Cryptocurrency Mining involves introducing new cryptocurrencies into circulation and validating transactions between users on the blockchain before adding them to a publicly distributed ledger. It first started in 2008 with Bitcoin, and as of then, anyone could mine with a regular home computer. But the case is different today, as you need to use a powerful computer that allows special software such as Application-Specific Integrated Circuits or a specialized GPU. To mine cryptocurrency, you need a mining rig. A mining rig is any computer that mines cryptocurrency. A mining farm is a storage house full of different mining rigs. There are different ways to mine cryptocurrencies, some of them being:
GPU stands for Graphics Processing Units. It operates by gathering a set of GPU in a mining rig. It is cheaper, flexible, and easier to use than ASIC Mining.
ASIC is software that is specially designed for cryptocurrency mining. It is more powerful and expensive than GPU mining, producing more cryptocurrency. The problem with it is that it becomes obsolete with advancements in technology.
Cloud mining is becoming popular due to GPU and ASIC mining challenges (increasing cost). Interested individuals use the energy of large cryptocurrency companies dedicated to mining. They can rent mining rigs online and use them for mining crypto.
Mining is competitive; hence anyone mining needs an edge over the others. So people come together to form a mining pool to have this edge. The mining pool combines computational resources to have a better chance of being the first to mine on the blockchain.
In conclusion, to mine cryptocurrency, computers have to solve complex cryptographic equations. The first to solve the equations gets the reward for that block added to the blockchain.