3 Procedures That Make Mining Plausible and Publicly Acclaimed
Obtaining information about mining the first time can be rather confusing. The first thought is almost always aimed at “physically mining” BTC or BCH for example. Even though that “crypto mining” and “physical mining” have essentially different procedures and workflows, they still have some mutual relations. Just as the gold dwells underground, coins exists in the protocol’s design, and they both are yet to be brought to daylight or “dug up / mined”. Similar to miners getting the reward in terms of gold for their physical effort, research and time, crypto miners receive assets as a reward for creating blocks of validated transactions and including them in the blockchain. This process may seem pretty straightforward, however there are many technical specifications that validate and make mining techniques achievable and profitable.
Mining nodes or “miners” as powerful and crucial factor for mining process (Proof of Work)
We can perceive node as any electronic device, including a computer, tablet, cell phone, or a printer, that has an internet connection and a unique IP address. Node’s purpose is abundant; however, its main role is to maintain a backup of a blockchain, and also to handle its transactions. All crypto assets have their own, uniquely designed nodes, maintaining the transaction registers of that specific token.
When it comes to mining, nodes operate through the utilization of the mining software usually installed on a computer. By exploiting this software, users of the mining nodes willingly contribute their hardware’s power to store and verify transactions all over the network by deciphering complicated mathematical challenges, and in return they acquire transactions fees in the underlying crypto assets. Essentially, this process is what is generally known in the cryptoverse as mining or forging.
These days traditional mining has been decreased to a bare minimum due to overwhelmingly powerful hardware which huge mining facilities are providing. Senior miners turned precisely to this option. Just by observing the mining difficulty and hash rate required for individual BTC mining, they reached a conclusion that it’s far better to sign a contract with cloud mining companies which borrow hash power, rather than upgrading your own hardware endlessly and effortlessly.
Always have in mind the golden rule that if you have a faster computing power than your competitors, there’s a much higher chance of validating the block before they do.
Understanding the economics behind the mining process
At the time of writing, there are about 4 million BTC left for mining, whereas 1,800 new BTCs are generated on a daily basis. The BTC block mining reward halves every 210,000 blocks, meaning that by 21st of May 2020, coin reward will descend from 12,5 to 6,25 coins. This tells us that the perfect time to sign a cloud mining contract is right now! MyHashing’s super computers guarantee you that our hash power will be available at your disposal 24/7 without any malfunctions or inconveniences. In case of hardware’s malfunction, you are automatically assigned with another fully competent hardware.
On the other hand, this fact opens up the possibility of mining BCH! Mining BCH has some similarities with BTC, but a couple of major differences as well. The size limit of BCH’s block is set at 8MBs whereas BTC’s is just 1MB. Understandably, bigger blocks will require more computing power and, essentially, more hash power to be mined. However, bigger blocks have bigger transaction rewards for the miners to collect!
Hash rate (hash power) as the unit of measurement for the amount of computing power
Hashes, in a nutshell, are a possible variable required for the success of the block achieved by a miner. In order to decipher a particular hash, the best course of action is for the computer to guess as many random inputs as possible per second until it comes across a correct output. Once this is achieved, hash broadcasts validated function to the network which sets this function’s data as a part of the next block up on this particular blockchain. As soon as network confirms the authenticity of the function, miners instantaneously receive a reward in terms of crypto assets.
Hash functions work very methodically, however huge power is needed for its optimal use. It takes an input of any given length and produces an output of a specified length. In the case of Bitcoin, the hash function SHA256 is used. However, they are created to be unpredictable and complex, in the sense that if you want to find an input that hashes to a specified output, the best possible way is to try many, many random inputs until one of them works.