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A closer look at cryptocurrency mining

The popularity and demand for cryptocurrency are at an all-time high. Millions of investors not just from India but the entire world want to get their hands on this digital currency to take advantage of the opportunity. 

However, what most people overlook is the process of gaining these assets which is crypto mining. This process plays a huge role in circulating the different coins in the market. If you’re eager to learn more, here’s everything you need to know about mining:

What is crypto mining?

Crypto mining is the process where auditors called miners solve a complex computational math problem. Successfully solving these problems verifies transactions and creates a new block in the blockchain and every successful block that the miners create will reward them with a specific amount of crypto tokens.

Think of it as a reward system where miners are awarded because of their dedication to maintaining the blockchain network. This gives people who want to own crypto tokens a chance to gain them without having to invest in them.

How does crypto mining work?

Crypto mining is not as simple as it may seem because various factors come into play. For it to work the way it should, here’s everything you need to know:

Transaction validation

The first step in crypto mining is the validation of transactions. It’s the miners’ responsibility to verify each transaction made on the blockchain. 

Crypto mining isn’t only beneficial for miners as it also helps in circulating the coins and ensuring that everything goes smoothly. For example, because the verification of every transaction in mining is automatically recorded in a distributed ledger, this prevents mishaps such as double spending from happening.

Block formation

Before a transaction is validated, all the unverified data inside the blockchain are stored in a memory pool or commonly known as mempool. When the miner gathers all of the data, it will then create a block that goes into the network. This part of the process may take up to 10 minutes or less depending on the mining rig.

Hash verification

The concept of proof-of-work comes into play during this process. This pertains to when miners validate a new block’s hash to reach a consensus in the network. After a consensus has been met, it will then create a new block to add to the end of the blockchain.


After the new block from the hash verification gets added to the end of the blockchain, the miner who’s responsible for the PoW will be rewarded with a specific amount of crypto tokens.

How much does a miner make?

The income of the miner solely depends on the cryptocurrency that they’re mining. In the case of Bitcoin, their rewards are halved every four years in what’s called Bitcoin halving. During its initial year, mining one block would earn you 50 BTC. Come 2012, it was cut to 25 and fast forward to May 11, 2020, the reward stands at 6.25 BTC.

Tools you need to start mining

Not everyone can start mining whenever they want. Not all computers can handle the power demand of crypto mining. Potential investors who want to try their hand with this tedious yet rewarding task need to have a powerful mining rig. Nowadays, miners either use GPU powered computers or ASICs.


The GPU or Graphical Processing Unit is an integral part of any computer responsible for rendering high-quality graphics. However, what most people overlook is that it’s also capable of processing multiple data simultaneously which is important in solving the complex puzzles in mining.

The more powerful the GPU is the faster and more capable it will be in crypto mining. However, it will come at a cost. Some of the most common GPUs that miners use these days include:

  • NVIDIA GeForce RTX 3060 Ti
  • AMD Radeon RX 5700 XT
  • NVIDIA GeForce RTX 2070.

ASIC Computers

ASIC stands for, application-specific integrated circuit. It’s a type of computer that’s solely designed to mine crypto. Because it’s specifically designed for mining, it does it spectacularly by featuring a faster rate than your regular computers. 

Other terms that you need to know

For you to get a better understanding of the concept of crypto mining, you need to familiarize yourself with some of its terms. This includes:

Proof of work

Proof-of-work or PoW is the term used to describe the process of solving and verifying a new block’s hash to achieve a decentralized consensus. PoW is also responsible for protecting the network from any kind of external attacks.

Mining pools

Because of crypto mining’s high demand for power, some miners decide to form a group called mining pools. This way, they can combine their mining capacity, therefore, making their lives easier. They will then split all of the profits that they’ve gained with each member getting a cut depending on their contribution in the transaction process of the chain.

Is it legal to mine cryptos?

One of the biggest concerns about crypto mining is its legality. As of the time of writing, there’s yet to be a law that restricts crypto users from mining or even laws regarding cryptocurrencies in general.

What to consider before mining cryptos

Crypto mining is available for anyone. However, not everyone can start mining cryptos whenever they want. Before engaging in this activity, you first have to consider these important aspects:


Mining for cryptocurrencies is expensive and there’s no way around it. From the mining rig itself, it’ll already cost you a fortune. Powerful GPUs alone can easily go north of 30,000 Indian Rupees. Add to that the power consumption that they demand them to work 24/7, you’re looking at a heft investment.

Demand for power

Speaking of power consumption, you have to consider that mining rigs need an ample amount of power for them to run properly. Mining consists of multiple data and your rig should be able to run them simultaneously and to power that, it needs to consume electricity. Take note of this when you’re planning to mine for cryptos 24/7.

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