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Mining – what is that anyway?
Cryptocurrency mining is all about supporting blockchains built on the proof-of-work mechanism. These include, for example, Bitcoin (BTC), Litecoin (LTC), Dogecoin (DOGE) and many others.
With the proof-of-work mechanism, the network participants (“miners”) provide proof that they are doing work in the form of arithmetic tasks. They use this to verify blocks, which are then attached to the blockchain. These blocks contain transactions or information about transactions. A transaction is only considered confirmed once it is included in the blockchain. This is how proof-of-work cryptocurrencies stay safe.
As a reward for this work, they receive the Block Reward – i.e. a reward in the form of the respective cryptocurrency. With Bitcoin, this reward is currently 6.25 BTC.
As a result, new coins are constantly distributed and the miners have an incentive to keep the network secure. If you want to mine cryptocurrencies yourself to secure such rewards, you have several options.
1. Mine cryptocurrencies in the classic way
The classic version of cryptocurrency mining runs on mining rigs. You install them, connect them to the power grid and connect them to the respective network. That it is also worthwhile (the probability of finding a valid block is low), people build entire mining farms. This method requires a lot of know-how and is both costly and time-consuming.
2. Cloud mining
Anyone who relies on cloud mining makes their computing power available so that third-party providers can use it to mine cryptocurrencies. However, the respective providers often use the RAM for other purposes and simply pay for it in Bitcoin or other cryptocurrencies. This is an alternative with high user-friendliness.
3. Mine cryptocurrencies in the browser
Browser mining is a variant that is very similar to cloud mining. Here you simply have to install the respective tool on your computer and make your unused RAM available. The respective provider uses this computing power and regularly pays a small amount of coins to the wallet.
4. Pool mining
In pool mining, you join forces with like-minded people and mine cryptocurrencies together. This significantly increases the chances of finding a valid block and getting the reward for it. It is significantly closer to the “real” prospecting process than options 2 and 3.