Oliver Martin here. You’ve probably heard plenty about “crypto mining” without necessarily being sure what it entails. At least for me, it often sounds like an enigma of nerdy gibberish— this was indeed my primary reaction toward it. I’m a trady, and not a computer person; therefore, the language surrounding this topic only served to confuse me further.
But let me share with you—crypto mining does not need to be complicated. If you are over 40, as I am, and you want to make sense of what crypto mining is, how it works, and whether it is something you should consider, then I am here to explain it to you in plain English.
Does Crypto Mining Entail?
In simpler terms, crypto mining is the process wherein powerful computers solve complex math problems to validate transactions on a blockchain. If you understand the blockchain to be a large digital ledger—a public record of transactions—then miners also help secure it by verifying each transaction.
So why would anyone want to do this?
Well, miners confirm transactions and earn bitcoins for their efforts. In other words, just like regular currency on paper that you can touch and feel, bitcoins are digital currency and work similarly. It’s like earning cash because you did the job, but in this case, the cash is in the form of digital money— typically Bitcoin or another type of cryptocurrency.
Let’s put it this way: Suppose you maintain a record book or ledger to keep track of every transaction occurring within your neighborhood, and each time a purchase or sale takes place, you confirm whether it is legitimate or not. If it is, you enter it into the ledger.
But here’s the catch: You don’t just add the transaction to the ledger. You’ve got to solve a tricky puzzle to make sure everything checks out. That’s the mining part. Miners are the ones who agree to do this solving on behalf of everyone else, to help prove that Joe Smith can indeed spend $100 he claims he owns. Here’s where you use a computer to solve cryptographic puzzles, not a pickaxe to mine gold or anything of that sort.
The miner who solves the puzzle successfully adds a new “block” of transactions to the blockchain. For their effort, they are rewarded with some amount of that cryptocurrency. This process is continually happening throughout the world as many miners collaborate to keep the network secure.
Why Do People Mine?
People mine cryptocurrency for a few reasons:
Earning Rewards: Miners earn cryptocurrency as a result of successfully adding a new block to the blockchain. In the case of Bitcoin, the transaction is in new Bitcoin coins, which diminish over time, in what is generally referred to as “halving.”
Network Security: Crypto mining ensures that the network remains secure by validating transactions. In the absence of miners, there is no means through which someone can confirm whether the transaction is legitimate or not.
Building a Portfolio: Some people mine as an investment in stocks or real estate, whereby they store what they mine and hope its value will rise with time.
Do You Need Special Equipment?
You might be asking yourself, “Can I mine from my computer at home or do I need some crazy expensive gear?” Well, it all depends on the cryptocurrency you want to mine.
Bitcoin Mining: An area that is very competitive is Bitcoin mining. It requires specialized machines known as ASIC miners. They are powerful and expensive machines, and they consume a lot of electricity. So unless you can invest in high-end equipment, then you are likely to find that Bitcoin mining is not really a practical option for most people.
Altcoin Mining: However, there are other cryptocurrencies, which people generally refer to as altcoins, that you can mine with regular computers or graphics cards. For instance, Ethereum is one such cryptocurrency. The term is generally applied to the alternative forms of cryptocurrency created after Bitcoin’s success. These are generally less resource-intensive and might be more accessible for someone just starting out in the mining world.
Cloud Mining: In case, you don’t want to buy costly mining hardware and run it, then there’s something known as cloud mining too. Cloud mining is about renting mining power from a service provider, you don’t see the equipment directly but yes there’s a fee in this case too.
Is Crypto Mining Worth It?
Now, this is the million-dollar question. Is it actually worth it to mine cryptocurrencies?
Please remember that it is not easy money and all depends on a number of factors. Different aspects which determine the amount of cryptocurrency that can be mined are as follows:
The Cryptocurrency: Different digital currencies have different ease levels when it comes to mining. For example, Bitcoin is highly competitive and mining it on your own is currently unviable. However, the same cannot be said for some of the smaller altcoins.
The Equipment: As I mentioned earlier, the equipment you use is very important. The high-powered mining rigs can be costly and, in addition to this, they consume a lot of electricity. You need to calculate whether the cryptocurrency that you would get would be worth the electricity used and also the cost of the equipment.
Electricity Costs: Since mining uses a great amount of electricity, it only makes sense to mine if you are paying little for electricity. In other words, mining makes no sense if you are paying a fortune for electricity.
The Mining Difficulty: Mining difficulty increases with time. A rising number of miners on the network and limited coins make it more difficult to mine. At this point, it is possible to mine Bitcoin even on a normal PC, but with the passage of time, it will need hardware specifically made for that purpose.
Getting Started with Mining: Should You?
Here’s my advice for those over 40 who are curious about crypto mining: Start small and be sure to understand what you’re getting into.
Mining is not for everyone. It requires a lot of investment in setting up equipment and does not even assure returns immediately. But if getting involved in cryptocurrency were your choice, and you have the patience for it, mining could be an interesting way for you to make some digital cash.
If you’re new to mining I’d suggest starting with altcoins, and use a GPU miner. (these are the same graphics cards used in gaming computers). There’s so much information online, and many communities of miners who’d be happy to help you.
Also, don’t forget about cloud mining—if you’re not ready to invest in equipment, but still want to get started, this could be your path.
My Final Thoughts
At the end of the day, crypto mining is not a get-rich-quick scheme. But if you are curious and want to understand how things work, it is a great way to get yourself deep into the world of cryptocurrency. Just like anything else— whether you are investing in property or stocks, there is no rush. Take your time and educate yourself before making decisions that align with your financial goals.
If you’re over 40, don’t worry about all this crypto talk getting too technical for you. Make an effort and you could soon be mining or finding your place in the crypto space in a way that makes sense for you.
Thanks for reading my CryptoXGen article, happy mining!