What is mining?

Getting into Cryptocurrency Mining

What is Mining
What is Mining

As you may know, cryptocurrencies are different from fiat currencies in that the first is decentralized and function on a peer-to-peer system, instead of being monitored by banks who generate and control transactions people or companies make with the physical or fiat currencies.

Cryptocurrency mining is the activity through which new crypto actives are issued, and transactions are confirmed in a blockchain network. Mining is an integral process where all the generation, transmission, and validation of the different cryptocurrencies such as bitcoin, ethereum, and ripple, is done. This process allows the payer and the payee to have a stable, secure and safe expansion of the currency from one to the other.

To avoid the huge infrastructure needed to work and operate with physical currency, cryptocurrencies implemented a mining system constituted by people in the network so-called ´miners´. These people, the miners, monitor and validate all the transactions that generate currency.

You are probably asking yourself, what is a transaction? Well, a transaction in cryptocurrency is a transfer of coins from one wallet to another. And once it has been made, all the details of the transaction are broadcasted to every node, meaning every miner, in the network.

All the transactions made with cryptocurrency in the network come with the hash of the previous transaction made by its owner. And the authenticity of the current transaction is tested through this hash which actually validates the present transaction. Through this system, miners avoid double spending the currency with this process of validation.

Each time a transaction is made and is validated, miners compile this transaction and they also include it in the block they are solving at the moment. Each one of these blocks will be broadcasted only after it has been solved.

To get a block completely solved implies really difficult mathematical puzzles which are truly hard to unlock and crack. Once the puzzle has been solved, the miner is allowed to add the block to the ledger; and can also collect the number of coins that have been set as a reward for his work.

Therefore, mining could be seen as solving a mathematical puzzle, getting coins in return. By implementing this method, the mining process has a warranty as a fair mechanism that maintains the security of the whole cryptocurrency.

How does mining work?

There are purpose-specific machines designed to mine any cryptocurrency, so-called ´mining machines´. This kind of devices started as a regular CPU, and they have evolved until becoming the widely used ASICs. Since mining difficulty has grown so much, mining machines had to evolve in order to get higher efficiency than their previous versions.

The cost of these machines, along with their performance in the mining tasks, determine the mining profitability, as well as the design and its implementation.

Mining itself depends on the algorithm used by the network to reach distributed consents. It could be Proof-of-Work (PoW), Proof-of-Stake (PoS) or any other. Nowadays, PoW is the most common mining system; by using it you can mine several cryptocurrencies, such as Bitcoin, Ethereum, Litecoin, Monero, Zcash and some others.

The proof-of-stake is usually achieved along with the proof-of-work in some cryptocurrencies such as Decred, Dash or NEM; and in an exclusive way with Stratis and Lisk.

PoW System:

In the Proof of Work System (PoW), miners use computers with powerful processors (commercial or specialized) to solve hash riddles; when they get solved, allow them to propose the next block of transactions to add in the chain of blocks and collect the reward for it, valued in cryptocurrencies.

The mining activity uses computer processor chips (CPU), video cards (GPU), programmable chips (FPGA) and the application-specific integrated circuit (ASIC). The chip used in the process depends on both the cryptocurrency algorithm and the current processing power of the entire blockchain network, which is completely related to the difficulty of mining, a variable that determines the complexity of the hash puzzle to be solved.

PoS System:

On the other hand, the Proof of Stake (PoS) is a consensus algorithm, and is an alternative to the PoW. In this, the participants (nodes) send a special transaction that blocks their funds for a certain period of time; and allows them to enter the process of creation and validation of blocks.

Depending on the type of algorithm, the network randomly defines the participant who can propose the next block to be added to the chain, or the participant in each round of a longer decision process in which the other participants of the network vote for the block which they consider should be added and the winner is finally added to the blockchain, thus reaching consensus.

An example of the use of this algorithm is in the Decred cryptocurrency, in which the participants block funds in DCR, in exchange for a ticket that allows them to cast a vote; activity known as staking (betting). When the network to vote randomly select the ticket, the user gets a small reward plus the purchase value of his ticket. In each block, five of these tickets are randomly selected to vote on the validity of the newly mined block.

How can you start mining and how profitable is it?

Every currency has its ways to mining it. Here we are going to talk about how to mine the three most requested cryptos: Ethereum (ETH), Bitcoin (BTC), and Ripple (XRP).


In order to start mining ETH, you must have a GPU. If you try mining with your personal computer processor (CPU-mining) it will not be profitable; so you must get a graphics card to obtain the minimum speed required.

One of the most recommended cards are the AMD graphic cards which have much better efficiency than Nvidia´s and also a better price.Click To Tweet

Another good way to start mining is to join a mining pool. This is much better than solo-mining because it will get you closer to obtain benefits by reducing the costs in hardware and electricity; it also allows you to earn ETH in a secure and predictable way.

Well, after you have your GPU with 3GB RAM (at least), the process of mining can start almost immediately. Right after you make a couple changes in your Windows you have to install the mining app; and then edit the settings required from the website you have chosen to join the mining pool. The proper miner for ETH is Claymore Miner. This is it! You are ready to start mining ETH.

Some important requirements you must fulfill are to use Windows 10, you have to make sure it is 64 bit. Although you could use Linux, Windows is the fastest to run and easier to configure.


Before even talking about mining Bitcoin, we must warn you about two things: number one, you are going to need a few hundred dollars to spare; number two, this activity is one of the most competitive ones when talking about mining cryptocurrency.

At the beginning of Bitcoin mining, it could be done by using your personal computer; or using a graphics card (GPU-mining). But nowadays you need to get a special computer specifically designed for mining Bitcoins, so-called ASIC miner.

Since this activity has big demand, Bitcoin gets more and more difficult to mine. For this reason, we recommend using a Bitcoin mining calculator so you can learn if it will be profitable for you, according to your resources. All you have to do is enter the data of the kind of Bitcoin miner you will get and it calculates how long it will take you to make any profit or get even. Once you are sure it is worth it, get your miner. For that, we can recommend the Antminer S9, the newest and most powerful miner you can find these days.

Ripple (XRP):

This particular cryptocurrency is different to ETH and BTC because Ripple-mining is not a thing. The only ones who can generate XRP are the guys who created it.

Ripple runs on a PoW consensus algorithm, created in 2012 by Jed McCaleb and Chris Larsen. This cryptocurrency´s algorithm is actually a payment network powered by the Ripple payment protocol.

The creators of the XRP have released 100 billion of them until date, and each transaction will eliminate the Ripple used in it. If one XRP has been already used then it can´t be used in any other transaction. The consequence of this is that Ripples get down as more people use it; and/or increasing its value by process transactions with its network.

The only way of getting Ripple by mining is to mine any other cryptocurrency, once you have it then you can Exchange it for XRP. This allows you to have the Ripple without paying the costs of mining it in the first place.

Knowing this, now you can make decisions about what cryptocurrency is the best for you to start mining.

A Beginner’s Guide to Bitcoin Mining
Photo: Erik Jacobs on Flickr
Show More

Maria Olleros

A Med student and writer with great experience and passion for cryptocurrency.

Leave a Reply

Your email address will not be published. Required fields are marked *