What is bitcoin mining. Cryptocurrency mining: what is it in simple words. Cryptocurrency mining options

Greetings friends, in this article, by the way, the first on this site about mining (the article is constantly updated), we will talk about how to start mining on a video card (GPU) and where to start. If you are too lazy to read, at the end of the article there will soon be a video on how to start mining for beginners. But first, I advise you to read the first 2 paragraphs on how to start mining for a beginner.

Mining start

This article deals with, as you understood above, about mining on a video card and step-by-step instructions. This mining guide is for beginners. We will set up mining, connect, install software, overclock the video card, and so on.

Mining getting started

What do we need to start mining from scratch

step by step mining

1. And probably the most important thing for mining on a video card is a video card (GPU), at least one, also more or less modern, about no more than 3-4 years old, and not a budget one. (It is also possible to mine on, hard drives and). If you want to choose a video card, then you are here -, the best cards are selected there, tables and top are compiled.
2. Naturally, a computer (system unit) or with an operating system installed (Windows x64). It's the 64 bit version
3. Decide on the currency that we will mine. Depends on the video card, in our example, the description will be mining ether eth. It is better to mine on Nvidia at the moment (12/28/2017) ZCASH - more on that below. Now broadcast.
4. Since mining is online, we need the Internet. Fast speed is not needed, but good ping is desirable, more on that below.
5. Select a pool (POOL) where we will mine ethereum (do not confuse with etherium). Next, select the miner program and configure.
6. Choose an exchange or a wallet where ours will drip and accumulate for mined ethereum coins, as well as services where you can transfer our earned coins to rubles and withdraw to a card.

Mining instruction start

And so let's start, you have a suitable video card and everything listed above in paragraphs 1, 2, 4 which are above and the drivers must be installed. If there is no video card, then read which article. If you do not have video cards and equipment, for more information about what kind of equipment you need for mining, follow the link -.

In our example, there will be Windows 7 x64 (by the way, ether mining is only on x64 bit operating systems), two AMD Radeon Sapphire RX 470 4gb video cards. The processor does not matter, in principle, as well as the amount of RAM, but it is recommended from 4 gigabytes. The easiest maning kit for beginners. UPD 3 GB and lower versions of video cards are no longer under go for mining ether, if you have 3gb or less, then you need to look for an alternative. There are other algorithms and currencies for mining, the list is .

Internet fast is not needed, but with a good ping. If you connect via a cable, then of course it’s better than the Wi-Fi option, but Wi-Fi is also suitable (I’ll write about this later), you can also read -.

How to start mining

Choose a pool (pool) where we will mine Ethereum coins:

1.ethermine.org

Advantages of this pool:

• + Large pool power
• + Small and fair commission 1%
• +Good ping

• Pool in English
• A bit incomprehensible site (for beginners), but we will describe here how to set it up using its example

2.dwarfpool.com/eth
pros:

• + for those who are in Russia, they have a server in Russia which is good for ping
• + a small commission of 1% which is not secretly overestimated
• + Good pool power
• + Easy miner setup

• - A little incomprehensible site (for beginners)

3. www2.coinmine.pl/eth/
Pros:

• + Honest small commission 1%
• + good ping
• + good power
• + Better protection

• - More complex customization manner
• - There are also difficulties with the site

4.eth.nanopool.org/

• + Simple website
• + Easy miner setup
• + Big power

• - There are rumors among miners and many claim that the stated commission of 1% is well underestimated

At the moment, I have chosen and will show the setting using example 1 - ethermine.org open the site in your browser

So the pool was chosen, now you need to select a wallet or an exchange in advance. What is a wallet, Ethereum Wallet? This wallet is located on your computer, coins are received on it, then from this wallet through the services they can be withdrawn to the card, which is not profitable at the moment, it is more profitable to transfer to bitcoins, and then to the card in rubles, but this can be done on the exchange. But the wallet is much safer than exchanges, soon I will write an article on how to create
wallet.
But for beginners it is better to work with exchanges

1. Binance is a more professional exchange, a good alternative to exmo!
2. Exmo is a great exchange, especially for beginners, loves miners.
3. Yobit is a good Russian exchange.

There are many of them, but let's start with the simplest, then with the advent of experience you will switch to a more interesting exchange, I also advise you to read the list of good ones.

After downloading, unpack the archive with the miner to a place convenient for you, the folder into which you unpack, preferably what was named in Latin (in English). This is what the content should look like.

