Cryptocurrencies are a new way to send and spend money, but they are only possible thanks to crypto mining. Once a basic computational system for validating blockchain transactions, crypto mining has grown into a hugely complex industry with corporations, collectives of individual miners, and other developments.
The evolution of how crypto mining has changed over the years is fascinating and provides some potential insights into how it may develop in the future.
myriam vega is a cryptocurrency enthusiast, digital creator and is active in Mining City. He has been in the crypto world for five years in total, but has only been mining for the last four years. She understands the importance of mining to the industry as a whole and how its development will affect everyone in crypto.
Before getting involved in crypto, Myriam had a degree in international business and her own company. Her business experience led her to cryptocurrencies and the unique value that she brings to the global economy. Through Mining City, Myriam recovered from major business hurdles and has now recovered.
In Myriam’s eyes, the evolution of crypto mining will affect the future of the industry as a whole. Let’s take a closer look at how crypto mining started, where it is today, and where it can go in the next few years with it now.
Bitcoin mining in a nutshell
Bitcoin mining occurs when a new cryptographic transaction is confirmed and added to the collective ledger of the blockchain. User computers called “miners” solve complex mathematical problems to verify those transactions, then verify the new blocks added to the blockchain.
Since very advanced cryptographic algorithms are used to ensure information security, it takes time to find the correct mathematical answer for each block. Therefore, the miners compete with each other using their computers to guess the correct answer.
Bitcoin mining process step by step
Let’s discuss Bitcoin mining in more detail:
- First, a miner tries to correctly guess a Bitcoin block validation math problem.
- The mining computer tries guess after guess until it succeeds.
- Once the miner is successful, the pending transactions are added to the block, pooled, and added to the blockchain ledger by the miner.
- The new block on the blockchain is sent out to the wider network, at which point other miners validate the new block of transaction information.
- Any miner participating in the validation updates the copy of the transaction ledger, which is how new information is gradually spread throughout the Bitcoin network.
- Meanwhile, the Bitcoin miner who guessed the correct answer to the block math problem receives a reward
Why do miners mine?
Miners don’t solve complex math problems for free! They do it because of the aforementioned reward.
Specifically, each Bitcoin miner competes for a block reward allocated every 10 minutes on average plus fees accrued from transactions within the resolved block. The miner who gets the solution the fastest receives the full reward.
At the time of writing, each block reward is worth 6.25 BTC, which was 50 BTC in 2009. Since each Bitcoin is worth thousands of dollars in fiat currency, this can be quite a lucrative activity if you have the right equipment.
However, the rewards of Bitcoin mining will not last forever. That is because Bitcoin will be capped at 21 million Bitcoin to prevent inflation. Current estimates believe that the last Bitcoin will be fully mined in 2140.
New challenges for Bitcoin miners
When Bitcoin was first launched, and for several years afterward, mining was relatively easy. Anyone could mine Bitcoin as long as they had a computer and a good internet connection.
However, as more people joined the cryptocurrency network, dedicated miners started using graphics cards or GPUs (graphics processing units). GPUs are advantageous as they can perform more cryptographic operations per second.
Then came ASICs (Application Specific Integrated Circuits). These highly advanced machines were specifically invented to mine Bitcoin or other crypto tokens more efficiently per watt of power consumed. These machines are very expensive, which means that individual miners can no longer mine Bitcoin at the same rate or with the same efficiency as large organizations with warehouses or farms full of ASICs.
These unique challenges have led many Bitcoin miners to form their own counterparts: mining pools.
Mining pools such as those used by Mining town The community is essentially collectives of individual Bitcoin miners coming together to combine their processing power to solve blockchain math problems faster. In this way, they can replicate the power enjoyed by large corporations employing ASIC miners.
Through mining pools, small or individual Bitcoin miners can now receive Bitcoin rewards, preventing total market dominance by large corporations or massive companies. This also allows mining to be a somewhat profitable activity for everyone.
Mining pools are also agile and can respond to new opportunities to earn Bitcoin or respond to new market pressures. Myriam Vega wisely points out that “Ciudad Minera reacts in the same way”.
Mining pools are beneficial because they generally distribute rewards based on the amount of hashing power an individual computer contributes. Basically, if a single user contributes a lot of computing power to a single blockchain problem, he will get a higher reward than miners who only contribute a little power.
Because Bitcoin mining requires a lot of machinery and electricity, miners should consider these factors when determining if it is really worth spending all the time and effort to mine a single Bitcoin.
Additionally, mining pools need to evolve further if they truly want to challenge the dominance of large corporations and Bitcoin mining farms. According to Myriam Vega, she would like Mining City to “implement new technologies, such as applications, so that we can reach people faster.” This may be a major development in the near-term future as mining pools expand throughout the world, especially in areas such as Latin America, Russia, and many Asian countries.
The future of Bitcoin mining
Ultimately, the future of Bitcoin mining is likely to continue to evolve, although it remains to be seen whether mining pools will be enough of a market disruption to prevent large corporations from dominating the mining scene.
Mining pools like these used by Mining town they are the best tools of many miners to combat widespread Bitcoin farming. Myriam Vega says she is “totally convinced [Mining City] It will be the Amazon of the future.” Hopefully, and like mining pools like these used by Mining town spread all over the world, Bitcoin mining will become even more accessible and affordable for the average person.
In this way, mining can truly achieve the ultimate dream of Bitcoin and other cryptocurrencies: secure, fully decentralized money that can be sent anywhere to anyone!