There are many ways to earn cryptocurrency, like trading, using fiat currency, using it for transactions to get again, etc. But one of the prevalent methods of earning new crypto tokens is mining. In this, complex questions are solved, and the miners get cryptocurrency in return. This is highly popular with Bitcoin. Bitcoin mining is one of the most famous processes of gaining new Bitcoin without trading.
What is mining?
Mining is how sophisticated hardware is used to solve complex puzzles. These puzzles are usually math problem that needs to be solved. After solving the puzzles, a new block of the transaction is added to the cryptocurrency blockchain. The miners get a reward with every added block of the verified transaction to the blockchain. This reward is in the form of cryptocurrency. In the beginning, miners were singular entities working from the personal setup and hardware like mntd helium miner. But now, one can find multiple Bitcoin mining companies operating across the globe.
Why are miners important?
One may think that the only profit from the mining process is for the miners as they are getting rewarded in terms of tokens. But, in reality, the Bitcoin blockchain is also getting equality profited. How? Well, in the process of mining, the miners tend to verify the transactions done on the Bitcoin network. There is always a chance of double-spending, which means a person can duplicate a token and use the same one to make double transactions. Every transaction is verified and stored in the blockchain to avoid such a situation. Without miners, the blockchain will not exist. They verify and validate the transactions and then add the block to the network.
Reward in mining
When the number of miners was low, the rewards were higher. But with time, as the miners are growing in number, the rewards have reduced drastically. Not only that, the complexity level of the mathematical puzzles increased too. In 2009, the miners would be rewarded with 50 BTC for verifying one block. But today, after these many years, in 2020, the reward got slashed to 6.25 BTC.
Mining is a process that helps in keeping the blockchain verified and working. It is an auditing process, and in return, the auditors get rewarded.