Mining Cryptocurrencies

Mining of cryptocurrencies, in its most basic sense, is the production of cryptocurrencies by solving mathematical problems using electronic hardware. Each cryptocurrency may have its own unique production method and protocol.

Mining is based on computers and the internet. When Bitcoin first came out in 2009, anyone with a computer and an internet connection could become a miner and compete for the block reward. However, over the years, we have moved away from this point and cryptocurrency production has become an industry in itself. Today, the computational and electrical power needed to compete with other miners, especially in Bitcoin mining, is very close to what a small country needs.

In the digital currency market, transfers between wallets are held in a transaction pool before being confirmed on the Blockchain. All pending transactions come together to form blocks. The miner who approves the block receives the block reward and transaction fees and includes the block in the Blockchain.

Cryptocurrencies have different mining types depending on their protocols and the hardware used. Mining has changed considerably over the years depending on the devices used. In this article, we have compiled 4 types of mining types for you according to hardware.

CPU Mining

In theory, it is possible to mine by downloading and installing mining software on the computer you use at home. In CPU mining, the processing power of the computer is used. However, at the point where cryptocurrency mining has reached today, this method has very low performance and is almost no longer preferred.

GPU Mining

Its name comes from Graphics Processing Unit (GPU). The processing power of graphics cards is utilized. Because the processors of graphics cards are much more powerful and more suitable for calculations than the processors of computers. GPU mining is preferred in proof of work-based cryptocurrency mining.

ASIC Mining

It is a type of mining in which hardware specially developed for cryptocurrency mining is used. ASIC devices consisting of a large number of processors consume a lot of energy because they have high computational capacities. For this reason, miners producing with ASIC devices need strong electrical infrastructures to meet their electricity consumption. Since proof-of-work-based cryptocurrency mining requires very high computational capacity due to competitive conditions, it can only be produced with ASIC hardware today.

Cloud Mining

Cloud mining is a type of mining that is done by renting processor power for certain periods without owning any hardware. It is a service offered to people who want to engage in mining but do not have sufficient technical knowledge and equipment or the initial capital to obtain this equipment.