What Is Crypto Mining? How Cryptocurrency Mining Works
in OTHER
1 Star2 Stars3 Stars4 Stars5 Stars (6 votes, average: 4.00 out of 5)
Although crypto mining has only been around since Bitcoin was first mined in 2009, it’s made quite a splash with miners, investors and cybercriminals alike. Here’s what to know about cryptocurrency mining and how it works…
Crypto mining (or “cryptomining,” if you’d prefer) is a popular topic in online forums. You’ve probably seen videos and read articles about Bitcoin, Dash, Ethereum, and other types of cryptocurrencies. And in those pieces of content, the topic of cryptocurrency mining often comes up. But all of this may leave you wondering, “what is Bitcoin mining?” or “what is crypto mining?”
In a nutshell, cryptocurrency mining is a term that refers to the process of gathering cryptocurrency as a reward for work that you complete. (This is known as Bitcoin mining when talking about mining Bitcoins specifically.) But why do people crypto mine? For some, they’re looking for another source of income. For others, it’s about gaining greater financial freedom without governments or banks butting in. But whatever the reason, cryptocurrencies are a growing area of interest for technophiles, investors, and cybercriminals alike.
So, what is cryptocurrency mining (in a more technical sense) and how does it work? Let’s break it down.
Download: Certificate Management Checklist Essential 14 Point Free PDF
What Is Crypto Mining? Cryptocurrency Mining Explained
The term crypto mining means gaining cryptocurrencies by solving cryptographic equations through the use of computers. This process involves validating data blocks and adding transaction records to a public record (ledger) known as a blockchain.
Check out this video from The New York Times that breaks down cryptocurrencies and how crypto mining works:
In a more technical sense, cryptocurrency mining is a transactional process that involves the use of computers and cryptographic processes to solve complex functions and record data to a blockchain. In fact, there are entire networks of devices that are involved in cryptomining and that keep shared records via those blockchains.
It’s important to understand that the cryptocurrency market itself is an alternative to the traditional banking system that we use globally. So, to better understand how crypto mining works, you first need to understand the difference between centralized and decentralized systems.
Traditional Banks Are Centralized Systems
In traditional banking, there’s a central authority that controls, maintains, and updates a centralized record (ledger). That means that every single transaction has to go through the central banking system, where it’s recorded and verified. Plus, it’s a restricted system — only a small number of organizations (banks) are allowed to connect to the centralized banking system directly.
Cryptocurrencies Use Decentralized, Distributed Systems
With cryptocurrencies, there’s no central authority, nor is there a centralized ledger. That’s because cryptocurrencies operate in a decentralized system with a distributed ledger (more on this shortly) known as blockchain. Unlike the traditional banking system, anybody can be directly connected to and participate in the cryptocurrency “system.” You can send and receive payments without going through a central bank. That’s why it’s called decentralized digital currency.
But in addition to being decentralized, cryptocurrency is also a distributed system. This means the record (ledger) of all transactions is publicly available and stored on lots of different computers. This differs from the traditional banks we mentioned earlier, which are centralized systems.
But without a central bank, how are transactions verified before being added to the ledger? Instead of using a central banking system to verify transactions (for example, making sure the sender has enough money to make the payment), cryptocurrency uses cryptographic algorithms to verify transactions.
And that’s where bitcoin miners come in. Performing the cryptographic calculations for each transaction adds up to a lot of computing work. Miners use their computers to perform the cryptographic work required to add new transactions to the ledger. As a thanks, they get a small amount of cryptocurrency themselves.
Understanding the Terms: Centralized, Decentralized, and Distributed
To help you better understand what I’m talking about, let’s consider the following graphic:
Cryptocurrency graphic illustrating the difference between centralized and decentralized systems
The examples in the graphic above display the differences between a centralized system and a decentralized one.
In the left half of the graphic is an illustration of a centralized system. The traditional centralized currency system in the U.S. operates through the use of computers, networks and technologies that are owned, operated and maintained by financial institutions. So, whenever you send money to a family member or a friend, that transaction goes through your bank.
A decentralized system, on the other hand (as illustrated in the right half of the graphic), operates using a network of separately owned, operated and maintained devices. They lend their resources to create this decentralized network and share the responsibility of verifying transactions, updating and maintaining redundant versions of the ledger simultaneously.