Now let's start setting up the miner and mining
Next, the Start.bat file, right-click on it, and select edit. If the Run button appears, click it.

Here is the code for our file that we will run

and we need to edit it for your pool and your wallet (exchange)
-epool and after we specify the address of the pool, since we chose ethermine.org, we should succeed:

Epool eu1.ethermine.org:4444

(This is the address and port for mining, for other pools you can find out on the pool website)

Do not close text editor

If you do not have equipment, then I advise you to read -.

Also, if you do not want to suffer with setting up and buying equipment, there is a cloud mining solution -.

The video of this article is coming soon - how to create mining.
Mining in Russia is developing, so you develop with us in 2020, good luck to everyone in mining, now you are not a mining beginner !!!

If your card is less than 3 gigabytes, then you can choose a different algorithm, the list is .

Write questions in the comments.

You can also ask your questions on the forum, and be sure to get an answer -.

Hello! In this article, we will talk about cryptocurrency mining.

Today you will learn:

1. What is mining and why is it profitable;
2. How can I mine cryptocurrency;
3. What cryptocurrencies are profitable for mining.

What is mining

Let's start with a little theory block first.

Mining – the use of computing power for mining.

The very concept of mining appeared back in 2010, when those who mined cryptocurrency were compared with miners, and then the currency itself with precious metals. A special installation has to shovel a huge amount of data in order to find the necessary key and get a portion of the cryptocurrency.

How Cryptocurrency Mining Works

Let's look at the principle of mining based on the most popular cryptocurrency, since most other currencies are either clones or have similar working principles.

Mining is not tied to any centralized issuer. That is, the system itself is engaged in the release in automatic mode. But before telling how the emission takes place - the creation of new bitcoins - first a few words about the transactions themselves within the system.

In order to transfer money from one wallet to another, it is necessary not only to make a transaction, but also to receive confirmation from other users that this transaction should go through. And to get it, you need the user to collect 1 block of transactions. In order to collect a block of transactions, you need to get a hash from each transaction.

The computer's job is to figure out the hash for each transaction. The number of transactions in a block depends only on their volume - it is necessary that they do not exceed 1MB of information in total. Despite such a small amount, it takes a lot of time and computing power to sort through the hash.

For example, compared to 2015, mining difficulty has increased by 10,000! once. This resulted in the lack of opportunities to mine bitcoin on their own for almost all users.

Summarizing, we can say this: mining - enumeration of various options to build a hash combination for each transaction in the block. For example, the system adjusts the complexity of building transactions so that one block takes 10 minutes. Therefore, the more miners, the higher the difficulty.

After we figured out how bitcoin roughly works, let's look at why only 2 components are currently used for mining - chips on video cards and ASIC processors.

Initially, the bitcoin system had a “Mine cryptocurrencies” button. After clicking on it, the processor was activated and began to use power for mining. But then, they found that video cards significantly exceed the processing power of processors, and this button was removed.

Then it turned out that the chips on the video cards are much stronger than themselves, and over time, only they were able to mine top cryptocurrencies such as ether and bitcoin. This is how mining on processors is a thing of the past.

Now, the complexity of bitcoin mining is such that only ASIC processors, specially tailored for bitcoin mining, can cope with them on their own. It has long been impossible to independently mine bitcoins on a home PC.

Mining on video cards has become popular thanks to Ethereum. This cryptocurrency is quite expensive ($400+) and you can only use video cards to mine it.

There are not even special ASICs that would work with Ethereum, and they are unlikely to be. Simply because when mining ether, what matters is not how much information the processor can process, but the speed of processing. That is why it is still difficult to find something other than video cards that can work with this crypt.

If everything is reduced to a couple of words that will be understandable even to a simple user, then the mining process can be described as follows:

• Download and install the mining program;
• The power of the equipment is directed to the calculation of all possible options;
• If the option is correct, then the miner receives a reward;
• The higher the power, the higher the probability of finding the correct option.

That's the whole mining technology in simple words.

Main ways of mining

In mining, you can act in three main ways:

• Work in a pool.
• Assemble your farm.
• Use cloud mining services.

Let's look at each method in more detail. They involve different costs, profits and the necessary equipment to start. Let's start with the simplest - pool mining.

Mining in the pool

Mining pool- an association of several miners who direct the computing power of their computers in order to extract the currency.

