Mining vs. Mining: The Difference Between Physical Mining and Crypto Mining and What It Holds for The Future

First Phase Media





With an average growth at a CAGR of 12.8%, the global crypto market is estimated to reach USD 4.94 billion in 2030 from USD 1.49 billion in 2020. This fact clearly shows how drastically the digital currency market has been growing and will be doing so in the future as well. While this is the average data. The value of the cryptocurrency has always been experiencing drastic ups and downs. The posts below show it pretty well.





While this post shows how the bitcoin prices have increased greatly, another post of the same week shows the sudden decline in the bitcoin price.



Difference between Physical Mining and Crypto Mining

If you are new to the crypto world, the first thought or to be specific the image that takes shape in your mind on hearing the term “bitcoin mining” is that of a traditional mining spot full of dust and huge machinery. But, this analogy is actually way too far. Unlike the traditional Physical mining process, crypto mining involves more computer work. 


The concept of Crypto mining & that Physical mining should not be confused with each other as both these are like the north and south poles of the earth. But, somewhere or the other they are related to each other in some way. The mining of minerals has helped in the production of reliable electricity thus indirectly helping the crypto miners work more efficiently as their work is done mainly on computers using the internet where reliable electricity plays an important role.


Bitcoin mining uses powerful computers to solve tough computational arithmetic problems that are too difficult to solve by hand and complicated enough to exhaust even the most powerful machines.


Mining cryptocurrency is time-consuming, costly, and only sometimes rewarding. Many cryptocurrency investors, on the other hand, are drawn to mining since miners get compensated in crypto tokens for their work. Miners are rewarded with Bitcoins in exchange for assisting with the primary purpose of mining, which is to authenticate and monitor Bitcoin transactions in order to assure their validity. Bitcoin is a "decentralized" cryptocurrency, meaning it is not regulated by a central authority such as a single bank or government, because these duties are distributed among many users across the world.


Crypto Mining 

Auditor miners are compensated for their efforts. They are responsible for confirming the legitimacy of Bitcoin transactions. This standard was created by Satoshi Nakamoto, the founder of Bitcoin, to keep Bitcoin users honest. By verifying transactions, miners help to avoid the "double-spending dilemma".


A situation wherein a Bitcoin user spends the same bitcoin twice is known as double-spending. This was not an issue with real currency: once you hand someone a $20 bill to purchase anything, you no longer have it, therefore there's no risk you'll use it to buy lottery tickets next door. While fraudulent currency is a probability, this is not the same as using the same dollar twice.


Evolution of Crypto Mining

The Bitcoin network attempts to create one block every 10 minutes or so to guarantee the blockchain's seamless operation and capacity to process and validate transactions. If one million mining rigs compete to solve the hash problem, they will almost certainly find a solution quicker than 10 mining rigs working on the same problem. As a result, Bitcoin assesses and changes the difficulty of mining every 2,016 blocks, or roughly every two weeks.


  • CPU Mining: Back in 2009, when crypto mining was new to the world, normal CPUs were enough to carry out the complex problems, but as its popularity increased, and more and more people started the mining process, the difficulty level of the problems began to rise. And so the normal CPUs weren’t enough. As the complexity increases, people start looking for more advanced solutions.

  • GPU Mining: GPU or a graphics processing unit is a special component added to computers to carry out more complex calculations. GPU was initially designed for gamers to allow them to run computer games with intense graphics requirements. In 2011, people started them for mining bitcoins. The mining power of one GPU is equal to 30 CPUs.

  • FPGA Mining: FPGA is a set of hardware that can be connected to the computer to run a certain set of calculations. This is just like a GPU but 3-100 times faster than that.

  • ASIC Mining: This was introduced around 2013 and stands for Application-Specific Integrated Circuit. And this hardware was solely designed for the crypto mining purpose, unlike the other hardware that was designed for some other purpose but was used in mining.
  • Since 2016, the rate at which new miners have started crypto mining has greatly increased.


Future of Crypto Mining

Cryptocurrencies have evolved from digital novelty to trillion-dollar technology with the potential to destabilize the global financial system in just a few years. Bitcoin and dozens of other cryptocurrencies are becoming more popular as investments, and they're being used to buy anything from software to real estate to illicit narcotics.


Cryptocurrencies, according to proponents, are a democratizing force that takes control over money generation and control away from central banks and Wall Street. Critics, on the other hand, claim that the new technology is completely uncontrolled, giving criminal gangs, terrorist organizations, and rogue nations more power. They believe that crypto mining, which consumes a lot of electricity, is also bad for the environment.


Financial regulators are trying to come up with a solution. Cryptocurrencies are regulated differently throughout the world, with some governments welcoming them while others prohibiting or restricting their use. To fight the crypto explosion, central banks throughout the world, including the US Federal Reserve, are considering launching their digital currency.


Conclusion

With the advent of Bitcoin and the technology that underpins it, a slew of new opportunities have opened up for consumers, developers, marketers, and others in a variety of fields. Many organizations have begun mining Bitcoin, which is virtual money that may be used to replace fiat currencies. Several nations, including the United States, Japan, China, and Australia, have begun to accept Bitcoin as a form of payment in restaurants and businesses. Because there are a finite amount of Bitcoins (21 million), the number of Bitcoins available for mining is decreasing by the day.


Approximately 17.7 million Bitcoins have been mined to date, with 3.5 million Bitcoins still to be mined. The desire to learn more about Bitcoin and the technical aspects of creating Bitcoin stems from people's growing interest in Bitcoin and its use in various fields.


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