How Crypto Mining Works
Crypto mining is done by specialized computers.
The role of miners is to secure the network and to process every Bitcoin transaction.
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.
For this service, miners are rewarded with newly-created Bitcoins and transaction fees
These complex problems are solved with ASIC machines which consume a lot of electrical and generate much heat. Normal home computers do not have the capacity to tackle such complex equations.
What is Mining Difficulty?
Mining difficulty is simply a relative measure of the amount of resources required to compete for mining crypto currency. Miners earn more crypto when less resources compete.
What are the Challenges for Crypto Currency Miners ?
- As more miners are integrated to the cryptocurrency network, the competition is increased.
- PoW mining mechanism poses a constant challenge between miners to see who gets to solve each block first. A more powerful computer has a higher chance and capability of solving a block.
- Cost of Machine
- Cost of electricity
It is better to join a mining pool than to be an individual miner because a mining pool offers miners the chance to share the computational workload and split the reward among all participating miners evenly. An individual miner would find it difficult to mine crypto more effectively because of the increase in competition for mining. Nonetheless, other factors can still prove this claim more or less accurate.