The Next Mining Boom has nothing to do with Minerals
It is about mining on blockchain networks.
What is Blockchain Mining
Blockchain Mining is the process whereby cryptocurrencies are created. To be more accurate, Mining refers to the distributed computational review process performed on each “block” of data in a “block-chain”. This allows for achievement of consensus in an environment where neither party knows or trusts each other.
The two main objectives of mining:
1. Creates (Issues) new currency
2. Confirm the validity of transactions in a trustful manner when enough computational power is devoted to a block
For instance, let us look at Bitcoin.
Every transactions made with Bitcoin are arranged into ‘blocks’, these transactions are regularly verified by miners.
Whenever miners verify a transaction, there will be a financial incentive for them.
Miners carry out this process by solving complex equations with their computers. For every block verified, miners will get a certain amount of newly issued Bitcoin as well as a transaction fee. Throughout this process, new bitcoins are released from the remaining unmined pool of 21 million total bitcoins.
Bitcoin mining regulates the security and validity of the network, creates a decentralized networks, and releases new coins into circulation. Today, mining is mostly carried out by decentralized networks of individuals, working either alone or in large groups.
Can anyone become a Blockchain miner?
The short answer is yes. However, the complexity of the mathematical equations that has to be solved has increased so much that you would spend more money on electricity to power your computer than you would make in new coins and fees.
In other words, you won’t make any money at all.
That is why miners now form large groups known as ‘pools’ to perform the mining process together. By combining the mining power of their computers, these mining pools have a significantly better chance of performing the mathematical computations faster and stay profitable. Due to Bitcoin’s algorithm, a large number of computers working together seems to be much more effective.
How mining will change in the future
Although mining is still technically achievable for anyone, miners with under-powered mining equipment will find more money is spent on electricity bills than is made through mining. In other words, mining won’t be profitable at a small scale unless you have access to free or really cheap electricity.
The good news is that mining is not limited to Bitcoin. New cryptocurrency is being created all the time with challenges that are greatly different from Bitcoin’s. Today, Ethereum is the highly sought after currency. When tomorrow Ethereum’s difficulty become less lucrative for mining, new currency will be there that offer better returns.
Learn more about the new upcoming video-games cryptocurrency, NOX and Nitro here.