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What is cryptocurrency mining?

Something that many people find interesting about cryptocurrencies is how to create them. The process to create crypto is called mining, and must be carried out to verify the blocks of a blockchain. This can disconcert some people since paper money is printed through central banks and is a process in a certain way, regulated. But at the same time, it is controlled by the decisions of a government entity. Nevertheless, it is a little easier to understand the mining process and how the protocol of each of them works.

When we talk about mining cryptocurrencies, we talk about new units of any cryptocurrency. In the case of bitcoin, we talk about the creation of new bitcoins, or when we talk about Ethereum, we talk about the creation of new ethers, for mining, there are different ways or methods of mining.

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Something that many people find interesting about cryptocurrencies is how to create them. The process to create crypto is called mining, and must be carried out to verify the blocks of a blockchain. This can disconcert some people since paper money is printed through central banks and is a process in a certain way, regulated. But at the same time, it is controlled by the decisions of a government entity. Nevertheless, it is a little easier to understand the mining process and how the protocol of each of them works.

When we talk about mining cryptocurrencies, we talk about new units of any cryptocurrency. In the case of bitcoin, we talk about the creation of new bitcoins, or when we talk about Ethereum, we talk about the creation of new ethers, for mining, there are different ways or methods of mining.

 

  • Mining through proof of work (PoW):  Which makes use of specialized hardware equipment with great computing capacity to solve a mathematical puzzle and thus be able to include a block in the chain of blocks, each block included in the blockchain generates a reward, and this is the profit that a miner obtains for carrying out the mining activity, it is the most controversial method since it generates an environmental impact since it consumes too much electrical energy.
  • Mining through proof of participation (PoS): it is a mining method that has gained popularity among new cryptocurrencies since it is being implemented more and more indifferent protocols the mining power does not come from special hardware that consumes a lot of energy; the mining power is governed by the purchasing power that a miner anchored to a smart contract has, that is, the more cryptocurrencies he has, the more mining power he has.
  • Mining through the cloud (Cloud mining): it is a very particular mining method since it was designed for less experienced miners of people rent the computing power and receive cryptocurrencies as compensation it is the same PoW only that it takes away from the user the expenses for the purchase of specialized equipment and the acquisition of technical knowledge to be able to mine optimally.

 

Regardless of the mining method in each case, when performing a block validation, the miner or miners are rewarded, since there are also mining pools, which is a group of people who pool their mining power either by hardware. or by purchasing power, and the reward for mining a block is distributed, remember that the reward for mining depends on the cryptocurrency that is being mined, for example in Bitcoin currently for mining a block you receive 6.25 BTC as a reward and this does not want to say it is the same in Ethereum, Cardano, Tron or other cryptocurrencies.

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