What Is Bitcoin Mining and How Does It Work?

Central banks issue traditional money. But there are no central banks in the world of cryptocurrencies. The only way to get a cryptocurrency is mining, performed using sophisticated hardware that solves a highly complex computational math problem.

This system is compared to a big book containing all the records of what is happening with the cryptocurrency. It is the platform on which the operation of any cryptocurrency is based. The point of mining is that computers located in various places around the world perform calculations and thus generate new blocks of the blockchain.

Roughly speaking, miners’ work is to pick up from millions of combinations a single hash (the result of some mathematical transformation of the block) from the previous block – this way, you can “attach” another block. Many miners fight for the reward simultaneously, and whoever does it first gets the prize.

Mining of the most popular cryptocurrency – bitcoin – is no longer possible without expensive special equipment. If at the beginning and middle of the 2000s even a home computer with a powerful video card was suitable for this, now industrial computing power is required. The fact is that there cannot be more than 21 million bitcoins. Most of them have already been generated, and more and more capacities are required for each new bitcoin. Industrial mining farms can consist of 30-50 miners, or they can be gigantic and include tens of thousands of devices.

For this reason, particular processors and computers are produced, which are called ASICs. They allow you to quickly carry out those calculations for which the miner receives a reward. Unfortunately, now the requirements for these computers have increased significantly, which means that in order to maintain this work at the level of profitability, it is almost impossible to remain a solitary miner. The cost of one “small” and profitable farm is around 40-50.000$. In addition, the mining farm needs to be maintained, which adds costs: the equipment quickly becomes obsolete, breaks down, and you need to deal with heat and noise insulation, pay rent, and substantial electricity bills.

The miner’s business essentially processes large amounts of electricity in exchange for bitcoins. This process harms the environment. Scientists at the University of Cambridge calculated that mining takes 121.36 terawatt-hours (TWh) per year. By comparison, the Dutch energy consumption is 108 TWh per year.

The negative impact on nature can be reduced: for example, alternative energy sources can be used for mining – hydropower and solar panels. Also, the deployment to more excellent countries contributes to improving the process.

Ever since bitcoin mining has become more complex and less profitable, many investors have turned their attention to cloud mining – where the user leases capacities (depending on the contract) from a large mining farm online, from anywhere in the world, and from any device. And such cooperation has a lot of advantages.

Firstly, the cloud mining of cryptocurrencies provides much higher profitability since the professionals involved in cloud mining perform the necessary technical maintenance. In addition, cloud mining technologies use intelligent algorithms to select the best and most profitable strategies that will bring good passive income. Another critical point is the environmental benefits and sustainability of smart mining. In other words, cloud mining makes the process of earning bitcoins the most efficient by optimizing equipment, taking advantage of the local climate, as well as using renewable energy sources.

One of the brightest representatives of this mining segment is SunMining. The guys from SunMining created a company that has no analogs in the field of cryptocurrency mining – an environmentally friendly mining farm that provides cloud mining services. The working model is simple – you rent the farm’s capacity by paying for the contract on their website (usually, the price of the contract is affected by the duration of production, the amount of leased capacity, and the referral program) and become a full-fledged miner. The only nuance is that you do absolutely nothing professionals do it for you, and the commission for their work is included in the contract.

The current situation with Bitcoin is an excellent opportunity to enter this market for both beginners and experienced investors. Given that hardware prices have become lower, cloud mining contracts have also become cheaper. Therefore, if you want to accumulate cryptocurrency at such a low price, be sure to try cloud mining with SunMining company.