As the terms like cryptocurrency, bitcoins etc. are gaining popularity, more and more people become enthusiastic towards the blockchain technology, every single day. People come over cryptos to strike gold by mining the cryptos. Bitcoins, Ethereum, Lit Coins are few of the popular cryptocurrencies.
Blockchain can be explained as a growing list of records linked by cryptography. Each block has some amount of data(transactions), a unique encryption of data called hash the hash of previous block and nonce- a number added to blockchain when it is mined.
Mining, in simple words is described as the process in which a machine performs certain tasks to obtain a little bit of crypto currency. The activities performed by PC, to obtain even the slightest cryptocurrency is known as 'Proof of Work'. The machine tries to 'guess' the hash of a block, through multiple iterations and once identified, the transactions are verified and new block is added. The miner in-turn gets cryptocurrency as reward.
As more number of miners come to mine one specific pool, the tougher it becomes to crack the hash. This brings a balance to the pool and motivates the use of bigger and faster machineries. Let us now go through different methods Cryptocurrency Mining.
1. Cloud Mining
Cloud mining is a process by which the miner rents a third party mining facility(known as rig) rather than owning large machines for mining. This rig is rented for an agreed upon period and all the earnings made by the miner shall be transferred to his respective wallet.
Cloud mining provides an opportunity to participate in the world of cryptocurrency, for people who might not have enough money to buy rigs or who doesn't wish to buy large machines for mining. A standard plan range from 500$ to 5000$ and the rental period can be from half a year to a lifetime. There are free cloud plans available, but it suffers drawbacks like slow mining speed, extra conditions etc.
2. CPU Mining
CPU mining utilizes the power of processors to mine cryptocurrencies. This was the most feasible way, during the inception of cryptocurrencies like blockchain, but now very few people use it for daily mining.
CPU Mining is extremely slow, and it could go on months to notice slightest change in revenues. Secondly it is inadvisable, because the higher computational requirement leads to overheating of machines and even higher electricity costs.
3. GPU Mining
GPU mining involves the use of Graphical Processing Units to verify blockchain transactions. A GPU mining rig is generally used for mining cryptocurrencies. One typical rig has a processor, a motherboard, cooling, rig frame and 2-8 graphics cards. GPU mines have higher computational efficiency and is cheaper, even though installation cost is pretty high.
As the blockchain mining is creating a buzz in the industry, the GPU makers like NVIDIA and AMD started coming up with more sophisticated models, to meet mining requirements.
3. ASIC Mining
Application-Specific Integrated Circuits are devices that solely serves the purpose of crypto mining. ASICs contains powerful microprocessors, memory blocks including ROM, RAM, EEPROM, flash memory and other large building blocks.
ASICs can generate 12-14 Terra Hashes per second(hash rate) while traditional CPUs generate only few Mega hashes. This helps them to generate massive amount of cryptocurrencies. The miners using ASICs or fields of ASICs, henceforth reap the benefits of computational efficiency over CPU and GPU miners.