Mining cryptocurrency is the process used to authenticate cryptocurrency transactions and add them to the blockchain, a digital ledger for cryptocurrency. Miners receive rewards for this process in the currency they mine, meaning you can earn cryptocurrency without buying it. As a miner, you’ll verify transactions to prevent illicit ‘double-spending’, where cryptocurrency users spend the same tokens twice. Mining also uncovers new coins to be circulated in the market.
To become a successful miner, you’ll need an in-depth understanding of Bitcoin and the blockchain. Mining cryptocurrency is hugely competitive. The reward goes to the miner who gets the solution first, completing the block of transactions. This process takes a lot of computing power to be successful. To set up a mining rig, you’ll need to invest in the right hardware: you’ll need a GPU (graphics processing unit) or an ASIC (application-specific integrated circuit) to get going.
You can choose from several different currencies. The best-known coins are Bitcoin, Ethereum, Litecoin and Ripple. These are also the most competitive currencies, making it even harder to mine.
Mining cryptocurrency can be an extremely lucrative way to earn money if you’ve got the know-how. It requires a very specialist skill set and has high investment costs, so it’s quite a risk for Bitcoin newbies: the computer equipment alone can cost up to tens of thousands of pounds. For crypto pros, however, it’s worth the investment.