Mining, cloud mining, pool mining, what the f***? - Simply explained

Mining, cloud mining, pool mining, what the f***? - Simply explained

By Roberto D. | CryptoFarm | 29 Feb 2020


Bitcoin Mining refers to their extraction process. Mining Bitcoin does not mean creating money, BTCs are automatically generated within the B2B network that manages this currency, distributed online randomly.
So Minare Bitcoin means getting BTC generated from the network and distributed online.

The BTCs are extracted from the so-called Miners, within the Blocks of transactions called "mines", powerful calculation centers that make transactions valid by generating a new amount of BTC that is added to the global evaluation base.

Introduction to Mining: the extraction of BTC

Each transaction block, i.e. all the transactions that took place within 10 minutes, is entrusted to a single Miner.

The Miner's task is to install the Cryptographic hash software in his machines, this software is able to calculate the BTC transaction data, to which is added a random or pseudo random value called Nonce.

The set of this value with the data of the transaction block, generates an alphanumeric string called Hash.
To calculate the content of a hash string the miner needs a large number of attempts and calculations, therefore a large number of nonce.

In the calculation process, the hash of the previous block is also added, which together with the data of the transaction block and the nonce, generates the hash of the current block.

The feature that makes this calculation complex but essential to be considered correct by the Bitcoin system, is due to the fact that the hash must begin with a fixed number of zeros.
When the string is validated, the block of transactions is made valid in turn.

The operation ends with the "extraction" of BTC by the miner and the update of the Blockchain register, the ledger of the blocks of transactions.

The whole process allows the BTC system to be extremely secure, since the blocks of transactions are linked together through the sharing of the hash; this allows a hypothetical attacker to renounce the alteration of transactions as it would inevitably change his hashes as well.

 

The different extraction methods: Asic, Cloud Mining and Pool Mining.

As mentioned, every day the network creates a certain number of BTC and distributes them randomly online.
To increase the probability of receiving them, you need a much more powerful technical device than a home computer, with greater computing power.

The higher the computing power, the more likely it is to extract and receive BTC.
This Hardware is called ASIC (Applicatio-Specific Integrated Circuit), of the microchips that allow to enhance the mining of BTC.

The first Asic farms were born in China and Singapore in 2013 with a strong concentration in hydroelectric plants and places with an adequate temperature to reduce system overheating.

Over time, many of these machines were purchased, making the algorithm more difficult; Thus Pool Mining was born.

The pool consists of a group of miners, each of whom transfers part of the resources of their hardware in order to solve the algorithms and earn BTC.

If the miners obtain BTC, these will be divided according to the transmission power that the components of the pool have transferred for the extraction.

Another possibility of investing in BTC is possible with the actual purchase of the Software and Hardware components that facilitate the extraction of BTC from the network, always keeping in mind the formula: greater computing power = greater probability of extraction.

Now, for anyone wishing to try their hand in mining must take into account a series of points:

  • There are several online software on the net that can be downloaded for free with which it is possible to mine BTC. These, such as the GUIminer, need massive computing power.
  • Purchase the Miner (device that allows you to increase the computing power).
  • Once you have purchased the miner and downloaded the software, you need to install them
  • Configure the software

Once configured, connect it to the network, and let it work.
It is also possible to invest online without physical possession of the Hardware through Cloud mining (online rental); this allows you to save on maintenance costs and electricity consumption (personally I prefer cloud mining as it eliminates problems related to electricity costs and any failures). The choice of contract varies according to the type of investment, be it short or long term.

 

Do you prefer cloud mining, hardware mining or direct currency purchase?

Personally, even when I buy currency, I prefer to buy computing power through cloud mining because at the minimum expense (even $ 7) you have computing power for two years, returning the expenditure in the next 5 months and earning for the next 19 months .

But I understand the "fear" of spending money on something you don't know, so I'll leave you the link to the site that I use for cloud mining (Dualmine) that offers 100 Gh / s free of bitcoin mining for two years, meanwhile you can see well the functioning of the site in its details and evaluate the purchase for less computing power.

 

 


Useful/Stonks link ALL TRUSTED:

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Roberto D.
Roberto D.

Born, and still living, in Italy. Passionate about cryptocurrencies since I discovered ethereum in 2016 https://linktr.ee/robertod


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