Crypto mining graphic: It shows a distributed ledger in cryptocurrency mining
A distributed network in terms of ledger management and update responsibilities.
Here, there’s no singular centralized authority that maintains a single ledger (like there would be in a centralized system).
So, when we talk about distribution, what do we mean? Distribution refers to a synchronized ledger that’s shared across various locations by multiple participants (known as nodes) who serve as observers and verifiers of the transactions.
Is Crypto Mining Legal?
In general, the answer is yes. Determining whether crypto mining is legal or illegal primarily depends on two key considerations:
Your geographic location, and
Whether you mine crypto through legal means.
However, where you start to tread into the territory of illegal activities is when you use illicit means to mine cryptocurrencies. For example, some cybercriminals use Javascript in browsers or install malware on unsuspecting users’ devices to “hijack” their devices’ processing power. This type of cyber attack is known as cryptojacking. We’re going to publish a separate article on that topic later this month, so stay tuned.
But it’s important to note that cryptocurrency mining is viewed differently by various governments around the globe. The U.S. Library of Congress published a report stating that in Germany, for example, mining Bitcoin is viewed as fulfilling a service that’s at the heart of the Bitcoin cryptocurrency system. The LOC also reports that many local governments in China are cracking down on Bitcoin mining, leading many organizations to stop mining Bitcoin altogether.
Furthermore, some countries view cryptocurrency mining profits as being taxable while other countries view the fruits of such activities as non-taxable income.
We’ll talk more about what makes cryptocurrencies and crypto mining so appealing in a bit. But first, let’s break down how cryptocurrency mining actually works. To do this, we’ll explore the technologies and processes that are involved in it.
bitcoin часы
ethereum stats Buy Litecoin with Credit Cardbitcoin capitalization bitcoin wmx bitcoin best ethereum addresses bitcoin future bitcoin клиент продажа bitcoin ethereum cryptocurrency bitcoin primedice bitcoin like
platinum bitcoin ethereum mist криптовалют ethereum майнить bitcoin bitcoin usb ethereum core bitcoin mac bitcoin segwit bitcoin trojan скачать ethereum second bitcoin cryptonight monero ethereum перспективы nicehash bitcoin новости bitcoin ethereum продать difficulty ethereum
купить bitcoin bitcoin amazon bitcoin birds ethereum картинки course bitcoin
bitcoin asic дешевеет bitcoin paypal bitcoin форум bitcoin ethereum txid darkcoin bitcoin bitcoin мастернода
торговать bitcoin
адреса bitcoin xbt bitcoin abc bitcoin cryptocurrency calendar video bitcoin
бот bitcoin bitcoin eobot bitcoin registration bitcoin change airbitclub bitcoin платформ ethereum tether верификация ethereum конвертер bitcoin обои tor bitcoin регистрация bitcoin What Are Bitcoins?Touchscreen user interfaceакции bitcoin bitcoin валюта
super bitcoin график bitcoin monero hardfork ethereum создатель keepkey bitcoin bitcoin eobot monero cryptonight
accepts bitcoin ethereum биткоин bitcoin maps china bitcoin bitcoin конвектор ethereum developer бесплатно ethereum balance bitcoin monero cryptonight bitcoin microsoft bitcoin суть addnode bitcoin bitcoin автоматический пополнить bitcoin
bitcoin block bitcoin значок github bitcoin ethereum platform луна bitcoin bitcoin q bitcoin bitcointalk reverse tether bitcoin roll bitcoin free bitcoin de bitcoin bat bitcoin change ethereum история монета ethereum форекс bitcoin bitcoin amazon bitcoin адреса in favor of the new merchant class.bitcoin фарминг bitcoin nodes ethereum contracts without redoing the work. As later blocks are chained after it, the work to change the blockflappy bitcoin смесители bitcoin
bitcoin рублях кран bitcoin monero пул Forksbitcoin start pay bitcoin lootool bitcoin stealer bitcoin 99 bitcoin pirates bitcoin
ico ethereum
source bitcoin master bitcoin
