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A Simple Guide To Crypto Mining

by Actual Simple 3 months ago in mining
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Crypto mining is processing a new cryptocurrency coin that can be included in the already existing coins of that type in the market.

A Simple Guide To Crypto Mining

In an ever-increasing world of cryptocurrency and blockchain, there is one term that intrigues a lot of people which is “Crypto Mining”. Trading and investing in cryptocurrencies is one aspect of this beautiful technology. Mining them is one different space which surely fascinates people. But crypto mining can be complex and a little tricky to understand. This article aims to serve as a simple guide to crypto mining and how crypto mining works.


  1. What is cryptocurrency mining?
  2. Why do we need cryptocurrency mining?
  3. Blockchain and Ledger In A Simple Manner!
  4. How Crypto Mining Works?
  5. What is required to start mining?
  6. The Future of Mining!
  7. Related Articles

1. What is cryptocurrency mining?

Let us first understand the well-known meaning of the term mining. It simply means to extract minerals from the Earth. Similarly, processing and extracting a new cryptocurrency coin is crypto mining. We add the new coin in the already existing coins.

Mining a cryptocurrency involves solving a complex mathematical algorithm using processors. The people who run these machines with the aim of solving the algorithm are miners. When any miner solves the algorithm successfully, a cryptocurrency coin is rewarded. Moreover, it becomes a part of the already existing market for that coin. In a more easy manner – creating a new cryptocurrency coin is crypto mining.

2. Why Do We Need Cryptocurrency Mining?

For fiat currencies, banks and government authorities regulate transactions. It ensures that transactions are secured and that no one is manipulating by simply duplicating the fiat currencies. We cannot print our own notes and use them, right?

This scenario opens up a different challenge in the world of cryptocurrencies. We need a way to create new crypto coins without duplication. Above all, a simple motive is to create a new coin that would be unique in itself and not a copy of some other coin.

We use blockchain and mining to deal with this challenge.

3. Blockchain And Ledger In A Simple Manner!

Blockchain is a chain of blocks. We link each block to its previous block and its succeeding block. Picture a block containing, let’s say 2 bitcoins. Now, we link this block to its previous block containing some other amount of bitcoin. We also link it to the forward block containing some amount of bitcoin.

4. How Crypto Mining Works?

Imagine a setup of multiple blocks linked together in the above-mentioned chained manner. Mining a cryptocurrency means solving a complex mathematical algorithm. The algorithm we solve is a hash function. A hash function takes a bunch of data and generates a random series of characters which is unique.

Once we solve the algorithms, it validates the most recent block in the chain. As a reward, we generate a new block and add it to the chain. This new block contains a set amount of cryptocurrency. Above all, this block belongs to the person who solved the algorithm.

When we perform mining, we are simply taking all the transactions (the value generated by the hash function) till the last/ recent block in the chain. We add a random number to it (called nonce) and then pass it to the hash function.

If the result is a number that is smaller than the decided value for your cryptocurrency – a new valid block/ coin is created. Else you change the random number (nonce) and try again until you get a smaller value than the decided value in the cryptocurrency network.

In the case of Bitcoin, the hash function used is SHA-256

5. How Crypto Mining Works?

What Is Required To Start Mining?

To start mining cryptocurrencies, we cannot use a basic laptop or mobile device. Such devices would take millions of years to solve the hash functions, add random numbers and validate the block. For mining, we require advanced computer hardware with high processing capabilities and Graphics Card (GPUs).

6. The Future Of Mining!

The future of cryptocurrencies is quite bright as it is well received by the people. But when we consider mining, it is costly and requires a lot of electricity and time. In addition, such usage of advanced hardware and processing also adversely impacts the environment to a large extent.

Time will tell the actual course in the crypto space.

However, we can easily conclude that crypto enthusiasts will find a more sensible approach to mining and how to handle cryptocurrencies. They have been developing tons of innovative tech stacks and we can surely see a new face of mining.

7. Related Articles


About the author

Actual Simple

We write about digital marketing, business models, and startups in a simple and lucid manner. - Everything Is Better When It's Actually Simple!

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