How Does Crypto Mining Work And Is It Worth It

Cryptocurrency mining is a process through which new units of a cryptocurrency (like Bitcoin) can be created and can enter into circulation. The mining process is also used for developing and maintaining the blockchain ledgers and for securing the network. The mining of a cryptocurrency also involves validating transactions on the blockchain network, and to add these validated transactions to the distributed ledger. The mining process is quite important towards preventing the double spending of the same cryptocurrency on a network.

The mining process will be rewarding for the miners, as their work is critical to ensuring the security of the network. There is no centralized authority overseeing a cryptocurrency network and its publicly distributed ledger. Mining, therefore, has critical importance towards the validation of the transactions. The miners are rewarded for the mining process and the incentives can be in the form of new coins.


The cryptocurrencies and their networks have a “proof of work” (PoW) protocol and consensus in place to ensure that validated crypto miners can only indulge in mining the transactions. PoW also secures a cryptocurrency network against the external hacking and other attacks.

As stated earlier, the mining of a cryptocurrency will result in the generation of new cryptocurrencies and their coins and units, which will subsequently go into circulation. Miners can mine a cryptocurrency by using machines and computers. These machines have to solve cryptographic hashes, which are complex mathematical equations. A hash is a unit of data and its digital signature. The hashes are for securing the data related to transactions of the cryptocurrencies. Miners crack these hash values and codes through their machines and computers and receive the rewards for it in the form of new cryptocurrencies. All of the hash functions are interconnected and the subsequent ones can be traced back to the previous or original one. The network errors can easily be checked for the authenticity of data mining by checking the blocks and their origins.


A computer that has special software designed for solving complex cryptographic equations can mine cryptocurrencies successfully. Over a period, and the evolution of cryptocurrencies, the hash groups, and the mathematical equations have grown to be more complex. However, this complexity is also being matched by more powerful computers and machines. While earlier a computer with a simple CPU could also mine cryptocurrencies, now you need more powerful machines, as the difficulty levels have increased. The best machines for solving the cryptographic equations include the ASIC (Application Specific Integrated Circuit) or the specialized and powerful GPUs for mining cryptocurrencies. A reliable and fast interconnect internet connection is also needed so that the mining rig is not lost and the cryptocurrency mining goes on continually. The miners of a cryptocurrency need to join the crypto mining pools before they embark on cryptocurrency mining. These mining pools can be accessed online. Below are some of the methods to mine cryptocurrencies.

CPU MINING: this particular method is now considered to be outdated because of a slow rate. Even accumulating small profits can take months of time when CPU mining is done.

GPU MINING: the cryptocurrency mining method involves combining GPUs. Cooling systems, combined with the motherboards, are used for GPU mining. It can maximize the computational power of a machine.

ASIC MINING: an ASIC miner is also a powerful method and tool for mining cryptocurrencies. These electronic circuits are designed specifically for mining cryptocurrencies and therefore are a better option when compared to GPUs. However, it is a more expensive method and will require constant upgrades as the difficulty level increases.

CLOUD MINING: cryptocurrencies can now also be mined on the cloud. Users can access the dedicated mining facilities and align with the major corporations to mine cryptocurrencies over the cloud.

Individuals who are interested in crypto mining can rent the mining rigs for a given period of time. There are both free as well as paid options available for mining the cryptocurrencies online nowadays.


If the cost incurred towards mining cryptocurrencies is lesser than the profits obtained, cryptocurrency mining can be called a profitable activity and initiative. Different mining methods may have different capabilities is towards mining. Therefore, whether the crypto miner chooses ASIC, GPU, CPU, or cloud mining options can impact the returns of mining and the profitability of the proposition. The mining activities will consume electricity and power and there may be other costs as well. For instance, the ASIC miner can create one bitcoin after consuming 72 TW (terawatts) of electricity and power, in a duration of approximately 10 minutes. The related costs also increase continuously due to an enhancement in the difficulty of mining and other technological advances.

Therefore, the cryptocurrency miners not only have to consider the price of the computer or the machine but also need to consider other costs including electricity costs and cooling costs. Those interested in mining cryptocurrencies should calculate these costs and see whether it is a profitable option. However, there is an innumerable number of cryptocurrencies miners worldwide, who use small devices (including smartphones) and powerful computers and machines to mine cryptocurrencies nowadays.


Laws in the United States of America and Canada are friendly to cryptocurrencies and activities including crypto mining. Israel treats cryptocurrency transactions as business transactions, and therefore corporate income taxes are levied on them. In countries including India, there are certain regulatory uncertainties still pertaining to cryptocurrencies. Only a handful of countries currently prohibit cryptocurrency transactions and mining.


The fast development and proliferation of cryptocurrencies have not left any world area untouched. Currencies including Bitcoin are now popular and accepted in many countries, and maybe even more mainstream currency in future. Professional miners who want to indulge in cryptocurrency mining for the long term should hold the requisite resources and remain committed for longer periods for considerable returns and profits. With the right set of resources, expertise, and knowledge, one can make cryptocurrency mining worthwhile and can generate handsome returns through it.