The term ' crypto mining' first appeared in 2009, after the inception of Bitcoins by an individual or a group of people using the pseudonym Satoshi Nakamoto.

Vitalik Bulerin, a Russian-Canadian programmer proposed another popular cryptocurrency (ETH) in 2013 which later launched in 2015. The idea of smart contracts—a collection of self-executing contracts with suitably encrypted conditions of agreement—was first presented with the emergence of Ethereum (ETH). In June 2021, El Salvador became the first country to adopt Bitcoin as legal tender, after the Legislative Assembly had voted 62–22 to pass a bill submitted by President Nayib Bukele.

Several thousand alternative cryptocurrencies have gained traction following the rise of Bitcoin and Ethereum. As of today, there are about 25,000 other cryptocurrencies in the crypto market, of which over 40 have surpassed a market capitalization of 1 billion dollars. Notable examples include Ripples, Cardano, Polkadot, Solana, Tether etc.

The Mining Process

Mining is the process of generating new blocks and connecting them to the blockchain.

Solving a hash in blockchain typically refers to the process of mining,and this process is done by miners. Miners solve the cryptographic hash function by running highly complex mathematical computations using specialized hardware and software programs.

Miners make use of specialized hardware and software programs to perform complex mathematical calculations in order to proffer solution to the cryptographic hash function.

The typical steps involved in mining are as follows:

1. Creation of a new block using a set of transactions

The miner optimizes the data from the new block, along with the hash of the previous block, and then applies the hash function to it.

2. Repeated modification of the data piece (also called nonce) until the hash parameters of the block are met.

3. Verification of the hash function and the block data that was supplied- the solution along with the block data, are sent to the network for confirmation.

Who can mine crypyocurrencies?

Since we already established the role of miners in the blockchain industry, it is equally important we discussed their qualifications. Cryptocurrencies do not run on a single ledger, as opposed to the government issued currencies(fiat currencies). Hence, crypto transactions involve the use of a decentralized ledger that makes them immune to third party & government interference. This means that anyone can be a crypto miner!

Apparently the process of mining is a rather complex one. The goal of mining is to crack the hash function in a competition against other miners. The first miner to provide a feasible solution is rewarded with cryptocurrency. This is known as the “proof-of-work” consensus mechanism, which is employed in Bitcoin and other similar blockchain networks.

Common Techniques used in Crypto mining

There are commonly used techniques employed in crypto mining. These include:

Proof of Work (PoW): Proof of Work is a consensus technique that is employed in blockchain technology to authorize transactions and generate new blocks. The relationship between PoW and mining is that mining provides the mechanism that allows PoW to operate. The PoW algorithm is designed to be resource-intensive, with its level of difficulty set by the network.The PoW algorithm has a few drawbacks, one of which is its challenging modification. To deal with this, Bitcoin miners are burdened with the task of generating new blocks every 10 minutes on average, regardless of the amount of processing power consumed.

Proof of Stake (PoS): PoS requires validators to hold onto a specific quantity of cryptocurrency as "stake," as unlike PoW, which requires miners to use computer power to solve a difficult mathematical problem. Based on their stake, validators are chosen to produce new blocks. The more their stake, the greater their chance of being nominated.

A validator's coin must be pledged as collateral in order to validate transactions and generate new blocks. Their stake is forfeited if they are shown to be operating against the best interests of the network, like trying to manufacture invalid blocks.

Since PoS requires less processing power than PoW, it is intended to be more energy-efficient than PoW. It also aims to minimize the concentration of cryptocurrency mining power within a small number of very powerful mining Pools given that anybody can join the network as a validator. An example of a crypto coin that operates using this technique is Ethereum (ETH).

Proof of Authority (PoA): As opposed to being selected on the basis of their computing power or stake, PoA validators are chosen based on their identification and reputation. Typically, validators are highly respected and credible people within the community or organization.

Validators must demonstrate their authority by signing blocks with their private key in order to validate transactions and produce new blocks. Compared to other consensus algorithms, the PoA algorithm is less susceptible to attacks since it makes use of identities and reputation; which may also promote centralization.

How to build a Mining Rig

A mining rig is just a specially made computer, built in the most effective way to carry out advanced computational mining activities. It is a collection of hardware components such as CPUs, GPUs, or even application-specific integrated circuits (ASICs).

As of 2022, GPU or ASIC mining rigs have nearly completely supplanted CPUs in practical mining operations. These are far more expensive than CPU-based mining rigs, but they can be hundreds of times more powerful.

To build a cryptocurrency mining rig, you'll need the following components:

1. Mining Rig Frame

2. GPU(s) or ASIC(s)

3. Memory Storage (SSD or HDD)

4. CPU on a Motherboard

5. Power Supply Unit (PSU)

6. PCIe USB Risers

7. In addition, you will require-:

mining software,

A mouse and a keyboard to complete the software,

A monitor,

A bootable operating system (Windows, Linux, etc.) loaded onto a flash drive,and

A cryptocurrency wallet (hardware or software) to store your mining rewards.

In conclusion,

Mining is done with the sole purpose of securing the data stored in the blockchain as well as validating the integrity of the data. The difficulty level of decoding the hash function is adjusted in order to regulate the rate at which new blocks are added to the blockchain. This creates an economic incentive for miners to participate in, whilst also securing the network using their computational expertise.

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