Mining Of Blockchain

We live in an era where you can purchase something in a currency that doesn’t exist in reality. It seems mesmerizing how far we have come from using copper and other metal coins in the medieval ages to using paper currencies and bank cards to finally doing transactions by using crypto. But how on earth is crypto made, what is blockchain mining and how is bitcoin mined on it? These questions bulged some people’s minds, but it is not a big deal. The process is no longer a hidden secret; you need to know the basics to get familiar with this stuff. 

Cryptocurrencies are mined on a blockchain, simply a database on which smart contracts are based that cannot be altered, and all transactions are recorded on it. Cryptocurrency miners mine on a blockchain, which verifies data blocks by complex mathematical algorithms and adds them in a sequence, thus creating a series of blocks. Blockchain mining is done to mine bitcoin. Blockchain mining can be done in several ways, but traditional and cloud mining are the two well-known methods to mine bitcoin. Let’s have a detailed look at which these methods work and which is more precise. 

Traditional Mining

Traditional mining is done by crypto miners who use powerful hardware and specific software, forming mining rigs to create bitcoin. The process requires extensive electricity, with highly functional GPUs to produce cryptographic algorithms. Once a network is established, nodes are designed to add a new block and form a bitcoin network. It is a complex procedure and cannot be done with a standard CPU and software. The bitcoin mining process can be subdivided into two categories.

Individual Mining

The users are individually assigned to solve complex algorithms. The miner who resolves first gets the reward, while other miners add the decrypted value to the blockchain, thus completing the network.

Mining Pool

Mining Pool can be labeled teamwork, where the miners combine efforts to solve the algorithm. Thus the reward is distributed among them once the value is decrypted.

Cloud Mining

Cloud mining is a procedure in which you don’t need a GPU with highly integrated graphics or software. All you need is to contact a mining company. The mining houses are inserted in their facility, and you can mine the bitcoin by purchasing their share or premium. Cloud mining maintains blockchain security, making blockchain transactions secure through decentralization. 

Other strong currencies besides Bitcoin can also be mined on cloud mining sites. BTC is also mined through cloud mining. Ethereum has an infinite supply, and roughly 120 million Ethereum are in circulation, whereas Bitcoin economics work differently. As of 2022, 19 million BTC are in circulation, and 2 million BTC are left to mine, which will be mined till 2104. The economics behind this is to control the demand and supply of BTC. Approximately 900 BTC are mined daily using cloud and traditional mining. The cloud mining process is based on a mining pool. Thus the miners solve complex mathematical problems to decrypt the value and form a blockchain. Cloud mining ensures that all miners verify each block to avoid replicating the same bitcoin. 

The Cost And The Benefits

Mining is a process which requires a large sum of money. Both mining mechanisms are funded in massive amounts. If we compare the cost of cloud and traditional mining, cloud mining takes the edge as you have to buy some shares, wait for some time and get a percentage of profit from your investment. On the other hand, traditional mining requires highly classified GPUs, cooling devices, electricity to run machines, security and other technical issues which make it costly. If we look at benefits, cloud mining still seems beneficial as the mining company will cater to all the problems. We have to wait for the profit, while in traditional mining, the profit and benefit factor is unstable. Not all cryptocurrencies can be mined as Tether (USDT) can only be purchased through Tether Limited or on crypto exchanges supporting Tether. KuCoin seems like a perfect option to buy Tether as it offers low trading fees to its users and is ranked among the top 5 exchange platforms in overall performance. 

Stick To The Best

Traditional mining was an early mechanism and is likely to fade soon. Users are shifting to cloud mining as it is more reliable in terms of security and scam-free due to proper checks and balances.