The process which involves the transaction, verification and addition of various forms of cryptocurrency to the blockchain digital ledger is called cryptocurrency mining. The emergence of cryptocurrencies came to many as a myth but it is globally accepted today because the usage and mining activities of cryptocurrencies is increasing rapidly by the day. This guide seeks to cover how crypto mining works, the most popular coins being mined, detailed roles of terminologies such as hashrate, GPU & motherboards, faucets etc in cryptocurrency mining.
The sub topics to be covered include:
- How Crytocurrency Mining Works
- Hashrate And Its Effects on Mining
- The Role Of GPUs and Motherboards In Crypto Mining
- The Concept Of Faucets
How Crytocurrency Mining Works
From the definition above, we can deduce that crypto mining functions in two ways; first, transactions are added to the blockchain (secured and verified) which is then followed by a release of new currency. These functions are disintegrated into the following steps below:
- The process that involves a transaction that is being made over a blockchain ( For example, in a case where a user sends coins to another user’s address) the transaction information is recorded and therefore put on the block.
- Since this block needs encryption and security, it will be open to all contributing miners available on that network
- The encryption of this block requires miners to compulsorily solve a cryptographic puzzle done via a guess-and- check method; this is done to check the accurate cryptographic hash fit for the block. For miners to be ahead of the pack in acquiring concrete information and to be the first to verify and secure the block, they must have a huge rig of dependable application- specific hardware system.
- The block is immediately added to blockchain after then it is being secured by the miner, its verification will be done by other nodes (computers) on the same network in an operation called consensus.
- Every miner that successfully verifies and secures a block is being rewarded with a freshly-created coin. This whole reward process is called reward Proof of Work (PoW
Below are some of the most popular coins that can be mined:
- Ethereum (ETH)
- Bitcoin (BTC)
- BitTube (TUBE)
- Ethereum Classic (ETC)
- Bitcoin Gold (BTG)
- Expanse (EXP)
- Pirl (PIRL)
- Aion (AION)
- Ubiq (UBIQ)
- Monero (XMR)
- Bitcoin Diamond (BCD)
- Energi (NRG)
- Metaverse (ETP)
- Electroneum (ETN)
- Zcash (ZEC)
- Litecoin (LTC)
- Ravencoin (RVN)
- Horizen (ZEN)
- Feathercoin (FTC)
- Vertcoin (VTC)
- Aeon (AEON)
- Grin (GRIN)
Hashrate and Its Effects on Mining
The speed at which a specific mining machine operates is called Hashrate. Speed is undoubtedly one of the most important factors as crypto mining is more or less a ‘guessing game’. Mining crypto involves the search for blocks through complicated computations. Since the blocks are like mathematical puzzles, millions of guesses are being made per second by the mining machine to locate the right answers in solving the block. This simply means that for a miner to adequately mine a block, the block’s header must be hash by the miner in a way that it’s either equal or below the ‘target’. The target transforms with every change in difficulty.
The miner has to diversify a few of the block’s headers to achieve a given hash (target), this process is known as ‘nonce’. Every nonce starts with ‘0’, so to arrive at the needed has (target) it should be increased constantly. The luck of achieving a given hash is always low; reason is because the varying of nonce is a game of luck or chances. The total number of attempts being made by a miner per second is known as hash power or hash rate.
How Hash Is Calculated:
A hash rate of 60 hashes per second show the device’s ability to compute and attempt to solve a block by making 60 seconds per second. Some of the hash rate terms are terms most computer users are familiar with such as mega, giga, tera and this depends on the number of hashes. The chart below describes how hash rates can be explained:
Kilohash = 1,000 hashes
Megahash = 1,000 kilohashes
Terahash = 1,000 megahashes
Petahash = 1,000 terahashes
Note: The different machines being used in mining different cryptocurrencies don’t have corresponding hashes. For example, the hash rate for a Bitcoin mining machine differs from that of Ethereum. This is made possible because of the contrasting algorithms initiated by the cryptocurrencies since their mining don’t usually require a the same amount of memory and computing
How Hash Rate Affects Mining
When mining, it is very important to note that a higher hash rate is affects mining positively as it increases the chances of a miner to find the next block and receive reward and reverse becomes the case when the hash rate is low. Let’s use Bitcoin mining for instance, whenever Bitcoin’s network difficulty is on the increase, it also cause an increase in the hash rate which therefore results to the miner earning 12.5BTC and the transaction fees included. The difficulty in the Bitcoin network increases as a result of the number miners in the network making it possible for the miner to compute more guesses per second.