Due to the fact that mining takes too much energy and requires large amounts of power, it is simply impossible for conventional computers to be among those who find the necessary combination. While normal mining rigs go through a huge number of options, the home PC is quite limited in its capabilities.

This method is suitable for those who want to try out what cryptocurrency mining means, whether it can be profitable and whether it is worth it. This is an option for skeptics, beginners and those who do not have money for equipment.

You can even work on your home PC. You need to download a program that will automatically direct your computer's calculations, integrate with other users and increase the chances of success. In this case, each will then receive a share according to the contribution to production. That is, the more powerful your computer, the higher the reward will be.

Mining equipment: everything is quite simple here. A computer or laptop will do. Even home machines can bring at least some profit if you make them work 24/7.

How much can you get: everything is not as good here as in other ways. Maximum 1.5-2 dollars per day, and then, if the video card is powerful enough.

As you can see, mining without investment is not a myth, especially if you have your own home PC that has a good gaming graphics card. True, you won’t get big profits, since even the most “powerful” computer has a capacity of about 26 times lower than one farm.

Mining farm

Farm mining is one of the most profitable, interesting and mainstream ways to work with cryptocurrency.

At the end of 2016 - the beginning of 2017, many interesting videos appeared regarding mining, cryptocurrency and bitcoins in particular. This suggests that the topic is popular even in Russia, where people are increasingly skeptical of various innovations, leaving room for so-called stability.

But we will continue to talk about the risks that such promising investments inevitably pursue. No one knows what will happen even in a year, so carefully evaluate the prospect of such investments.

Buy or make a farm yourself

To give an opportunity to objectively evaluate all the prospects from the assembly and purchase of a farm, we will not say which is more profitable. Decide for yourself after looking at the pros and cons of each method.

Let's start with self-assembly of the farm.

Pros:

• Less investment relative to the purchase;
• Assembling the farm yourself, in the event of a breakdown, you can fix everything.

Minuses:

• Difficulty in installation for a beginner;
• Risks during tuning and overclocking;
• A large amount of time for delivery if you buy cards abroad.

Now to the issue of purchase.

Pros:

• You can get the farm right away, without wasting time on purchase / delivery and setup;
• Ease of use;
• Whole farm warranty;
• Professional setting.

Minuses:

• High price;
• Service charge;
• The risk of buying low-quality equipment;
• If you do not have enough knowledge on installing / configuring the farm, you will not be able to deal with breakdowns on your own in case of force majeure.

Profit from mining

We have already touched on this issue above, in the discussions of each method, but I would like to talk about it separately. We won't cover PC mining as it's just a way to try your hand at seeing if there's money in a niche and see if it's right for you.

First, let's talk about farms and why it is more profitable to do this in the CIS, unlike Europe. In Europe, high electricity prices are 3-4 times higher than in Russia. This means that the payback period, profitability and profit will fall very much.

Now about money. The farm pays off in about 150-200 days. Some sources give a lower figure, but this means that the authors use outdated data that is relevant at the end of 2016 and the beginning of 2017. Now mining has become more popular, mining has become more difficult, and revenues have dropped significantly.

So, one video card can bring from 80 to 180 rubles per day. Consequently, a farm of 6 video cards brings from 500 to 1000 rubles, depending on the configuration and overclocking. The cost of one farm is from 100 to 250 thousand rubles.

In total, we have income from the farm: 15-30 thousand rubles a month, with investments of 100-250. Not bad, promising and profitable. It turns out that for the first year you will have a yield (if prices remain the same) of about 100% per annum.

We have closed the issue with farms. Now to cloud mining. If we take into account the average returns of 0.7 - 1% per day of costs, we have the following indicators - for every dollar invested, we will receive 0.7 cents per day. Therefore, at a cost of 100 thousand rubles, we will receive 700 rubles per day, which is slightly higher than with independent mining.

But the risks are higher here, there is no way to cancel your investments or simply sell a share. Therefore, the prospects of such investments are more doubtful.

As you can see, the investment is quite profitable regardless of whether you are running a farm or a cloud mining site. But you have to pay for such a profit with one, but an important indicator - liquidity, which is practically zero here. Similar indicators for real estate and in its infancy.

