- What is mininig
- What do I need to mine
- Is it still worth it
Mine the Coin
Cryptocurrency Mining is quite a complicated business. Many wonder how it is even done. In fact, the entire process is not as complicated as it might seem. With the advent of blockchain technologies, the concept of mining was clarified as the use of computer processing centers to earn Bitcoins and other cryptocurrencies for solving highly complicated mathematical transactions.
Cryptocurrency mining includes two main functions - adding transactions to the blockchain by securing and verifying algorithms, and releasing new currency. Individual blocks that are added by miners must contain elements known as POWs or Proof-Of-Work. Mining requires powerful computers and specialized applications, which help miners compete with their peers in solving complicated mathematical problems.
The mining process itself relies greatly on the equipment used, which is most often specialized for various types of cryptocurrencies. The equipment is quite expensive and has estimated return on investment periods. Most often, this period is calculated on the basis of the purchase price of the equipment. Such an approach is a mistake, as it is made on the assumption that the mined currency will either remain at a constant exchange rate or that the latter will rise. The business profitability of mining is directly related to the exchange rate of the currency the miner decides to mine. It is also important to take into consideration that the equipment used has high degrees of breakdown probability and is in constant need of updating to remain competitive, not to mention the vast amounts of energy needed to cool and run the computer farm itself.
Whether the process of mining is profitable is a decision left entirely at the discretion of the miner, as the factor of which cryptocurrency to mine, and what initial investments the miner is ready to make, are subjective and susceptible to a variety of external factors. The main risk of mining is currency risk as even the most popular currency – Bitcoin has a high volatility rate. There are many options to choose from and it is impractical to give advice. Some resources such as whattomine.com offer some insight. If one intends to mine Altcoins, there is the risk of illiquidity of the coins mined. And if one decides to mine Bitcoin, as the most intensively mined currency, once every 4 years it halves the reward for the confirmation of a block. This leads to a 50% reduction in income from 5 to 8 per year.
Mining in itself is certainly still worth it, if one is ready to take the risks and be prepared to shell out vast amounts of money on the equipment and related costs. Lest we forget, the equipment cannot be insured, as the miner cannot be registered as a legal entity. The risks are inherent, but the rewards are there and it is necessary to be ahead by relying on some instruments. One instrument that can be of considerable use is the Cryptics project.
Cryptics supports market participants by providing liquidity on exchanges and a safety cushion for retail investors by creating a platform that connects market players and develops algorithms to predict changes in the value of cryptocurrencies.