As bitcoin adoption soars during the global crisis, miners are needed. Here’s how you can cash in on crypto while staying at home.
The novel coronavirus has brought about a new way of living in almost every conceivable regard. To how we interact with friends and loved ones, to how we work, and how we earn an income. In its wake, the virus has already begun to cripple our collective health and the health of many economies, which has left a number of us looking for better ways to earn a living, comfortably from our homes.
It has also left many heading online to begin trading in digital currencies. Focused exchange platforms, like Bitvavo, have noticed a stark uptick in existing user interaction, as well as new accounts. Whether this is due to a faltering trust in standard global financial systems, or just because we all have a bit more time on our hands is so far unknown.
What is known is that with increased interaction and user adoption- more transactions will need to be validated and added to the blockchain than ever before. Which translates to a need for miners. This comes as great news, as bitcoin is realistically the only financial asset that can operate and maintain remotely. In fact, that’s the entire basis of the network’s structure.
What is Mining?
Mining is a term used to describe how transactions are validated and added to the blockchain. To appropriately expand on that, you’ll need a bit of knowledge on how bitcoin works at its core.
Decentralized Public Ledger System
The blockchain is bitcoin’s ledger system. It’s where the checks and balances are stored, each and every transaction that occurs on the network is stored within the blockchain- effectively making the transactions public, transparent, and verifiable. All without the need for a centralized authority.
Each time a transaction is made on the network, independent computers that function as part of the entire network (nodes) work to solve complex mathematical equations. If these equations are able to be solved, it proves that the transaction was real and unique. Verifying the transaction itself. As each transaction is verified, it is added to the blockchain, where it can be publicly viewed by anyone on the network. Each verified transaction is completely immutable and time-stamped. Ensuring continued transparency and authenticity.
Verifying Transactions
The nodes that work to verify transactions are owned by people. Those people are called “miners”. They get this name because each time a transaction is verified, the person that owns the node that solved the equation is rewarded in newly minted bitcoin. Sort of like a prospector mining gold from a vein.
This payment helps to incentivize people to continue to relegate their computing power to verify transactions. Further distributing the responsibility of verification throughout the entire network. Solidifying the decentralized nature of bitcoin.
Payment for Work
This system of verification is called “Proof of Work”. In a proof of work system, all nodes on a network race to be the first to solve the mathematical equation. The node that comes up with the solution first, reaps the reward.
In proof of the work environment, it’s not necessary for anyone node to be in any one place. Which makes it easy to mine at a distance, or even comfortably from your own home.
How to Mine Bitcoin
Mining bitcoin can be a bit tricky to get started if you’re not particularly tech-savvy. Tricky, but not impossible. The equipment needed to mine bitcoin has evolved nearly as quickly as bitcoin itself- in little over 10 years, time-consuming, energy-gobbling, clunky hardware has been replaced with a sleek and efficient purpose-built piece.
While innovations in mining technology continue to emerge, it seems that the industry may be slowing down as it comes closer to reaching an equilibrium. Currently, two options of mining exist Cloud Mining and Personal Hardware Mining.
Cloud Mining Companies
With the cloud mining route, hopeful miners choose a company through which they “rent” mining hardware. Essentially, through these companies, cloud miners will pay for someone else to mine for them using their own hardware. Similar to a type of crowdfunding. This “rental” investment will generally be paid out in bitcoin.
When choosing a cloud mining company, it’s important to do your research and personally vet any company you plan on working with. Each company will have a different setup for how their operation works, rental terms, and how you will be paid. Each company will walk you through their process and lead you through the necessary steps you will need to take to begin cloud mining.
Personal Hardware Mining
Choosing to mine with personal hardware is an expensive choice if you don’t already have access to cheap electricity supply, powerful network connection, and decent access to hardware.
Before you begin the process of purchasing a personal mining setup, it’s advisable to use a bitcoin mining calculator to see if the cost of investment versus payout from mining will be profitable.
Modern mining is almost exclusively done using ASIC hardware. This Application-Specific Integrated Circuit hardware is a microchip that is purpose-built for mining. While these processors are extremely efficient, even the best hardware only produces about $10-$30 of profit per day. So expensive setups and high energy costs can make it cost-prohibitive to choose this route.
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