You will not be able to sell your stake in a company that provides lossless cloud mining services. This will not be of interest to buyers, because they themselves can spend such an amount and receive the same amount. And you will not be able to sell a used mining farm for the same money - it will not be in demand (unless, of course, you are one of those who can even sell snow in Alaska). Therefore, if you are looking for something that you can sell quickly and for the same money, you should not engage in mining.

Which cryptocurrencies are suitable for mining

The question of which cryptocurrencies are the best is now much more acute than 1.5 - 2 years ago. Then it was still safe to say that it was possible to mine bitcoins even on a home PC. And now it can not be obtained not only at home, but also on farms.

If you have a special installation on ASIC processors, you definitely need to mine bitcoins. Since they are simply made for cue balls. And don't even think about anything else. It still won't be any better.

For farms on video cards, the answer is ether. Since it is for him that such units are assembled. An alternative, if you do not want to work with ether, there are other, less popular altcoins. But contacting them is quite risky, so it’s better to think several times before changing a stable, familiar and promising broadcast to them.

If you want to try at home what real cryptocurrency mining is, then we recommend that you try your luck with Altcoins. Since you will not receive any income from Ethereum or Bitcoins in the pool. Alts remain the only option for effective earnings. Since at the initial stage it is still quite simple to mine them, and the price can rise significantly, in the future you can earn decent money even on a home PC.

As a result:

With special equipment, we mine cue balls and only them. With farms - ether (or promising alts, if you really want to take a chance). On a home PC - only altcoins (but not ether). As you can see, there is no unambiguously “most profitable cryptocurrency”: there is a profitable option for every opportunity and need.

Now about even more important - experts' forecasts regarding cryptocurrencies.

Forecasts of experts regarding the fate of cryptocurrencies

There will be absolutely no subjectivity here. Bare facts and assessments of more competent people. But people in two areas at once - finance and IT. At the same time, both have different views on the fate of cryptocurrencies.

Let's start with the more positive. The forecast of IT specialists regarding cryptocurrency in general and blockchain technology in particular is extremely positive. Specialists believe, and it is difficult to disagree with them, that the technology on which cryptocurrencies are based will be in demand in real business in the near future.

This is due to the fact that the prospect of all the processes that take place in the enterprise, affect each other, form a chain of data and be analyzed by machines is quite attractive. This will significantly reduce costs and, possibly, bring benefits to the company.

The simplest example is linking the blockchain to deliveries. Delivery takes place, the system processes the process, displays data on the receipt of goods, launches the money transfer mechanism, makes the necessary data public after sending, and then draws up a package of documents. This is how an automation program on the blockchain can work.

And blockchain is now a way to encrypt data. The data may or may not be anonymous, but it will be 100% secure. And no one can declassify them, which is also important.

So, the forecast of IT specialists for blockchain technology, as well as cryptocurrency, is quite positive. In the future, there will only be an increase in the use of technology, which will inevitably lead to an increase in demand for cryptocurrency as a derivative of this technology.

And now to the more negative. For a year now, there have been sentiments in the field of investing that bitcoin (and all cryptocurrencies DIRECTLY depend on the price of bitcoin) by all indications is another bubble that threatens to burst. There is a sharp rise, and revaluation, and constant currency speculation. Daily drawdowns of 1-2% have long been considered the norm, but from a financial point of view, they are one of the most obvious signs.

Cryptocurrency is highly overvalued. Just look at how much bitcoin has jumped over the past year. A year ago, in October 2016, the currency was worth $600. Now the indicators have again broken through the 4000 mark and have already reached $4300.

There was already a slight decline in September, but it is associated with the ban on bitcoin exchanges in China. Speculation on bitcoins increases its value, but overheats this currency, and with it the entire crypto market. The whole situation is very reminiscent of the crisis in 2000 with IT companies, and in 2008 with the US real estate market.

The situation risks repeating itself, and many traders and investors seriously fear for the fate of the cryptocurrency. But the decisive word still remains with the leading central banks of Europe and the USA. If England, Germany, France and America come to the conclusion that the cryptocurrency can be used as collateral, the price of the cryptocurrency will inevitably rise. If not, then everything will go downhill.

Therefore, if you make money on cryptocurrency, follow the news carefully. Your earnings and the prospect of investments directly depend on the government of the leading Western countries.

How else to make money on cryptocurrency

Mining is not the only way to make money on cryptocurrency. You can also get cryptocurrency without mining - for this you need the very exchanges on which trading is actively conducted. Someone buys, someone sells, because of this, the price constantly jumps.

