A node or a group of nodes that help to perform valid transactions in cryptocurrency are called miners. It also verifies and validates the transactions or blocks called consensus, and then adds them to the entire blockchain, as well as encourages each node in the blockchain to update the existing ledger by adding the new verified transaction.
Miners compete to solve a difficult mathematical hassle primarily based on a cryptographic hash set of rules. When crypto is successfully mined the miner receives a reward fee in the form of a private key having a reward fee in the wallet.
As we discussed, miners compete to solve difficult mathematical puzzles, to perform this hassle miners require high computational power, and it consumes a high rate of energy.
What is Consensus
In the blockchain, there is no centralized authority to accomplish each task within the network like verification and validation of transactions. As there is no central authority in the blockchain but still, the transaction is secure and verified just because of the presence of consensus protocol which is called the very core part of the blockchain also known as the consensus algorithm.
The consensus protocol is the set of rules, procedures, and agreements through which secure and verified transactions are performed. It is a mandatory part to install a consensus algorithm on each node within the network. There are various types of consensus algorithms like POW - Proof of Work, POS - Proof of Stake, and POA - Proof of Authority.
How to Mine Crypto
When you are ready to start the mining, the following step you need to keep in mind:
- Selecting the Cryptocurrency
- Doing Miner Conjunction Analysis
- Acquiring Equipment & Continuous Power Supply
- Getting Crypto Wallet
- Configuring Setup Architecture
- Consolidating Pool
1: Selecting the Cryptocurrency
The very initial step to select the crypto you want to mine, there are various types of crypto like Bitcoin, Ethereum, and many others. There is a very important point to keep in mind that each crypto uses a different consensus algorithm BTC uses POW and Ethereum uses POS for mining. For example, if you are looking for a cryptocurrency that uses POW - Proof of Work, you will select BTC mining.
2: Doing Miner Conjunction Analysis
In most of the popular crypto like BTC, there are already so many miners to earn a profit, therefore due to tough competition, there are very less chances to earn a profit. So, that’s why you have to go for other profitable cryptocurrencies to achieve the purpose of mining. Obviously, it’s all about earning more profit. Here are some recommendations in which you can start mining like Kadena, Ergo, and Dogecoin.
3: Acquiring Equipment & Continuous Power Supply
To perform mining, we need a complete setup of high-performance equipment with a continuous power supply. Mining required 24/7 services including high performance and quick response even without a delay of a second. As for miners, a single-second delay can let them down.
As I described, mining is performed by consensus algorithms. If I talk about proof of work consensus, it has to perform mathematical puzzles called the nonce. The nonce is very hard to find so here the capability of your computer matters a lot.
4: Getting Crypto Wallet
The wallet is the secure shell to store the coins, here you can protect your assets from data theft and tampering. Miners have to set up a wallet to store the reward as it is very easy to perform.
5: Configuring Setup Architecture
Once your setup is ready, now it is time to install the mining software on your system, such as Pionex, ECOS, BeMine, MultiMiner and BFGMiner. This particular software is a set of rules, policies, and procedures which is an integral part of each miner in the blockchain. This software is also called a consensus algorithm as we already discussed in detail.
6: Consolidating Pool
Finally, you are ready to perform the mining, it is possible to perform stand-alone mining, however it is quite hard to earn block reward. So that’s why most of the miners go for the mining pool, it is the ground where all miners can perform collaboratively by sharing their resources. In this approach, there is a high chance to earn a block reward. But you are free, it's your choice whether you go stand-alone or want to join a pool.
Crypto mining is the process to validate the transaction in the cryptocurrency, in return they receive a reward fee as profit. Good opportunity for the profit hunters, you just need a setup having high-performance equipment with a continuous power supply, and afterward, you can make a lot of profit.