Koda Finance – What Is Cryptocurrency Mining?
We speak to investors all the time about the huge benefits of investing in cryptocurrency. While some investors are jumping at the chance to diversify and grow their investment portfolio, others have a question. They want to know why they need to invest in cryptocurrency when they could just mine crypto coins.
In this blog post we look at what cryptocurrency mining is and why investment may be the easier option.
• In its simplest term, cryptomining is the gaining of cryptocurrencies. This is done through solving cryptographic equations using computers. The process of cryptomining involves validating data blocks and then adding transaction records to the public ledger (like a public record) known as a blockchain.
• Looking at cryptomining in a more technical way, cryptomining is a transactional process. It involves the use of a computer and cryptographic processes. These are used to solve the complex functions and record the data to the blockchain.
• If you are picturing one computer with lots of numbers on it to complete the cryptomining process, think again. There are in fact entire networks of devices. These are all involved in the sometimes-successful task of cryptomining and sharing the records via the blockchains.
It’s important to note that cryptocurrency mining is painstakingly time consuming and costly. And, even when you have put in all the hard work, time and effort. It is only sporadically rewarding. That said, the process of cryptocurrency mining has a magnetic appeal for many investors. However, there are some things you need to consider before investing your time, energy and equipment into mining for cryptocurrency. It will take a lot of time and effort and you will not always win the crypto coins if someone else cracks the code first.
The benefit of mining for the crypto coins yourself is that you can earn cryptocurrency without putting down an investment for it. Miners receive crypto coins as rewards for completing blocks. However. They are only paid to the first miner that discovers the solution to the complex hashing puzzle. The likelihood that the miner will solve the problem is related to the crypto coin value they win.
To be a cryptocurrency miner you will need either a graphics processing unit, also known as a GPU, or an application-specific integrated circuit, also known as an ASIC. This machine is needed to set up a mining rig, which is needed to start cryptomining.
Cryptocurrency mining is very taxing regarding the resources needed in terms of the computer and power. Therefore, cryptocurrency mining is not a very feasible option for many users. It can be much easier to invest your money into cryptocurrency, instead of your time and efforts into cryptomining.
If you have any other questions regarding mining or investing in Crytocurrency please reach out to one of our team at [email protected]