Altcoin mining is the process of verifying transactions on a blockchain through computing power using a suitable altcoin trading platform to receive new coins or tokens in exchange. Bitcoin is the most popular among altcoin miners due to its high difficulty level. Specialized hardware, such as graphic processing units, is essential for efficient mining compared to CPUs and GPUs used for general-purpose computing tasks.
This method of earning cryptocurrencies was popularized through cloud mining services that use rented computer infrastructure to mine cryptocurrencies on behalf of customers without requiring any technical knowledge or understanding.
All miners need to know the blockchain basics to be successful. The blockchain is nothing but a digital ledger that is used for recording transactions in chronological order. Miners are required to solve mathematical puzzles in order to add new blocks to the blockchain. At the end of each transaction at the altcoin trading platform, a small reward is given to the miner through bitcoins or altcoins. The bitcoin network employs an incentive-based mechanism to encourage users to contribute their computing power towards mining activities.
A digital currency miner can participate by providing their personal computer's processing power towards mining activities instead of buying expensive mining equipment, learning complex procedures and maintaining low electricity costs.
Brief about the process of validating transactions
The process of validating transactions at the altcoin trading platform is carried out in rounds known as blocks. Each block is verified when it is appended in the blockchain, and a miner gets a reward for completing the block. The algorithm must be solved to add a new block in cryptographically secured, chronological order with the previous blocks. When the puzzle is solved, a new block is appended in the blockchain and can be used by other users to verify transactions.
Visual Walk-through of Altcoin Mining
For beginners to altcoin mining, it is essential to understand how blocks are formed and verified through its verification process.
The authors of this article will go through each step of developing an ASIC (Application Specific Integrated Circuit) like bitcoin mining to help you understand all aspects of creating your own ASIC device for cryptocurrency mining.
Specialized hardware is required for mining Altcoins
Compared to the mining of bitcoin, the altcoin is more difficult due to the higher difficulty level. Therefore specialised hardware called ASIC is required for mining altcoins. While building an ASIC device for cryptocurrency mining, you will have to consider the following aspects :
Compute Units - A group of Application Specific Integrated Circuits designed for processing a single algorithm on a Blockchain. Each ASIC has an internal microcontroller that manages data transfer between the different compute units on the chip.
Frequency - The frequency of the chip can usually be specified as T, GHz or Gigahertz. The voltage is applied to the chip relative to the ground (0V). Lower voltage increases performance and reduces operating temperature. Lower voltages can also decrease the life span of your ASIC device if any problem occurs during operation.