Market speculation in the crypto market is a paradise for those who understand financial performance. Fluctuations of 1-2% per day are a testing ground for making huge money by buying and selling bitcoins. Even within one trading session, you can significantly increase your capital.

But trading on top cryptocurrencies like Ethereum and Bitcoin will be difficult for those who are far from the financial markets. For such people, there remains the option of investing in Altcoins, which are only gaining popularity.

Altcoins are all cryptocurrencies except bitcoin. And they are good because immediately after the issue they will cost 1-2 cents, and only after that they will begin to gain their popularity. In 2017, which is not yet over, most of the top Altcoins have shown growth of more than 2000%, which is simply amazing.

Therefore, if you do not want to engage in mining, investing in promising altcoins is the key to success. They may even be more profitable than spending money on mining. Most importantly, remember that no investment will be 100%.

Conclusion

In conclusion, a few things can be said. In Russia, mining has been and will be popular for another 1-2 years for sure. It is at this time that you need to use your funds to the maximum, mine bitcoins and earn. In 2017, you still have a chance to catch the outgoing train.

But meanwhile, investing in cryptocurrency is a big risk, so choose wisely. But still, if you want to earn money now and are not afraid to lose some of the funds - make up your mind, create / buy farms and earn money for yourself. This is a great source of passive income. It has been said about mining for 5 years that it is unprofitable. And people continue to earn huge money on it.

Special devices for mining

Calculations are becoming more complicated every day, and therefore miners switched from a stationary computer to gaming video cards. At first, reprogrammed microcircuits were used, and then integrated microcircuits. They have a high hash calculation speed with low power consumption. For example, a Radeon HD graphics card has a power of about 1.5 gigahash per second, consuming a lot of electricity, and the latest ASIC system is about 2.8 gigahash per second, consuming about 3 watts. Most miners prefer the ASIC system, as its cost is quickly paid off by mining bitcoins. Its cost is about $130. Modern miners do not mine without using this system, as it is simply not economically viable. The value of one bitcoin is from 950 to 21,000 rubles, it all depends on the devices that are used and the tariff. Such a video card can pay off in 14 days.

The complexity of calculating the hash forced the miners to unite in groups (pools). In the case of finding the right source, everyone received their reward. The system easily detects a miner from the pool that produces many gigahashes in one second. But in fact, he is the main service resource that distributes tasks to the miners from his pool. Single mining gives less income than mining within a group.

The reward for creating a new source falls every 5 years: 2013 - 45 bitcoins, 2015 - 20, and by 2017 will be about 10 bitcoins.

The Internet, which was created by American military scientists to transmit highly classified information, now provides users with almost unlimited possibilities. Here they communicate, meet, live and even earn money. More recently, the newest system has appeared, with its own currency and rules - this is "Mining". It quickly gained popularity, as it practically does not require constant presence and participation. So what is mining really? What does it need and how does it work? What is the best way to set up a business: join a community or do it yourself, investing only your strength?

What is this system of online earnings? If we talk about the literal meaning of the word "mining", then this is the extraction of various minerals. But on the Internet, this is the process of obtaining a virtual cryptocurrency. It covers not only finance, but also various elements of programming. In this case, almost everything depends on the installed video card and processor.

The answer to the question of what mining is and how to make money on it depends on how much you are aware of the operation of your own computer equipment and the process of transmitting information over the Web. The basis in this system is the generation of separate parts by building a hash.

In other words, the essence of mining lies in the fact that many unconnected computers solve various mathematical computational problems through a special program. As a result, bitcoins are created, which are transferred to the miners themselves for the work done.

History of occurrence

The most interesting thing is that, despite the global recognition and popularity, bitcoin mining has a rather dark past. Even now, practically no one knows who exactly and when exactly invented this financial-computing system. In addition, over the past few years, many versions of possible origins have appeared. However, there are also undeniable and generally accepted facts.

It is believed that for the first time it was possible to earn several units of this cryptocurrency back in 2008. Initially, the miner was someone Satoshi Nakamoto, a Japanese. Although some argue that this is just a fictional person, but in fact the first earners were several people at once. At that time, a certain file appeared on the Web, which carefully described the structure, protocols and principles of the peer-to-peer system. And in 2009, the first full-fledged client was introduced.