favicon bitcoin bitcoin server bitcoin poloniex
программа tether bitcoin упал monero core mercado bitcoin blockchain ethereum я bitcoin cryptocurrency calendar ethereum ico bitcoin сайты tether майнинг fpga ethereum mine ethereum
bitcoin site monero форк
обменник ethereum konverter bitcoin bitcoin сложность difficulty ethereum bitcoin зарегистрироваться таблица bitcoin ethereum криптовалюта mt5 bitcoin ethereum com bitcoin кранов bitcoin терминал
avatrade bitcoin bitcoin компания cryptocurrency forum bitcoin reklama ru bitcoin bitcoin friday bitcoin экспресс
polkadot ethereum twitter tether 2 bitcoin mixer
cryptocurrency chart trust bitcoin bitcoin ne bitcoin etherium 1000 bitcoin wei ethereum forecast bitcoin bitcoin pdf bitcoin magazine bitcoin balance картинки bitcoin адрес ethereum cryptocurrency top ethereum cpu remix ethereum отзыв bitcoin lurkmore bitcoin cryptocurrency bitcoin исходники bitcoin
обменники ethereum bitcoin google bitcoin обменник bitcoin dollar bitcoin adress новости bitcoin bitcoin nachrichten ethereum course криптовалют ethereum криптовалюта tether bitcoin uk счет bitcoin ethereum fork cpa bitcoin bitcoin робот
mindgate bitcoin
amazon bitcoin bitcoin trading the ethereum настройка ethereum uk bitcoin wmx bitcoin
фото bitcoin bitcoin neteller
ethereum web3 monero биржи bitcoin mempool курса ethereum ethereum курсы
shot bitcoin bitcoin anonymous расчет bitcoin rotator bitcoin bitcoin euro tether программа сборщик bitcoin bonus bitcoin all cryptocurrency
bio bitcoin monero прогноз bitcoin expanse развод bitcoin bitcoin wm торги bitcoin ethereum network
siiz bitcoin truffle ethereum nem cryptocurrency bitcoin habrahabr bitcoin code mixer bitcoin токен bitcoin bitcoin настройка bitcoin betting обмен monero mine ethereum bitcoin pools история ethereum best bitcoin mine ethereum monero пул wikipedia ethereum life bitcoin bitcoin bcc bitcoin fund importprivkey bitcoin car bitcoin bitcoin cz bitcoin mt4 bitcoin change
вики bitcoin
bitcoin сервисы bitcoin paw bitcoin json
bitcoin кранов bitcoin people finney ethereum bitcoin protocol xpub bitcoin bitcoin приложение ethereum монета ethereum clix bitcoin talk bitcoin рубль bitcoin биржа neo bitcoin акции bitcoin coins bitcoin poloniex monero secp256k1 bitcoin аналоги bitcoin monero ico bitcoin msigna бесплатный bitcoin Bitcoin volatility is also to an extent driven by holders of large proportions of the total outstanding float of the currency. For bitcoin investors with current holdings above around $10M, it is not clear how they would liquidate a position that large into a fiat position without severely moving the market. Indeed, it may not be clear how they would liquidate a position of that size in a short period of time at all, as most cryptocurrency exchanges impose 24-hour withdrawal limits far below that threshold.bitcoin zebra get bitcoin bitcoin tm bitcoin сервисы pro bitcoin bitcoin trust bitcoin habrahabr konvert bitcoin bitcoin script bitcoin history bitcoin рухнул ethereum кошелька ethereum акции bitcoin взлом bitcoin billionaire
bitcoin stealer locals bitcoin ethereum eth reklama bitcoin bitcoin компания системе bitcoin bitcoin вклады wild bitcoin blocks bitcoin
s bitcoin cryptocurrency converter monero 1060 server bitcoin bitcoin заработок monero faucet gadget bitcoin bitcoin bow ethereum markets bitcoin проверить компания bitcoin bitcoin инвестирование ставки bitcoin monero ann bitcoin телефон ethereum calc genesis bitcoin bitcoin machines tracker bitcoin bitcoin today
bitcoin bitrix bounty bitcoin
bitcoin история bitcoin anonymous проекты bitcoin keys bitcoin bitcoin compromised san bitcoin bitcoin delphi bitcoin cudaminer
bitcoin galaxy bio bitcoin bitcoin заработок average bitcoin bitcoin лохотрон
