If you’ve taken an interest in cryptocurrency, you’ve probably heard about cryptocurrency mining, maybe even of crypto mining stock. Crypto mining is dissimilar to the mining people do for minerals and metals as cryptocurrency is distinct from currency. It is, however, the process through which cryptocurrency is produced. So what is it? How is it done? Can anyone do it? Let’s get into all these questions.
What is cryptocurrency mining?
While every cryptocurrency has distinct characteristics, nearly all of them require mining. As we can’t encompass all cryptocurrencies in one article, we’ll use Bitcoin – the ancestor of all cryptocurrency – to explain mining basics.
To put it simply: cryptocurrency mining is the process of overseeing the blockchain in return for bitcoin. One way mining bitcoin is similar to physical mining for metal is that it’s demanding and meticulous work. While there is relatively little payment for this work, it still holds great appeal for many people. That is because the payment is in bitcoin tokens. With the value of bitcoin breaking its own record repeatedly lately, mining becomes a significant investment.
How to mine cryptocurrency?
So what does mining involve? In the case of bitcoin, the process has two steps:
First, miners audit bitcoin transactions. This means that miners review transactions to make sure all transfers are honest. Miners are there to prevent attempts at stealing bitcoin or committing what’s called “double-spending.” We’ll get into double-spending in a bit.
A miner needs to oversee 1MB of transactions to get rewarded. This first step is the easier of the two but comes with more risk – as we’ll see shortly.
Secondly, miners have to provide “proof of work.” The tech industry uses the term Proof of Work for multitudes of functions. In the matter of bitcoin, it is a long series of digits that comprise a target hexadecimal number. It’s closer to guessing than to computing, but it can be difficult with so many possible guesses.
Only after being the first to solve the problem – or get closest to the solution – can a miner be rewarded for their review of the transactions. So it is possible to do all that work and earn nothing.
What is Double-Spending?
Anyone interested in the cryptocurrency industry needs to know what double spending is.
Aptly named, double spending happens when a bitcoin owner uses the same bitcoin twice. Being digital cryptocurrency can technically be copied. Thus, an owner can copy their cryptocurrency and use the copy while holding on to the original.
This is the double-spending miners aim to prevent.
Who can mine bitcoin?
The question of who can mine it is a little complex. Historically, one could use a simple home computer to mine bitcoin. However, one of the bitcoin concept elements is the changing difficulty of mining over time. The network aims to solve one block approximately every ten minutes. The more miners there are attempting to solve a block – the faster they reach a solution. Thus the more active miners there are, the higher the level of mining difficulty. The network adjusts the difficulty approximately every 14 days.
Back when bitcoin started in 2009, the difficulty level was low enough for any standard home computer to handle it. Now the mining level requires serious computing power. While a home computer can mine bitcoin, it won’t be strong and fast enough to earn anything for its work.
You could join a mining pool – a group of people who agree to join their computing power to mine bitcoin.
The alternative to mining – Crypto Mining Stock
Mining – as we’ve seen – is an expensive business. You need some mighty and costly computing power, and you may never actually earn anything for your trouble. However, all is not lost.
There is an alternative to mining. You can buy stocks at a mining company. A growing number of companies with the funds to invest in the computing power required for competitive cryptocurrency mining – have recently started going public. By buying stocks at these companies, you can earn off mining without doing any hard work.
Here is some info on the mining companies you can invest in:
Riot Blockchain (RIOT)
Founded in 2000 in Castle Rock, CO, the main focus of Riot Blockchain is bitcoin mining. The company started crypto mining in 2018 after acquiring a mining facility in Oklahoma and 7500 Antminer S9 devices. Historically, the company mined bitcoin cash and Litecoin but now puts all its hashing eggs in the bitcoin basket. According to the company’s site, they “aim to be one of the largest and lowest-cost producers of bitcoin in North America.”
The last report on the RIOT website regarding their mining power claims they have 6040 next-generation Bitmain Antminers and a hash rate capacity of 456 PH/s. However, the same report claims that more equipment should arrive early in November 2020 and the first four months of 2021. So this information might not be completely current.
When it comes to crypto mining stock – RIOT is in the top 3 most popular companies.
Marathon Patent Group Inc (MARA)
Founded in 2010 in Las Vegas, MARA is a tech company that mines cryptocurrencies. It is predominantly focusing on blockchain ecosystems and the generation of digital assets. MARA operates a mining facility in Quebec.
According to the MARA website, the company intends to reach 21500 Antminer Bitmain S-19 Pro bitcoin miners once fully deployed. However, there is no specification as to when that will be or what the current situation is. As it is one of the world’s leading miners, it’s sensible to assume they’re not far from full deployment now.
In the last press release from December 28, 2020, MARA announced a 70000 S-19 ASIC Bitmain Miners purchase. This company is also in the top 3 most popular of crypto mining stock tradable companies.
Hive Blockchain Technologies (HIVE)
This environmentally aware company operates 6 data centers in parts of the world that can access affordable green energy. These data centers operate on around 50MW. HIVE has a data center in Canada, 2 in Iceland, and three centers in Sweden.
In their latest update from January 2021, they announce the purchase of 4,180 MicroBT WhatsMiner M31S+ next-generation miners with an aggregate operating hash power of 334 Petahash per second (PH/s).
Hut 8 Mining Corp (HUT)
Based in Alberta, Canada, the company recently managed to lower operating costs. They are using 94 BlockBoxes and Whatsminer equipment at 104MW. Another way they use to keep costs low is to use smart response systems to shut down the less effective machines during low profitability.
In their latest updates from late 2020, the company announced new hires at the executive level and shareholder updates, focusing less on tech and equipment.
Bit-Digital is a cryptocurrency mining company focusing solely on Bitcoin. It also runs car rental operations, but that’s not what we’ve gathered here to discuss.
According to Bit-Digital’s website, it started mining in February of 2020 and now operates at 2,253.5 PH/s Bitcoin Hash Rate in the entire network. For a company that has been mining for less than a year, their 1331.2 BTC mined accomplishment is quite impressive.
The latest update on the website – from December 2020 – announces a massive load of equipment added to their operations, signaling significant growth in the near future.
Grayscale Bitcoin Trust (GBTC)
While not a mining company per se, we’ve chosen to add it to this article as a mining adjacent business. Originally named The Bitcoin Investment Trust in 2013, it started giving investors access to its shares with the symbol GBTC. This Trust is not an ETF. According to the company itself, it’s based on popular commodity investment products. As the Trust derives all its success from bitcoin, it rises and falls with bitcoin’s value fluctuations.
GBTC promises its investors a top-of-the-line security system, as storing bitcoin is highly risky. Consequently, the Trust manages this risk by taking extra security measures. As a result of this high-security promise, the Trust’s minimum investment is $50000, and annual charges are at 2%.
Crypto Mining Stock – The Takeaway
So what have we learned about Cryptocurrency mining? In short, we knew how it’s done and how arduous it can get. Fortunately, we learned that there’s a terrific alternative to mining crypto yourself: crypto mining stocks.
Finally, we saw a short overview of the leading crypto mining companies traded publicly at this time. This cryptocurrency mining subject is so much more vast, but we tried to cover all the essential parts with this article. We hope this information helps you in your crypto future.