Within a fairly short time, this type of earnings had many fans and followers. But it is worth noting that in some countries, such as, for example, Thailand, cryptocurrency mining has been banned.

Basic Rules

As in every professional system, there are several forming principles that make it so unique and interesting. So, what is mining, you can understand by reading its main provisions:

Specialized equipment for mining

One of the main rules of a successful and profitable business is investment. After all, if you do not provide a good start to the business, then all efforts will practically be in vain. That is why bitcoin mining requires significant investments in equipment. In this case, you can go in two ways: buy a specialized ASIC complex or buy all the elements separately. The first method will provide an opportunity to get more performance, and the second one is much cheaper.

ASIC is a specialized system created by student Yifo Guo. Its value and high efficiency lies in the fact that it solves one specific problem - calculating hashes. In addition, it is quite compact and unpretentious. But it is very difficult to get such a system, because it is quite expensive, and the order will have to wait up to several months.

Standard equipment for the extraction of "bitcoins"

If you choose a more budget option, then for mining you will need the following tools:

• Motherboard.
• Video cards (preferably several).
• Powerful processor.
• Power Supply.
• Capacious hard drive and additional memory.
• Cooling system.
• Riser extensions for additional video cards.

The challenge is to keep it all up to date with the latest technology and trends. A lot of? What did you want? What is mining without investment? Zero without a wand.

Required settings

For the extraction of bitcoins, not only the latest computer equipment is used, but also special programs. For example, Bitcoin or CGMiner. But! For them to work correctly, you need to set the appropriate settings. This will greatly improve the productivity and efficiency of the process.

The mining setup is very important, requiring some adjustments to the operation of the equipment:

• I is the load intensity of the video card. It is recommended to increase from 9 to 20 points, depending on the power of the equipment used.
• thread-concurrency. This is the number of calculations.
• G is the number of threads. It is optimal to set a value from 2 to 10.
• gpu-engine. The frequency of the graphics core depends on it. The optimal size is 900-1500.
• gpu-powertune. Power consumption of the used video card. Value from -20 to +20.
• gpu-fan. Fan cooling. It is recommended to set at 85%.
• gpu-memclock. This is the frequency of the RAM of the video card - 1500.

These are almost all the necessary parameters. They directly depend solely on the power of the selected equipment.

Mining "lightcoins"

Bitcoins are not the only virtual money that can be mined using special equipment. This is due to the fact that over time, it becomes more and more difficult to mine cryptocurrency, due to many features. Therefore, more and more new financial units are being invented. Litecoin mining, like bitcoin mining, has the same principle of operation. But there are a few significant differences here:

1. The block calculation technology depends less on the video card than on the amount of memory and the power of the processor used. Therefore, you can use completely ordinary computers, practically without spending money on
2. The difficulty of mining litecoins, unlike bitcoins, can not only increase over time, but also significantly decrease. This allows you to mine more Litecoins on the same hardware.
3. The process of calculating this cryptocurrency is much faster, which means that the user earns much more real money.

Despite the clear benefits, compared to bitcoins, Litecoin mining began to lose ground. It's almost as hard to make money now.

Solo mining

The name of this online earnings is fully consistent with its essence. Bitcoin solo mining is all about solving various cryptographic equations alone.

The mining process is carried out by pooling, where several tens, or even hundreds of people, united by one network, build the correct hash. Also, those who have their own mining farm can work independently.

Each option has its pros and cons. It is worth noting that one can significantly save on organizations, since pools take a certain percentage for each transaction. However, solo mining requires sufficiently powerful computer hardware. And only a fairly wealthy person can afford it.

Pros and cons

Before embarking on such a popular activity, you should carefully weigh the pros and cons. The advantages of this method include:

• It does not require personal intervention. You can just download the program and calmly go about your own business while the computer earns. And the higher the mining speed, the more money there will be.
• Production depends only on the capacity of the equipment used.
• All mining programs are carefully checked for viruses, and therefore they are absolutely safe for your computer.
• Each pool has an affiliate program, thanks to which you can invite friends and earn a certain percentage on this.
• Payments can be received in several ways, while you can withdraw absolutely any, even a small amount.

The disadvantages of this program include:

• Every year the extraction process becomes more and more complicated, therefore it requires more and more powerful equipment.
• Cryptocurrency is also subject to the influence of external world money markets.
• There are some internal problems, for example, there is no clear regulation of the exchange of litecoins and bitcoins.

