Mining: what is it and why is it needed?

You already know that we have our own mining pool, so we decided to tell you in more detail: what is mining and why is it needed.

Mining is one of the basic principles of blockchain technology, it is the process of mathematical calculation performed by a computer or other computing power. The result of this calculation is recorded in the next block of the chain, and the miner who executed it automatically receives a commission in the form of a cryptocurrency – this is how the expression “mine bitcoin” or other cryptocurrencies appeared.

Any computing equipment can be used as a miner: CPU processor, video card, specialized ASIC miner or a whole “farm” of ASIC miners. The mining process is necessary for the continuous construction of new blocks with information encrypted in them, which is a mandatory factor in the functioning of any blockchain system.

An important feature of mining is the ever-growing difficulty of calculating blocks, since the value of the hash (information calculated by miners) increases in sync with the lengthening of the block chain. At the same time, the reward for calculating the next block is received not by all miners at the same time, but by the one who does it faster than others. Accordingly, the productivity and profitability of miners directly depends on their power.

To increase the efficiency of computations and the received reward, miners create pools. A mining pool is a community of miners who pool their computing power, which increases their chances of solving a problem and calculating a new block. The computation fee is divided among all the miners in the pool in proportion to the power of their equipment. Periodically, the amount of remuneration to miners is halved. Therefore, mining of popular cryptocurrencies (first of all, bitcoin) is becoming less profitable and attractive for ordinary users every year.