Cryptocurrency mining is a process in which transactions are verified, generated into blocks and added to the blockchain. Mining can be performed on any hardware device, however, for mining to be efficient specialized ASIC processors or GPUs are recommended. Mining is needed to keep a blockchain organized, and it is usually performed by private parties who dedicate computing power of their devices in exchange for a reward in cryptocurrency that is being mined.
What is cryptocurrency mining
In essence, all miners are competing with each other to solve a mathematical riddle associated with a particular block in the chain. This activity is required to authenticate the legitimacy of transactions in cryptocurrencies. As a result of mining, new cryptocurrencies units are issued. Mining difficulty level is continually being increased. Therefore, the further in the lifecycle of a cryptocurrency the mining happens, the more powerful hardware is required.
What is needed for cryptocurrency mining
Anyone is able to become a miner. However, there are specific requirements needed to mine cryptocurrencies effectively. Firstly, a miner needs to install specialized software. Then, the proper hardware is also required. An ideal setup would consist of a powerful dedicated PC, also called a mining-farm, with an advanced cooling system.
Profitability of cryptocurrency mining
Since mining is rewarded with cryptocurrency, it is easy to imagine that it is a simple way to earn substantial amounts of crypto, for example, Ethereum or Bitcoin. However, due to the high difficulty levels cost of components and electricity will far surpass the income. At present, the most profitable cryptocurrencies to mine can be currencies like Litecoin or Feathercoin. A mining farm with 4 middle spec GPUs can generate an income of about $250-$300 per month.