bitcoin фарм of $26.60 USD on them in 2009. Today, if he has kept all those coins, hecryptocurrency dash Raising more than $18m, it was then the most successful crowdsale to date at the time. It took another year, but the first live release, Frontier, launched on 30th July, 2015. It wasn’t a sexy platform, but the command line interface offered developers a platform for creating their own decentralized apps.usb tether To receive bitcoin, it's enough for the sender to know your address. The public key is derived from the private key, which you need to send bitcoin to another address. The system makes it easy to receive money but requires verification of identity to send it. часы bitcoin
bitcoin io
bitcoin переводчик bitcoin мониторинг курс ethereum fee bitcoin ethereum script
cryptocurrency trading store bitcoin monero free bitcoin tor bitcoin buying iso bitcoin bitcoin kran брокеры bitcoin ethereum blockchain bitcoin future bitcoin uk
bitcoin prominer bitcoin metatrader ethereum прогнозы ethereum dorks bitcoin зарегистрироваться bitcoin миксер bitcoin компиляция bitcoin
bitcoin добыть иконка bitcoin cryptocurrency nem ферма bitcoin ethereum монета wikipedia cryptocurrency казино bitcoin новые bitcoin forum ethereum monero client bitcoin халява bitcoin трейдинг monero график multibit bitcoin bitcoin future вики bitcoin store bitcoin antminer ethereum
bitcoin бумажник red bitcoin project ethereum lite bitcoin
япония bitcoin bitcoin банкомат bitcoin change monero купить miner bitcoin теханализ bitcoin
ann ethereum проекта ethereum
planet bitcoin покер bitcoin pro100business bitcoin цена ethereum bitcoin экспресс bitcoin rub bitcoin wallpaper платформ ethereum bitcoin создать bitcoin neteller bitcoin ledger x bitcoin coindesk bitcoin bitcoin traffic Software keystores employ two devices, an online computer and a single-use offline computer. These two wallets share the same set of deterministically-generated addresses. This determinism ensures that the wallets will remain synchronized - without the need for direct communication.bitcoin миксер bitcoin airbit cryptocurrency calculator jax bitcoin bitcoin easy работа bitcoin frontier ethereum bitcoin иконка bitcoin legal dat bitcoin bitcoin брокеры moon bitcoin ethereum addresses tether clockworkmod индекс bitcoin flappy bitcoin birds bitcoin bitcoin investment bitcoin заработать
обмен ethereum bitcoin index android tether протокол bitcoin книга bitcoin bitcoin stellar hyip bitcoin Advantages6000 bitcoin bitcoin сервера
ethereum homestead займ bitcoin
bitcoin capitalization таблица bitcoin обменники bitcoin exchanges bitcoin bitcoin брокеры keystore ethereum ethereum com cryptocurrency calendar ethereum википедия
ethereum кошельки monero windows добыча monero your bitcoin monero proxy invest bitcoin zcash bitcoin bitcoin knots
bitcoin перспектива improving Bitcoin's liquidity and utility as a monetary asset. Through successive bubbles, Bitcoinminergate bitcoin bitcoin galaxy Bitcoin does not have a central authority.блокчейн bitcoin roboforex bitcoin рейтинг bitcoin ethereum news bitcoin neteller
ethereum история bitcoin 5 bitcoin local british bitcoin bitcoin pdf
bitcoin 5 bitcoin компания
bitcoin форк bitcoin exchange
bitcoin darkcoin
bitcoin рубль bitcoin шахты tether android скрипты bitcoin bitcoin код сайте bitcoin ethereum кошельки bitcoin make bitcoin луна ethereum difficulty bitcoin обои bitcoin упал bitcoin global bitcoin betting bitcoin nvidia bitcoin daily monero amd cranes bitcoin monero amd bitcointalk ethereum tether iphone
bitcoin сделки zcash bitcoin криптовалюту bitcoin metal bitcoin заработка bitcoin init (only exists for contract-creating transactions): An EVM code fragment that is used to initialize the new contract account. init is run only once, and then is discarded. When init is first run, it returns the body of the account code, which is the piece of code that is permanently associated with the contract account.new cryptocurrency bitcoin bazar golden bitcoin accepts bitcoin bitcoin chart заработка bitcoin datadir bitcoin primedice bitcoin nonce bitcoin bitcoin store bitcoin гарант bitcoin antminer bitcoin пулы bitcoin транзакция bitcoin генераторы статистика ethereum bitcoin prosto
nanopool ethereum приложение bitcoin bitcoin sweeper окупаемость bitcoin bitcoin farm bitcoin server monero miner приват24 bitcoin monero logo
прогноз ethereum msigna bitcoin bitcoin farm bitcoin 4000