Most Popular Cryptocurrency Payout Systems

Pay Per Share. Here, a fixed payment for each transaction is accepted. Great for intermittent mining. The only downside is the rather high commission.

RBPPS. It differs in that the reward is credited only after checking the correctness of the calculations. Accordingly, the commission here is quite low.

PPLNS. This is payment for the last few operations that took place in the last round. Used for continuous mining. The system works only for found and accepted blocks.

Alexey Russkikh

It is unlikely that today you can find people who have not heard about mining. The emergence of cryptocurrencies and their integration into the global economy created an incredible hype. However, not everyone understands what mining is. This can create a misconception not only about the process itself, but also about the prospects for currencies. In this article, we will talk about the main technical features of mining, consider the principles of creating a currency, and also evaluate the degree of profitability and future prospects for digital money.

The concept of mining

Let's start with the most basic - the essence of the work of mining and determining the process of creating new crypto-money. If we simplify the term as much as possible, it turns out that it consists in mathematical calculations that are carried out on computers, farms or specially organized large mining centers. The latter are entire hangars stuffed with "iron", they have huge computing power and consume a large amount of electricity. The most common currency at the moment is bitcoin, which has become almost synonymous with the concept of "cryptocurrency".

In simple terms, cryptocurrency mining is a computational task based on a cryptographic algorithm (and hence cryptocurrency). During mining, new cryptocoins are issued.

In the case of Bitcoin, the block reward in the early years was 50 BTC. In 2012, the issue size decreased to 25, and since 2016 - to 12.5 BTC. According to forecasts, the emission will slow down by 2040, the reward for creating a block will not exceed 10-8 BTC. Further construction of new blocks will be carried out only at the expense of commission fees.

How does bitcoin appear

How are bitcoins created and cryptocurrency mined? The emission of cryptocurrency, unlike fiat currencies, does not occur with the help of a printing press. New coins give rise to transactions (transfers, purchases, sales, etc.). Carry out (carry out) transactions - miners. They collect them in blocks. Blocks are combined into a chain. It turns out a long chain consisting of transaction blocks.

The continuity of such a chain is ensured by including the hash sum of the previous block in the new block. Hashing is the transformation of input data (in our case, data on previous transactions) into a specific bit string.

An example of a SHA-256 hash of the phrase "The quick brown fox jumps over the lazy dog" = D7A8FBB3 07D78094 69CA9ABC B0082E4F 8D5651E4 6D3CDB76 2D02D0BF 37C9E592.

The hash sum is a digest of hashed blocks. Each new block contains information about all previous blocks. Thus, it is not possible to change a block without changing the hashes of previous blocks.

Hashing is carried out according to a cryptographic algorithm. It is with the help of such an algorithm that the “Byzantine generals problem” is solved, in which the success of the transaction is ensured, even if the majority of network participants are intruders.

If the problem is solved correctly, the block is created. For the created block, its creator (miner) receives a reward in the form of a new cryptocurrency. This is how new cryptocurrencies appear. This is how bitcoin is born.

Decentralized distribution system

The task of the Byzantine generals:

In the morning there will be a battle with the enemy. The army of Byzantium consists of several legions, each with its own general. All of them are subordinate to the Supreme Commander. Some generals of the legions are suspected of betrayal and interest in the fall of Byzantium. In the morning, everyone receives an order from the Supreme Commander-in-Chief: “advance” (on the enemy) or “retreat”.

Possible scenarios for the outcome of the battle:

1. All loyal generals join the battle - Byzantium wins (favorable outcome).
2. All loyal generals retreat - Byzantium will keep the army without losses (intermediate outcome).
3. Some loyal generals join the fight, some retreat - Byzantium is defeated (negative outcome).

It must be taken into account that the Supreme Commander can also be a traitor and give different orders in order to achieve the defeat of Byzantium.

If each general acts independently, the probability of Byzantium winning is extremely small.

How should generals communicate and what decision should be made?

This task reminds you of something, doesn't it? You guess right. Transactions are a favorable outcome. Generals are miners. The supreme commander is the network. Blockchain is a system in which mining is carried out, provides communication and does not allow traitors to carry out their malicious plans. The agreement between the generals and the Supreme Commander, in which a favorable outcome (transaction) is achieved, is called consensus.

