What you should know about mining Bitcoin

Updated: 4 days ago

What is the best way to mine a cryptocurrency?

Mining is the method of creating cryptocurrency by the validation of the blockchain blocks. There are many various methods, but the one we're involved in here is the Proof Of Service (POW), or proof of work, which necessitates the purchase of actual machines to complete the task. The form of computer you want is often linked to the currency you choose to mine.

Cryptocurrencies such as bitcoin and litecoin, for example, necessitate the purchasing of ASICS, which are powerful machines with hundreds of microprocessors. Most other crypto-currencies (also known as "Altcoins") that follow the Proof of Work consensus may be mined using graphics processors. These computers are known as "RIGS" and have a similar design to a normal device, with the exception that they often combine multiple graphics cards to have a respectable Hashrate. On average, a RIG will have between 4 and 8 graphics cards.

What is the concept of a mining farm?

A cryptocurrency mining farm is an infrastructure made up of machines that are designed to conduct cryptographic mathematical calculations in order to protect a blockchain network based on the "Proof Of Work" consensus protocol. They may be made up of processors or graphics processors (GPU).

This infrastructures will vary in size from a few hundred units for the most basic to several thousand units for mining companies like Bitmain, which is one of the world's largest bitcoin mining companies and the industry leader in ASICS marketing (computers specialized for the mining of important cryptocurrencies such as bitcoin or litecoin to name but two).

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What is the concept of a mining algorithm?

Mining algorithms are used in the cryptocurrency community to describe the mechanism for solving cryptographic mathematical problems used for proof of work (POW), as well as the way blocks are generated and, more simply, how a blockchain's data is protected.

For eg, the SHA-256 algorithm used by Bitcoin was created by the National Security Agency (NSA) in 2001 and is now used by financial firms and governments for data encryption. However, there are also others, such as the SCRYPT used for the litecoin blockchain and the X11 used for the Dash blockchain, to mention a few.

What is the concept of a mining pool?

A pool is a group of miners who pool their computing resources (hashing) to solve the mathematical problems needed for cryptocurrency mining more effectively. This raises the likelihood of discovering the problem's solution and reaping the rewards. A pool behaves as if it were a single miner on the network, receiving money and thus distributing it to participants in relation to the amount of electricity they have contributed to the network.

What really is a RIG?

A RIG is a device that generates computational capacity, or hashrate, using graphics processing units (GPUs). Built solely for mining alternate cryptocurrencies (also known as "altcoins") such as Ethereum, Monero, and Zcash, to name a few. RIGS will mine hundreds of crypto-currencies; unlike ASICS, which will run on many algorithms and therefore "jump" effortlessly to the crypto-currency you choose to mine, RIGS are quite adaptable machines.

What exactly is an ASIC?

An ASIC (Application Specific Integrated Circuit) is a piece of computer hardware that contains electronic chips (processors) that are programmed to perform a specific operation, such as solving a given mining algorithm in the case of cryptocurrencies. The ASIC has been engineered and programmed to have high processing capacity while using minimal power. However, ASICS are incapable of doing all other tasks; they are not modular, resulting in their frequent criticism of obsolescence, which is caused by the continual need for additional power to remain in the mining competition, as well as the fact that an algorithm may be discarded in favour of a more efficient algorithm in the event of a Hard-Fork, rendering it unusable. Nonetheless, ASICS are now needed for anybody who wishes to mine such common crypto-currencies such as bitcoin, which involve a significant amount of processing power that a standard machine or graphics processor cannot supply.

What exactly is hashrate?

Hashrate is the hash rate; it refers to a network's capacity, which is the number of all the machines linked to the network's processing power. It is intrinsically related to the computing components of the devices, and it provides information regarding their efficiency. It is used as a measurement basis to define the pace with which a mining machine generates cryptocurrencies, which is why it is represented in Hash per second.

What is cloud mining, and how does it work?

The ability to lend the processing resources of a cryptocurrency mining system to a corporation with the required hardware is known as cloud mining. It helps people who want to make money from mining to buy computational resources (Hashrate) while leaving the technological restrictions to the chosen business. The selection and procurement of machinery, its installation and optimization, the electricity cost, repairs and repair, as well as the thermal and sound environmental inconveniences are all factors to consider. It often takes the form of time-limited contracts (1 to 2 years on average), in which the customer specifies the mining algorithm as well as the computational capacity.

Hardware vs. Cloud Mining: Which is Better? Which is the more lucrative option?

You've decided to become a cryptocurrency miner by purchasing computational resources, but you're not sure which bid is the best. Without being sarcastic, the buying of hardware would still be based on "price / hashrate" in the long run, but is this the only factor to consider before embarking on this adventure? This is a concern you can ask yourself because the idea of Cloud Mining does not work unless any benefits made the difference. Cloud mining was created to address a variety of issues, the most obvious of which being the hardware limitations. Owning personal equipment is great, but as you multiply them over time, issues arise, such as excessive heat, noise emissions, constant repairs, electrical power limitations, troubleshooting, repair of obsolete parts, mining program upgrades, and so on.

Without a doubt, possessing mining machines may be restricting, both in terms of the need for supervision and the potential restriction of the expertise in the industry. Whilst these restrictions are real, we do not all have the desire to incorporate them into our everyday lives. As a result, it's obvious that the cost of a Cloud Mining deal would be more significant than the cost of actual hardware with the same processing capacity. This is due to the fact that the price differential is used to compensate the firm to which you entrust this technological job, especially its energy bill. Furthermore, even though France is not the world champion in terms of energy prices, several of its neighbors have rates that are twice as big! A nation like Germany, for example, has a kWh price of 30 cents per euro! It doesn't take a lot of math to figure out that using a laptop at home isn't necessarily the most cost-effective option...

Finally, the solution to this query lies inside you and you alone, with each of you determining your own desires and limitations in this area of endeavor. There is no such thing as "positive" or "bad," just the acceptance or rejection of a program. If you wish to own your own rig, the profitability would be higher (subject to a suitable energy rate...), yet you would have to accept the associated restrictions knowing all the truth. Cloud Mining is for you if you want a reliable processing power with no downtime, no need to maintain your machines on a regular basis, and only want to earn money by mining a crypto-currency with a global management.