Nowadays almost the entire globe is aware of the term “Cryptocurrency Mining”. In general, the age of cryptocurrencies is more than 10 years. However, Bitcoin is the oldest cryptocurrency that is still in action. Just as gold and gems must be extracted from the earth after a mining process, Crypto users have to mine cryptocurrency from Cryptocurrency mining pools. This is not a new concept for crypto users. Is it profitable to mine cryptocurrency on your own? Let’s discuss.
How does Cryptocurrency Mining Work?
Cryptocurrency mining is a process that is performing on top of complex mathematical equations and concepts. These processes require huge computational power. The required amount of computation power is achieving with huge electricity consumption. Therefore, mining is said to be a bit expensive process.
Cryptocurrency is built on blockchain technology which is a specific ledger system. The basic process of a blockchain ledger is to record the transactions, verify each record, and keep adding the new records continuously. Only the cryptocurrency participants are having access to the distributed ledger. While considering verifications in a blockchain, it refers to many mathematical concepts. Since mining is a combined process with blockchains, complexity remains the same.
But at the very young age of cryptocurrency, miners proceeded individually. They used their own equipment (Rigs) to mine cryptocurrency and yes! They got reasonable profits as well. But what is the current situation?
Is it profitable to Mine Cryptocurrency on an individual basis?
Miners should have special software, hardware, and graphic cards to perform such complex operations. However, these equipment are working under a significant amount of electricity.
On the other hand, when the participants are increasing, automatically the demand gets high. Due to this popularity and limitations of cryptocurrency lots of miners tries to mine cryptocurrency. As a result, much more electricity is required. What do you think the cost would be? It’s not hundreds of dollars but thousands of dollars. Therefore, mining cryptocurrency individually has been directed to an area that does not provide a reasonable profit. In simple words, it’s unprofitable.
What is POS?
POS refers to Proof of Stake. This was developed as an alternative for the increasing electricity cost of the mining process.
What happens in POS is, it is a mining limitation method. The cryptocurrency users are able to mine cryptocurrency according to their portion of coins. The maximum amount of mining limits according to the percentage of coins that they are holding on. Therefore, the rapid incensement of mining comes to a lower speed. This is a better option for reducing energy consumption. But hopefully, more advantageous systems will come into the discussion. It’s up to the future!