the l cryptocurrency mining This is one of the main processes for blockchain networks. It only comes through mining Blocks of transaction certified and verifiedAllowing the formation of new cryptocurrency units. But How cryptocurrency mining worksWhat are it? Income E How legal is it?
What is cryptocurrency mining and how it works
the l cryptocurrency mining This is the process with which they come Confirm transactions On a blockchain and new blocks are made. Through mining, network participants were called MinorThey resolve complex cryptographic calculations, to confirm the authenticity of the operations and guarantee the safety of the system.
This activity is essential on the basis of a procedure for crypto currencies Proof off work (POW)Come on, Butt coin Ed Ethereum (Up to the transition to Ethereum 2.0 with the proof of stack). Mining guarantees that the blockchain is decentralized and safe, without the need for the central authority.
Process Mining In a Basta blockchain Proof of work (POW) It has been divided into three main stages:
- A solution to the problem of a secret. The miners compete with each other to find a (nuns) value that combines the hash according to the block data, combined with block data (eg a special of the initial zero Number). This does not mean that a complex equation should be solved in a classic sense, but try to combine a lot of blends until the hash is met.
- Form new blocks. The first miner who identifies the right hash has the right to add a new block to the blockchain. Therefore, each block already has a combination of certified transactions and it contains an encrypted reference in the previous block, which produces a tampering series.
- Reward for miners. Miner who successfully adds a barrier to a Block the rewardOr a quantity of new cryptocurrency was produced, as well as the Commission (fee) paid by the consumers who included the transaction in the block. In the case of BitCoin, the block prize is reduced from time to time through Half the procedure.
This procedure is defined Proof off work (POW)Because it requires high use of computational resources to ensure network safety.
How does cryptocurrency work mining?
the l cryptocurrency mining This is a process that happens through a solution Complex cryptographic algorithm. To understand its operation, it is important to analyze the key elements contained in it.
- Hashing e -proof work: Miners need to find a hash price that respects some standards to be able to add a new block to the blockchain. This operation requires a great capacity of the calculation.
- Mining difficulties: The system automatically adjusts the difficult level of mining to maintain the time necessary to produce new blocks (for example, in the case of Bitcoin, about 10 10 minutes per block).
- Blocks and transactions: Each block contains transactions that have been confirmed by network nodes and is included in the blockchain only after one miner is verified.
Cryptocurrency mining, the user must have appropriate hardware, specific software and blockchain network. Most of the mining performance and profit depends on thisHardware used And let’s go Electrical energy costs.
Typology in mining
the l cryptocurrency mining It can be performed in different ways in terms of available resources and investment you are ready to do. The main ways of mining are these:
- Mining with dedicated hardware (ASIC, GPU, CPU): ASIC (Integrated Circuit of Application) These are devices that are specially designed for mining, with extremely powerful but very expensive and high energy consumption. They are the favorite option for mining Butt coin. GPU (graphics processing unit)Or advanced graphic cards, they are the most wide solutions to weaken crypto currencies such as Ethereum (Before the transition to POS), Ryankin and Monero. CPU (Central Processing Unit)That is, ordinary computers were used in the early years of mining processors, but today they are mostly less effective for crypto currencies.
- Mining in cloud: It allows you to rent the calculations from a company that manages the mining system. Eliminates the need to buy expensive hardware and reduces energy consumption, but is at risk of relying on incredible or scam suppliers.
- Pool vs. mining in solitaryia: Many consumers in pool mining share the strength of the calculations to weaken the blocks and get more frequent prizes, though all participants are divided. In isolation mining, however, the miner works alone and receives the full prize, but the block is less likely to solve the block.
technical requirements to make cryptocurrency mining
Starting mining LOY, you need:
- Appropriate hardware: ASIC for BitCoin, GPU for other crypto currencies. ASIC offers high performance but uses a lot of energy. GPU has more versatile but less expertise.
- Specific softwareProgram like CGMINER, BFGMINER or Nice Hash to handle the mining process.
- Purse for crypto currencies: It is used to receive rewards and keep in cryptocurrency.
- Steady internet connection: Mining requires permanent contact with blockchain.
- Competitive energy costs: High power consumption is one of the important factors that determine mining profits.
- Cooling and ventilation: Mining operations produce a lot of heat. A good ventilation and cooling system helps to maintain hardware and avoid high heat.
- Power supply and power stability: A proper power supply (PSU) and, if possible, prevents the damage due to voltage or blackout changes.
- Updated operating system and driver: GPU drivers must keep updated and, if necessary, use a special or better distribution for mining.
Finally, learning of computer security can be useful to protect your system from unauthorized access and malware, creating firewalls and mining software properly.
Can you earn from cryptocurrency mining?
the l Get derived from mining It depends on several factors:
- The cost of electricity: Mining is used too much electricity, so low energy rates are high.
- Mining difficulties: More and more people participate in mining, it is equally difficult to solve the blocks and get rewards.
- The price of mina Cryptocurrency: Eliminating the value of cryptocurrency cannot make mining very profitable.
- Hardware performance: More powerful devices allow you to reduce low income faster.
For example, with a high ASIC, can earn from a mining indicator Between $ 10 and $ 30 in a dayBut this value may vary according to the above factors.
Mining has also provided some initial costs support:
- Cost of mining system: An ASIC cost for the latest generation bit coins can cost 5,000 and 10,000 eurosWhile for other crypto currencies may vary between the GPU line 2,000 and 6,000 euros.
- Electricity costs: Can use an ASIC system More than 3,000 kW every monthSignificantly affect operating costs.
- Breaky Avon Point: The point where revenue covers early investment depends on market conditions, but may vary between 6 months and 2 years.
Keep in mind that the aforementioned indicator costs can be quite varied on the basis of specific models, energy costs, market fluctuations and variations of difficulties.
Is BitCoin mining legal?
legal status of cryptocurrency mining Different from the country. In many nations, including Italy, the United States and the European UnionIs, mining LinkBut this is subject to tax regulations.
However, some governments have imposed mining restrictions or prohibitions for various reasons.
- High energy consumption: Countries like China have banned mining to reduce the pressure on the power grid.
- Environmental concerns: Some circle options are organizing mining to reduce the effects on COA emissions.
- Crypto currencies control: Some governments see crypto currencies as a threat to traditional financial systems.
In Italy, mining That is allowedBut the tax regulations are subject to and it must be declared to qualified authorities.
In fact, some risks and taxes are these:
- Tax of mining income: The income earned with mining is considered income and it should be announced in the Italian tax government.
- Announcement of income: People who make mining at professional level may have to open Vat number And declare this money as business activities.
- Fined for signed mining: Failure to report income can lead to administrative and tax fines.
Always inform a lawyer or with an accountant expert in crypto currencies.
Substitute for cryptocurrency mining
In recent years, many blockchains have adopted Proof Off Stack (POS) As an alternative to traditional mining. With StackingConsumers can get rewards by blocking their crypto currencies in a verification car node, without the need for mining energy use.
Stacking is less expensive from an energy point of view, it does not require expensive equipment and is not guaranteed too much access to private consumers. However, it needs to mobilize a significant amount of crypto currencies and some POS systems can pose a risk of manipulation in the market.
Some investors prefer to do cryptocurrency trade Instead of investing in mining. Trade offers the possibility of earning a earnings by exploiting market fluctuations without management of expensive hardware or high energy bills.
However, trade includes high risks and need deep information about the Market market to be profitable.
