Steemit Crypto Academy | Homework 4 @besticofinder|Cryptocurrency Mining|

Hi all,

Our course topic and the topic of our homework is crypto money mining. There are 3 questions asked us. We will answer them and finish our homework. I will try to answer the questions immediately. I will cover all the details while answering the questions.

(1) How crypto currency mining works ?

Source

Certain institutions of the country issue any national currency. These institutions are generally central banks. Central banks issue their own national currency according to certain criteria. Sometimes they don't follow any criteria. :)

To put it simply; All of the mathematical verification processes for crypto money production and transfers on a blockchain are called crypto money mining. The hardware / system used in performing these operations is also called a miner.

To elaborate with a little example; Imagine that you are trading on the exchange for Ethereum investment. To perform these transactions, you need to deposit fiat, ie fiat money (such as US Dollars) into the account and convert your money to Ether (ETH). You will then transfer Ether from the exchange to another friend's account. While you instruct it to happen, the miners verify that the Ether investment and transfer you made will take place. Miners who do the verification and verification work earn a fixed / indefinite amount of Ether. Regardless of the cryptocurrency, if there is a mining process there, no transfer can be made without the verification and approval of the miners.

Crypto money miners set up various mechanisms for mining. These are called mining rigs. Various devices are available on the Rig.

(2) What is Mining Difficulty ?

Source

I want to answer this question as follows. I will give the answer again on Ethereum. In November last year, Ethereum's mining difficulty and hashrate reached an all-time high. These indicators show that more people want to mine Ethereum.
The most important reason more people turned to Ethereum mining was the increase in Ethereum mining revenue. The mining challenge is as more people / machines / devices turn to mining of any blockchain. Ethereum's mining difficulty is an indicator of competition among Ethereum miners.

(3) What are the challenges for crypto currency miners ?

Source

a) States: Since cryptocurrencies are not legally recognized by many countries or because they do not adopt crypto currencies, they cause difficulties for crypto money mining people / companies. States that do not cause difficulties, I want to collect high taxes from crypto money miners.

b) Cost of devices and high energy use: Another major problem of crypto money miners is that the costs of the devices used in mining are increasing. Especially in the Covid19 period, many people / companies had difficulty in finding devices. He criticized the increasing costs of the devices. While doing crypto money mining, the increase in electricity costs also makes crypto money miners quite difficult.

c) Crypto money prices falling: Crypto money prices are very high in bull periods, crypto money miners are happy in this period. For example, ETH price is currently $ 1500. It had dropped to as low as $ 95 during the month of last year. During the bear periods, most of the crypto money miners are making a loss. Some miners take a break from mining to avoid damage. When crypto money prices increase, they start mining again.

@besticofinder
@steemcurator01
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