we’re going to talk about Bitcoin mining software.

The main job of the software is to deliver the mining hardware’s work to the rest of the Bitcoin network and to receive the completed work from other miners on the network.

Bitcoin mining software monitors this input and output of your miner while also displaying statistics such as the speed of your miner, hashrate, fan speed and the temperature.

One of the most important things you will need before using any kind of Bitcoin mining software is a wallet.

This is because all Bitcoin mining software will ask you for a Bitcoin address that will be used to send your mining rewards and payouts.

Satoshi Nakomoto’s invention of Bitcoin, “a peer-to-peer electronic cash system,” opened up an entirely new frontier, not just of freedom but of occasionally outrageous profits.

Those with a strong interest in such things, namely cypherpunks, cryptographers, technically-minded libertarians and assorted hackers, were first to stake their claim.

Bitcoin mining has grown from a handful of early enthusiasts into a cottage industry, into a specialized industrial-level venture. The easy money was scooped out a long time ago and what remains is buried under the cryptographic equivalent of tons of hard rock.

Only those with specialised, high-powered machinery are able to profitably extract bitcoins nowadays.

Cryptocurrency mining is painstaking, costly and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded for their work with crypto tokens. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in 1849. And if you are technologically inclined, why not do it?

However, before you invest the time and equipment, read this explainer to see whether mining is really for you. We will focus primarily on Bitcoin (throughout, we’ll use “Bitcoin” when referring to the network or the cryptocurrency as a concept, and “bitcoin” when we’re referring to a quantity of individual tokens).

The primary draw for many Bitcoin miners is the prospect of being rewarded with valuable bitcoin tokens.

How exactly to categorize Bitcoin is a matter of controversy.

Is it a type of currency, a store of value, a payment network or an asset class?

Fortunately, it’s easier to define what Bitcoin actually is. Don’t be fooled by stock images of shiny coins emblazoned with modified Thai baht symbols. Bitcoin is a purely digital phenomenon, a set of protocols and processes.

It also is the most successful of hundreds of attempts to create virtual money through the use of cryptography, the science of making and breaking codes.

First things first.

If you’re only interested in owning litecoin, you should probably buy it from an exchange such as Coinbase. If, on the other hand, you want to try your hand at mining litecoin – because you think you have the time and resources necessary to make a profit, because you want to help keep the litecoin network decentralized, or out of a sense of curiosity – this guide will give you a sense of the concepts, an introduction to the vocabulary, and suggestions for further research.

Because the nitty-gritty of litecoin mining depends so much on your hardware, software, operating system and pool, this is not a step-by-step tutorial. If you’ve gotten those variables figured out, there are good guides available online and helpful forums for when search engines fail you. Depending on your level of expertise, you may want to pass over certain sections of this guide.

The first Bitcoin block, called the genesis block, was mined in January 2009 and was placed in the blockchain (its public ledger). The process of mining began ever since with a default design that scales up the difficultly level as more and more Bitcoins are mined. In order to combat the mining challenge, more advanced computer hardware and complementary software have been developed.

While the hardware used by miners is broadly of three types: CPU/GPU (Graphical Processing Units), FPGA (Field Programmable Gate Array) and ASIC (Application Specific Integrated Circuits), the choice for the software is broader. Here’s a list of some of the popular Bitcoin mining software (in no specific order). (See: What is Bitcoin Mining?)

CGMiner is among the popular Bitcoin mining software compatible with GPU/FPGA/ASIC hardware.

Chances are you hear the phrase “bitcoin mining” and your mind begins to wander to the Western fantasy of pickaxes, dirt and striking it rich. As it turns out, that analogy isn’t too far off.

Far less glamorous but equally uncertain, bitcoin mining is performed by high-powered computers that solve complex computational math problems (that is, so complex that they cannot be solved by hand, and indeed complicated enough to tax even incredibly powerful computers). The luck and work required by a computer to solve one of these problems is the equivalent of a miner striking gold in the ground — while digging in a sandbox. At the time of writing, the chance of a computer solving one of these problems is about 1 in 13 trillion, but more on that later.

The result of “bitcoin mining” is twofold.

NVIDIA Corporation (NASDAQ: NVDA)’s second-quarter earnings released earlier this month, though exceeding expectations, elicited cautionary reaction from the investor as well as analyst communities.

Traders bid down the stock by over 5 percent on Aug.

11.

One of the reasons cited for the negative reaction was cryptocurrency contributing to much of the outperformance.

Analysts Blayne Curtis and Christopher Hemmelgarn of Barclays believes revenue stream from cryptocurrency is fickle. Therefore, the analysts were not in favor of assigning a multiple to it, as it has the potential to become an eventual headwind.

Rival Advanced Micro Devices, Inc. (NASDAQ: AMD) also had a similar tale to tell.

Cryptocurrency mining, or cryptomining, is a process in which transactions for various forms of cryptocurrency are verified and added to the blockchain digital ledger. Also known as cryptocoin mining, altcoin mining, or Bitcoin mining (for the most popular form of cryptocurrency, Bitcoin), cryptocurrency mining has increased both as a topic and activity as cryptocurrency usage itself has grown exponentially in the last few years.

Each time a cryptocurrency transaction is made, a cryptocurrency miner is responsible for ensuring the authenticity of information and updating the blockchain with the transaction.

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To cut through some of the confusion surrounding bitcoin, we need to separate it into two components. On the one hand, you have bitcoin-the-token, a snippet of code that represents ownership of a digital concept – sort of like a virtual IOU. On the other hand, you have bitcoin-the-protocol, a distributed network that maintains a ledger of balances of bitcoin-the-token.

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