Bitcoin is a worldwide virtual currency that is not issued by any particular state but is generated by the system with the participation of users from many countries. The developer of the currency is a person or group of programmers under the nickname, Satoshi Nakamoto. You can use BTC like any electronic currency:
- Pay in online stores or on sites that provide various services;
- Exchange for dollars, rubles, euros, or other banknotes;
- Transfer to other users.
A Bitcoin farm is a collection of powerful computer hardware that is used to issue Bitcoin. Another name for this process is mining. The term means “mining”, by analogy, as in a mine.
One farm can have from one device to several tens of thousands. For example, one of the largest cryptocurrency enterprises located in China has 21,000 pieces of equipment. It is installed in several long hangars with excellent ventilation systems. From the outside, one-story buildings lined up in a row resemble a farm. The service staff consists of 50 people.
Mining is a distributed system used to confirm pending transactions by plugging them into a blockchain. Mining ensures the chronological order of transactions in the blockchain, the neutrality of the network, and also allows different computers to “agree” on a single state of the system. For transactions to become confirmed, they must be packaged in a block that meets strict cryptographic requirements and must be verified by the network. These rules do not allow changing the previous block, so in this case, all the following blocks would be invalid. In addition to this, mining creates an analog of a lottery, which excludes the possibility of simple sequential addition of blocks to the chain by any user. Thus, no one can control the blockchain or replace parts of it with others to roll back their transactions.
How cryptocurrency mining works
To understand how cryptocurrencies are mined, you first need to understand what a mining algorithm is. As you know, each digital currency is created using a specific encryption algorithm. It is it that the mining equipment decrypts, ensuring the processing of transactions on the network and bringing the miner a reward.
How to mine cryptocurrency?
This will require powerful hardware, including:
- Video cards (GPU) – the more of them and the more powerful they are, the more efficient mining will be. For Bitcoin and Litecoin mining, video cards are not suitable – for this, you need special ASIC miners. The performance of mining equipment is referred to as hash rate.
- A powerful computer with as many graphics card slots as possible. You can install special operating systems for mining cryptocurrencies (for example, ethOS) or professional 64-bit Windows 10 on it. Remember that farms are loud enough and require a powerful cooling system and power supplies.
- Internet connection via cable or Wi-Fi with good ping.
- You also need to register a wallet where the mined coins will be stored.
It should be noted that some types of mining do not require special equipment:
- Browser mining – coins are mined through the execution of a special JavaScript script. Most of these scripts are fraudulent.
- Hidden mining is the mining of cryptocurrency at the expense of the power of other people’s computers. It is carried out by infecting them with malware. Read the article for expert advice on how to deal with mining malware.
- Mining on phones and laptops is an inefficient way to mine coins even on the most powerful models. Allows you to better understand what cryptocurrency mining is.
- Cloud mining is the mining of cryptocurrency remotely when a user pays a company to rent its mining equipment.
What are the prospects for mining
The profitability of mining is highly dependent on the rate of the mined coins. Nevertheless, the mining industry itself is changing at a dizzying speed, and shortly, the process of mining cryptocurrencies may change dramatically. For example, initially, anyone could participate in the process of confirming bitcoin transactions using their CPU (however, then very few people knew what mining and cryptocurrencies in general). However, less than three years after the appearance of the first cryptocurrency, this has ceased to be profitable. The types of mining began to change: GPU mining appeared, which then replaced ASIC mining. Now, the golden age of bitcoin is leaving, and more and more miners are starting to make money on the extraction of altcoins.