The Role of GPUs and Motherboards in Crypto Mining
A GPU (Graphic Processing Unit) unlike a CPU is a single chip processor specialized for graphic functions. Images, animations and videos are being rendered to the computer’s screen by the GPU. Years back, when the crypto wave drove in, miming was performed mainly with CPUs. Notwithstanding, due to its high power consumption and limited processing speed, its output was limited which consequently led to inefficiency in the CPU-based mining process.
The GPU- based mining was therefore introduced since it had several benefits over the CPU. While a CPU shoots a maximum of 4 32-Bit instructions per clock, an average GPU (Radeon HD 5970) on the other hand gives out an output of 3200 32-Bit per clock. This in turn makes them perfect for crypto mining because GPUs are designed to perform better when they are run repetitive or similar tasks.
This is one great reason why GPUs are best for mining since the process of mining needs a higher performance in carrying out the same kind of repetitive computations. Another reason points down to the high sensitivity of how the mining device continuously attempts to decode the different hashes over and over and only one digit changes in each trial in the data that is getting hashed. For this type of dedicated processing, a GPU is the best fit.
Their ability to perform mathematical computations is based on the fact that they built with a huge number of Arithmetic Logic Units (ALU). This forms another good reason why the GPU is an awesome alternative to CPUs since they have the capability to perform calculations.
A motherboard on the other hand holds the crucial components of the computer system together which includes the memory, CPU and connectors to output and input devices. They are one of the most vital parts of a computer system and are also needed for mining.
8 Best Motherboards to Consider When Buying Motherboards for Mining
- Asus B250 Mining Expert
· Biostar TB250-BTC Pro
· MSI Z170A Gaming Pro Carbon
· Asus ROG Strix Z270E
· ASRock H110 Pro BTC+
· MSI Z170A Gaming Pro Carbon
· Gigabyte GA-H110-D3A
· Asus ROG Strix Z270E
Few Things to Look Out for When Buying a Mining Motherboard
· The number of PCIe slot, make sure it has as many native PCIe support as possible. (6-12 slots or more) This enables you to add more graphic cards.
· The motherboard should support 4th generation INTEL processors like Pentium G3250 and Intel Celeron G1840.
· The ram slots (DDR3 or DDR4) should be two or more and can support up to 16GB memory
Note: Some of these motherboards can be used for mining as well as gaming too.
The Concept of Faucets
Asides mining and trading of cryptos, another medium crypto coins can be gotten is through faucets. This concept was invented in 2010 by Gavin Andresen; its core purpose was for it to act as a reward system and a tool for promotion. With this system, coins like Bitcoin were given out for free in a bid to raise awareness and to enable the public adopt the new cryptocurrency. To promote Bitcoin, faucets were being employed as a major tool was in exchange for simple tasks like watching a video on a site or solving captchas. The reward for tasks then was as little as 5 cents which was equivalent to 5 BTC.
The faucet intrusion grew increasingly popular and required more tasks to gain a significant amount of Bitcoin. Either a game was being played, videos watched or some ads that required clicking, all these were tasks users undertook. But as the value of the Bitcoin sprang up, the amount of coins that were issued out dropped drastically. At a point, it was no longer needed to create consciousness amongst people as Bitcoin’s rapid speed in value and media attention was enough awareness for the public. Even though the activities of faucets still exist, it is now mostly used as one of the promotional tools for new cryptocurrencies. It has been recorded that the highest amount anyone can earn from faucets is 0.0001 BTC which is equivalent to $1.
How Faucets Differ From Mining with Your Own Equipments
From the entire content above, one point should be noted; there is a huge gap between faucets and mining.
- Faucets are gotten from little tasks (Requires little or no skill) while mining is done with a highly advanced equipment (Requires a good tech skill to succeed)
- Faucets are almost a waste of time because its aim is solely promotional while mining is both innovative and profitable
- As recorded, the most amount of BTC gained through faucets is barely $1 while a miner gets a reward of 12 BTC or more after a successful mining
- Faucets are for newbies and beginners chasing mere crypto shadows while mining serves as a ground for users who want to take an advanced step in the cryptocurrency world.