How is cryptocurrency mined?
Cryptocurrency mining involves two main activities: verifying new transactions and adding them to the blockchain and also generating new currency. The first part of it is necessitated by the fact that there is no central authority to keep track of transactions. Miners check individual transactions made and after confirmation, add them to the blockchain ledger.
Generating anew block on the other hand requires miners to solve complex mathematical problems. They use computers with specific hardware and software installed for the purpose. The first miner to crack the puzzle is considered the winner and gets a reward for the effort.
In the beginning, mining was the reserve of a handful of crypto enthusiasts. But with time, more people began to realize the potential in this activity and joined the bandwagon. Investors created advanced mining hardware while others set up warehouses for the job.
As the mining difficulty increases, miners are these days opting to join pools where they share resources to speed up the process and split the proceeds.