Cryptocurrency Mining

In this Decrypto podcast, Shaun Wilson, a cryptocurrency miner since 2015 who now runs a sizeable mining operation, speaks to Gareth Cliff about the world of cryptocurrency mining to explain what it is and how it works. Shaun has seen many ups and downs in the crypto industry and continues to be involved in the space.


But what is cryptocurrency mining and how does it work?


First, a little background: cryptocurrencies experienced meteoric price gains in 2017 and with that began a massive interest in cryptocurrency mining. The hype during this period came with a hefty increase in the number of people and businesses wanting to get involved in the mining side of the cryptocurrency industry.


Cryptocurrency mining is the process whereby transactions are verified and added to the blockchain. Every time a transaction is made, a miner (computer) is responsible for ensuring the authenticity of the information and for updating the blockchain with the relevant transaction. The actual mining process involves miners competing with one another to solve complex mathematical problems using cryptographic hash functions that are associated with a block on the chain containing the transaction data. But after all this homework, what’s in it for them? The miners are incentivised by earning cryptocurrency rewards for solving these problems and authorising the transaction.


The mining analogy is pretty well suited to Bitcoin, because just like actual mining, Bitcoin has a fixed supply - 21 million to be exact. Around the year 2140, the last Bitcoin is expected to be mined. In addition to miners being rewarded for solving complex mathematical problems, the Bitcoin blockchain also provides transaction fees, and although they amount to a fraction of the current block reward of 12.5 Bitcoin, it is likely that these fees should increase over time, encouraging miners to keep on mining.


Key takeaways:

• One of the biggest misconceptions about mining is that it’s expensive to get into, which results in fewer miners adopting on a larger scale from their mobile phones or laptops.
• A big mistake many people have made is assuming they’re able to sustain a monthly income through mining.
• Miners play an essential role because they validate the blocks in the blockchain.
• If we consider the value of the blockchain, we can understand where the future of the web is headed.
• It’s important to view mining as you would any investment - markets move up and down on a daily basis, so if you’re looking at it daily, you’ll struggle to see the big picture.
  
  
  Link to full episode: https://iono.fm/e/614745
  
  
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