Mining is the backbone of the crypto industry. It is the heart of the entire process and the engine that drives the blockchain so it can run continuously while rewarding miners with new coins. But as the world of crypto evolves, it may be too hard and too expensive to mine by oneself. That’s an issue that Eyal Avramovich, MineBest CEO, intends to solve.
Cryptocurrencies are becoming increasingly popular. Big companies like Tesla, PayPal, Visa and Starbucks are already accepting or will soon be accepting digital assets as a means of payment for their products and services. Consumers can use crypto in day-to-day transactions, bypassing centralized organizations like banks. However, most still rely on conventional payment methods. This is reflected in the daily number of transactions conducted using Bitcoin. It amounts to about 330,000 worldwide. At the same time, credit card holders in the US alone generate 100 million transactions daily.
“Prosperity and financial security are an important part of our lives. These aspects, however, are predominantly associated with banks. In my opinion, not only personal finances but the business of tomorrow will not be affiliated with banks, but with crypto institutions,” said Eyal Avramovich, inventor, serial entrepreneur and CEO of MineBest.
Unsurprisingly, cryptocurrencies remain a mystery to many people. One of the best ways to make the concept more approachable is to take a look behind the scenes. Let’s learn more about mining, a fundamental concept of the cryptocurrency world.
Mining: Not Easy, but Worth the Rewards
In simple terms, cryptocurrency mining is a huge mathematical competition to see who can solve complex algorithms first. But don’t worry if you are not that good with numbers, the heavy work is done by special devices propelled by enormous computing power. The faster a machine operates, the faster they find solutions.
The race is not only for glory or bragging rights. Mining has a vital function in the cryptocurrency ecosystem. The computational power employed in the process maintains and secures the blockchain digital ledger, which is the heart of the entire network.
Blockchain is a database storage structure set up in a chain of blocks, as the name suggests. All incoming information is compiled into a new block and added to the chain. Once the block is written, it cannot be changed. Such data is then permanently recorded in a way that allows public access.
When it comes to cryptocurrencies, mining is involved in processing and recording all the transactions, engraving the data into a new block added at the chain’s end. To create each new block, special mining machines use computation power to resolve a cryptographic function that protects the block’s immutability. The first miner to solve the puzzle and create a block shares it among other network participants to verify its authenticity. If the block is valid, the miner is rewarded for the effort by receiving newly minted coins.
BTC: The Mother of all Coins
The critical question is, why do we need cryptocurrencies? Today, almost all money transfers are overseen by centralized organizations like banks or governments. The 2008 financial crisis highlighted the problems within the system. One of the reasons why cryptocurrencies were created was to provide people with alternative ways to manage their finances without central authorities ruling over them.
The first cryptocurrency is Bitcoin, showcased at the end of 2008 in Satoshi Nakamoto’s BTC whitepaper. It was launched on January 3, 2009 as a decentralized form of digital cash.
Bitcoin runs on the blockchain. Backed by cryptography, it stores every transaction ever made. Thanks to a peer-to-peer network, no central server is required and the whole system can work in a decentralized way, with participants all over the world.
Bitcoin operates in a decentralized space, which does not excuse it from following specific rules established on its internal protocols. The number of coins is already known and limited to 21 million. There will never be more. And the schedule of coins distribution is also known to network participants.
The mining rewards are reduced by half every four years. This process is called halving. When Bitcoin was first mined in 2009, a miner earned 50 BTC per block. In 2012, this was halved to 25 BTC, in 2016 to 12.5 and from May 11, 2020, the reward is 6.25 BTC for completing a block.
Forget About Mining with a Laptop
Long gone are the days when one could become a miner with a simple laptop or personal computer. That is how Satoshi Nakamoto mined the first BTC. Today, solo mining using the so-called CPU method is no longer possible due to the much higher computational power of the network.
Another popular mining method involves the use of graphics processing units (GPUs). Miners who use them often create custom mining setups. It offers a much higher level of computational power and therefore, a higher probability of creating a new block. GPUs are still used to mine ￼cryptocurrencies like Ethereum and Monero.
Time does not stand still and much has changed since Bitcoin’s initial launch. The cryptocurrency market has evolved while seeing a large influx of users attracted by new opportunities. Naturally, the approach to mining has also changed.
In response to an increased demand for powerful hardware, manufacturers have started developing new methods to mine cryptocurrencies more efficiently. For many crypto enthusiasts, ASIC hardware has proven to be a real game-changer.
The equipment was built specifically to mine crypto and offers a high level of computational power. ASICs are a popular choice for mining Bitcoin and other cryptocurrencies sharing the same hashing algorithm (SHA-256). However, the key drawbacks of ASICs are relatively high prices (up to USD 10,000 for top-shelf models) and power consumption.
The MineBest Choice
Cryptocurrency mining has undergone a rapid transformation. No one can win here using the old DIY approach. It is now a highly competitive market and significant investment is required to join it. MineBest, a technology company specializing in crypto mining, aims to give power back to crypto enthusiasts by providing them with access to high-class mining infrastructure.
Founded in 2017 by Eyal Avramovich, the company makes it possible to reap the rewards of mining cryptocurrencies while counting on a world-class hosting provider.
MineBest runs multiple cryptocurrency mining farms at a 160 MW operational capacity, with a current planned expansion of 220 MW. They provide state-of-the-art facilities and infrastructure that are maintained by experts around the clock.
The Future of Mining
Today, the perception of cryptocurrency has shifted. It is no longer just the “buy, hold or sell” approach. Users want to make transactions in the real world. If crypto capabilities are to grow, so will the mining industry. Such dynamic changes inspire optimism from Avramovich’s perspective.
“Crypto mining is expected to continue booming. There will be, of course, some challenges, for example, the ongoing global pandemic. Like many other industries, we attempt to fight it. But I believe that we are in a good place to overcome any problems on the horizon,” said MineBest’s CEO.