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What Is Crypto Mining?

In this article, I will explain what crypto mining is, how it works, how expensive it is, and whether it is good or bad for the environment.

What Is Crypto Mining?

Crypto mining represents a process in which transactions for different types of cryptocurrencies are verified and then added to the blockchain digital ledger. Crypto mining is a current topic of interest and a popular activity as crypto usage itself has witnessed significant growth.

A mining operation is similar to a data center. The difference is that people don’t have to sit behind a computer, instead, computers do the verification work autonomously and are programmed to solve difficult cryptographic puzzles in order to verify transactions.

How Does Crypto Mining Work?

As part of the crypto mining process, volunteer coders, which are called miners, are in competition with each other in order to solve difficult math problems using high-performance computers. Each problem makes use of cryptographic hash functions that are associated with a block that inside has the transaction data for the cryptocurrency.

The first miner that manages to solve the math problem (or, should we say, the first computer to solve the math problem) is allowed to authorize the transaction. For this service, the miner will receive a specified amount of the cryptocurrency they are working with.

After the miner solves the math problem and verifies the transaction information, they will add that data to the public blockchain ledger.

Is Crypto Mining Expensive?

When Bitcoin was first created in 2009, crypto mining was highly profitable. Back then, a miner would receive 50 BTC for solving a crypto puzzle, which meant they received around $6,000. The needed resources for crypto mining were minimal, so miners were able to keep most of the reward as pure profit.

But, in time, the reward for Bitcoin has decreased (in order to keep it from becoming inflationary). Currently, the reward sits at 6.25 BTC. Then again, the price of Bitcoin has increased, so 6.25 BTC have a value over 300K dollars at the time of this video.

It is worth mentioning that the cost of Bitcoin mining has also grown quite a lot. This is a result of the fact that the competition has also increased, which means that high-performance computing is now absolutely necessary in order to mine the token. This also leads to a higher cost of energy being consumed in the process, so the energy bill can be really high based on where the miner lives and what type of hardware they use.

Is Crypto Mining Bad For the Environment?

There is a lot of talk about how crypto mining actually affects the environment, especially since Elon Musk declared that his company, Tesla, wouldn’t accept bitcoin as a form of payment anymore until half of its mining is done in a green way.

Some point out that bitcoin mining has a power consumption of 118.9 TWh(terawatt-hour)/year, which means it consumes as much power as countries like The Netherlands or Pakistan. Others put that number even higher, at 131.80 TWh/year, which would mean the activity consumes as much electricity as countries like Egypt, Malaysia, or Argentina.

But it is important to mention that energy consumption doesn’t equal carbon emission which is actually the one causing the pollution. For example, around half of the bitcoin mining that takes place in the US is done using renewable energy, which means that there isn’t actually any pollution resulting from it.

The industry is taking steps towards a greener way, which means that in a short time, crypto mining may become an eco-friendly activity.

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