Home Basics of CryptocurrencyArticles What is cryptocurrency mining?

What is cryptocurrency mining?

by John
what is cryptocurrency mining

For real what is cryptocurrency mining? Many people believe that cryptocurrency mining is all about creating a bunch of new coins. However, it is a bit complex as it also involves validating crypto transactions. These transactions are moved on a blockchain network. It is later added to the distributing ledger. The biggest benefit is that it will prevent double-spending, especially on a distributed network. If we talk about the challenges, digital currency is very easy to manipulate on various platforms. Cryptocurrency mining is something that any top organization can handle. This expansion can be costly for beginners who don’t have much idea about crypto mining.

What is cryptocurrency mining?

The process of cryptocurrency mining is complex. It deals with the specialized computers that are known as nodes or mining rings. You can validate the transactions to a blockchain network. As a result, the user can receive a mining reward for this effort. Top organizations can handle this process quite easily. They have good knowledge about various cryptocurrencies too. 


Crypto mining is very much similar to mining various metals. Crypto miners must dig out new coins and bring them into circulation. If miners want to deploy a large number of coins they will have to deal with some mathematical equations. They are known as cryptographic hashes.

The hash refers to important data of the digital signature and big machines can handle it. Hash will help keep the data secure on a public network. One miner has to compete with another to get the best hash value. The value of the hash is determined by the transaction of a crypto coin. When the miner cracks this difficult code, he receives a reward that will add to the ledger itself.

crypto mining

Process of crypto mining

Now let’s look at how crypto mining is done:

  • Nodes refer to legit transactions

Transactions are the foundation of a cryptocurrency blockchain. If the nodes are proper it indicates that the transactions are legit too.

  • Formation of blocks

The main process of crypto mining is to add a bunch of transactions to a list. This list is further added to a block of data. 

  • Hash and another form of data

When the transactions are added to the block, there is additional information included in it. Hash and another form of data are added to an unidentified block. The miner of a certain network will have to crack a code as well.

  • Verification of Block’s hash

A miner must check the unidentified block and hash at the same time. However, hashes are very complex, and dealing with mathematical equations may not be easy. 

  • Block will publish in the Blockchain

From the point of view of the crypto miner, this is good news as the proof of work is now complete. The proof of work is generally very time-consuming due to the complexity of hash. It takes time to prove to others that the process is done legally without any problems.

Find out how to mine crypto.

Is cryptocurrency mining legal?

Generally, the mining of cryptocurrency is legal. However, if you want to determine whether this process is legal or illegal depends on some factors. The first thing is your location and whether you know how the process is done legally. Some countries don’t allow the use of crypto mining. If you keep yourself away from all the illegal activities there are ways you can keep the mining legal.

crypto mining legal

There is some cybercriminal who make use of JavaScript and spread malware on many devices. The device of a certain person will hijack while the processing power is taken in control. This illegal activity is known as cryptojacking. It is important to understand that crypto mining holds a different meaning for each Government.

Why is Crypto mining a big deal?

Nowadays people don’t trust some existing system. The main thing is that they want to get hold of their security rather than involving with others. Some people don’t like to keep their money in the traditional banking system. They want to have full control over the finances by making use of crypto mining and other top cryptocurrencies.

Is Crypto Mining Profitable? 

To get profit from crypto mining is a challenging task. There is a lot of competition among individual and commercial miners. A lot of miners are joining this market and things seem to be going on a difficult road for now.

The cost of crypto mining varies from one miner to the other. However, the profit margin of an individual will generally be small. As the number of miners’ increases, the cost of crypto mining is drastically increasing. If this isn’t enough the cost of electricity is also sky high. In a nutshell, the profits from crypto mining will be different for everyone.

crypto mining profitable


Is there an alternative to cryptocurrency mining?

Most crypto coins have to make use of mining or proof of work protocol. It is the only way to confirm legit transactions on the network of blockchain. If we talk about an alternative method that will probably be proof of stake protocol. There is no doubt that crypto mining makes use of resources and it can be draining and exhaustive too. 

The proof of stake process requires keeping the cryptocurrency for a long time. This helps with the earning of block rewards too. There are a lot of miners who may like to move from the Proof of Work protocol to the PoS protocol. This idea is more sustainable and doesn’t require much energy. It can also help keep the costs lower.


Many people believe that it is hard to determine whether crypto mining is profitable or not. It depends on many factors and the choices made by the miner. If the miner chooses CPU, GPU, or any other cloud mining the results will differ. The most important thing is to keep in the hash rate and use of electric power. You also need to keep in mind your costs before taking any action. It’s up to you whether you want to try crypto mining or not.

Also read : What is a cryptocurrency wallet?

Related Posts