Consensus structure

So, we have learned that blockchain is a system of consensus algorithms. Like any system, the blockchain has levels. There are only 3 of them:

1. Consensus nodes (miners) - form a blockchain, group transactions into blocks.
2. Audit nodes - distribute the load over the network, check the work of the miners.
3. Light nodes - clients - do not have the full version of the blockchain (cryptocurrency wallets, programs).

The Bitcoin blockchain is the largest blockchain. More than 7000 network nodes have a complete copy of it.

Cryptographic Algorithms

Despite the fact that the task of the Byzantine generals was solved back in the 90s, the blockchain is a more difficult task. All of its nodes are in a state of constant change. Cryptographic algorithms here are different from those used in the Byzantine puzzle.

Most cryptocurrencies use proof-of-work (PoW) and proof-of-stake algorithms. Read the article for more details about.

The extraction of currency based on PoW is commonly called mining (mining - English production), based on PoS - forging (forging - English forging).

The most common algorithm used by cryptocurrencies is SHA256.

The task of the algorithm is to hash blocks of transactions. SHA256 generates a 256 bit hash.

Mining speed is measured in hashes per second (h/s). As it turned out, the hash sum can be calculated with a pen and paper. If we expand the algorithm mathematically, then we can achieve a speed of 0.67 hashes per day (with a 12-hour load, this is approximately 0.000016 h / s). However, most likely, this is not the best way to mine, because. modern miner systems are able to build blocks at a speed of several terahashes / sec, which is a quintillion times faster than a person.

VIDEO - bitcoin mining with pen and paper:

In addition to SHA256, the following encryption algorithms are known:

• ECDSA;
• SHA3-512;

Table. The most famous cryptocurrencies with types of algorithms:

Mining Options

For a beginner, this area can be completely incomprehensible, so it is worth considering the most relevant types of mining. According to the principle and mechanism of action, today they are divided into:

• mining on video cards ();
• mining on Asic or just asics (specially designed devices that have more computing power and much lower power consumption);
• forging (or);
• association in .

The latter type of mining is becoming more and more popular. Due to the arrival of “big players” on the market and the significant complication of mining cryptocurrencies, which require more and more power for home mining and singles, pools are the only way to somehow earn. Otherwise, a lot will depend on luck, which is a rather important factor when opening new blocks.

Cloud mining is becoming incredibly popular as it does not require investments in expensive hardware. For example, the Hashflare platform makes it possible to buy contracts for the production of several cryptocurrencies: BTC, ETH, LTC, Zcash and Dash.

As for the currencies themselves, Bitcoin is the most popular today, although the following cryptocurrencies can also bring profit from mining:

• Ethereum;
• Zcash;
• Monero
• Litecoin;
• Ripple
• Dash.

It is also worth considering that in addition to farms, asics and other technologies, computing on processors has long become an unprofitable and inefficient process. Today it makes almost no sense.

How profitable can mining be?

Initially, it is worth clarifying that mining for beginners ceased to be a simple and profitable activity back in 2016. In 2018, it became completely unfavorable. Even 7-8 years ago, even on one PC, you could get quite an impressive monthly income. Unfortunately, today it will make sense to mine only in the following cases:

• there is access to free electricity (then the main costs of mining, that is, paying electricity bills, can be ignored);
• there are 4 or more video cards available (especially from AMD);
• there is a sufficient amount of free money that can be invested to save from inflation and a small income in the future.

In other words, anyone can. That is why video cards disappeared from the shelves in a very short time, and even the largest stores in the world justified themselves for empty warehouses. What happened a few months later?

All hopes of receiving passive income burst, the payback of video cards increased by 2-3 times, the complexity of mining increased significantly, which significantly reduced income. Without investments to increase computing power, without buying ASICs (which are already very expensive), mining is now unprofitable for most participants. The minimum income will be "eaten up" by electricity bills and other costs, and the profit as a result will be so insignificant that it will not justify either the investment or the time spent.

Consider a short example of currency gains in 2018:

• The average investment in mining this cryptocurrency is about $2000.
• Without taking into account electricity, with an average farm income in the range of $ 125-140 per month, the payback will be from 15 to 19 months, depending on changes in the value of the currency.
• If we take into account electricity, which on average will cost in Russia with such investments at the level of $30-34 per month, the total income will decrease and will be about $100, and the return on the farm, on the contrary, will increase.

At the same time, simply working in any specialized position, gaining experience and improving qualifications, will in most cases be even more profitable than mining.