Mining is how new cryptocurrency is created and transactions are verified. Here's how it works.
What is Mining?
Mining is the process of using computers to solve complex mathematical puzzles that validate blockchain transactions. Miners are rewarded with newly created coins.
How Mining Works
- Transactions are broadcast to the network
- Miners collect transactions into blocks
- Miners compete to solve a cryptographic puzzle
- Winner adds block to chain and receives reward
Mining Hardware
- ASIC: Specialized Bitcoin miners
- GPU: Graphics cards (some altcoins)
- CPU: Regular computers (rarely profitable)
Is Mining Profitable?
Factors affecting profitability:
- Electricity costs
- Hardware costs and efficiency
- Cryptocurrency price
- Network difficulty
For most individuals, buying crypto is more practical than mining.