Do you ever wonder how Bitcoin and other cryptocurrencies are mined and how you can obtain crypto tokens without needing to buy them from an exchange? Since prices of crypto coins like Bitcoin, Ether, and Dogecoin have increased so rapidly, many want to get involved in the crypto ecosystem. The majority of people purchase these tokens through exchanges, however (although this can be extremely time-consuming today, as with Bitcoin) you can also ‘mine’ them by solving complex mathematical equations through your computer.
Anyone with access to electricity and a rack of computers can, in principle, print money with free software anywhere in the world.
Cryptocurrency mining in Africa is the next frontier considering the aspiring, talented, and the growing number of unemployed youths. Some economists have termed cryptocurrency mining in Africa to be disruptive to the economy of the member states.
The term crypto mining refers to the process of earning cryptocurrencies by using a computer to solve cryptographic equations. During this process, a public record (ledger) called a blockchain is updated with transaction records to become a public record.
Cryptocurrency Mining In Africa is time-consuming and costly, with sporadic rewards. Despite this, many people including investors have been attracted by the cryptocurrency rewards and the promises it has for the future economy. It may be because entrepreneurs perceive mining as pennies from heaven, much like gold prospectors in California in 1849. What’s the harm in doing this if you’re technologically inclined?
Computing algorithms and cryptographic methods are used during cryptocurrency mining to perform complex algebraic calculations and record data into a blockchain. Crypto-mining networks can maintain shared records using blockchain technology.
- Rather than paying up front for cryptocurrency, you can earn it by mining it.
- Whenever bitcoin miners verify transactions and add them to the chain, they earn Bitcoins as a reward.
- The reward for finding a solution to a complex hashing puzzle is paid to the miner who discovers it first. The probability that a miner will be the one to discover it is determined by their share of total mining power in the network.
- To set up mining rigs GPUs and ASICs are required.
The banking system that we commonly use, has a central authority that controls, updates files and systems and most of all maintains the centralized records (ledger) that go through the bank on daily basis. Thus, every single transaction must go through the central bank, where it is registered and verified. It also has a restricted system – only a few organizations (banks) can connect directly to the centralized banking system.
There are no central authorities or centralized ledgers in cryptocurrencies. Due to their decentralization, cryptocurrencies use a distributed ledger (more on it shortly) called a blockchain for their operations. The cryptocurrency “system” can be used by anyone directly, unlike traditional banking, since payments can be sent and received without the involvement of a bank. Because of this, digital currency is known as decentralized.
Cryptocurrency Mining In Africa: The basics
Cryptocurrency Mining In Africa generally consists of three basic components: a wallet, mining software, and mining hardware.
In order to store any coins or tokens your mining efforts yield, you need a wallet. Online wallets allow you to securely send and receive tokens with a unique address, essentially like online bank accounts. Wallets can be online or offline, and there are even so-called “cold storage” wallets that do not work online at all. Choose the one that best fits your needs before starting to mine.
Mining software is available for a variety of operating systems and is generally free to download and use. You will discover that there are multiple types of software which can be used to handle cryptocurrencies like bitcoin. There are many of these options that can be used to improve mining operations, however, there may be slight differences that can have an impact on your mining.
Mining hardware is probably the largest component of a mining rig. It is highly recommended that you use a powerful computer, perhaps one that has been designed specifically for mining. It’s not uncommon for these computers and their associated equipment, such as graphics cards, to cost over $15,000.
New ways to participate in mining have emerged as the process has become more popular and more expensive. The new method of participating in mining is called a mining pool. In essence, a mining pool is a group of miners that pool their computing power and extract digital currencies jointly. As a result of the power each device contributed, the profits are split proportionally. Mining pools often come with both benefits and drawbacks, as might be expected. Although the initial setup may be costly and time-consuming, it is significantly less than setting up your own personal system. The downside, though, is that you will likely earn much less money from mining, since any rewards will be shared.
There are several ways to mine cryptocurrencies. We’ll start with cloud mining, which is one of the most important:
Cloud mining is the process of mining cryptocurrencies from remote datacenters using shared processing power. Users can mine bitcoin or alternative cryptocurrencies with cloud mining without managing the hardware. A mining company owns and maintains the mining rigs, so the customer just needs to register and buy mining contracts or shares. A cloud miner is generally charged a fee, which means his returns will be lower because cloud mining is a service.
In summary, cloud mining entails mining companies that provide you with all the tools and software to mine crypto. They will charge you a small fee for those services. With cloud mining, there are free and paid plans. I highly recommend you go with a paid plan.
CPU mining consists of performing calculations with a central processing unit (CPU) to add transaction records to a cryptocurrency’s public ledger. Basically, a CPU does the heavy lifting for the software that runs on a computer.
CPU mining is becoming less and less profitable. Having to spend time on your PC to compete with companies that have high interconnect processing power is not promising. CPU mining also will cost you more to mine and the output will be mere.
N/M Do not mine on your laptop. Because of high computing power and heat generated. It will fry your laptop.
GPU mining is probably the most common and highly regarded method of mining cryptocurrency. If you search for “cryptocurrency mining,” one of the first things you’ll see is a GPU mining rig.
A GPU is often used to process information by cloud miners, as an example. Their equipment is rigged by professionals who often have hundreds or even thousands of pieces, so they must have a lot of experience.
GPUs are highly efficient and relatively inexpensive, which accounts for their popularity. It may be more expensive to build a GPU miner, but it is more efficient and has a larger workforce.
ASICs (Application-Specific Integrated Circuits) are special, specialized pieces of hardware with a particular function. In order to mine crypto, you need a computer.
Because they produce huge amounts of cryptocurrency compared to their competitors, ASICs are well-known and highly cherished.
Cryptocurrency Mining In Africa
In Africa, demand for crypto-currencies, a form of digital currency, has been growing steadily. Some economists predict that innovation will be disruptive on the continent.
Due to its internet-based origins, cryptocurrency is not limited by geographical region; its transactions are recorded in a blockchain, a network of linked computers that records transactions in real time.
A number of cryptocurrencies are popular across the globe, but Bitcoin is the most popular in Africa. Among these top cryptocurrencies, brands are Bitcoin, Litecoin, XRP, Dash, and Lisk. A number of investors consider Bitcoin, which was created in 2009 by a person or persons using the name Satoshi Nakamoto, to be the new type of financial transaction in the digital age.
The Bitcoin explosion presents a great opportunity for Africa. Africa is home to growing flexible young individuals who are aspiring to conquer the challenges of unemployment. With that being said, most youths in Africa are venturing out to new sectors in search of greener pasture.
Many young people turned to virtual money due to the lack of employment opportunities for graduates of colleges and universities.
Cryptocurrency Mining In Africa can help people earn a living, start businesses, and work outside their home countries for big brands.
In addition, Africa’s diaspora has embraced bitcoin to enable more affordable remittances between continents. It makes sense to do that. Africans in the diaspora cannot transfer money home through bank transfers because the fees are too high. In some cases, the fee can be as high as 20%, but you can send money virtually free to Africa through cryptocurrencies.
Challenges of Cryptocurrency Mining In Africa
Blockchain assessment company Chainalysis, which offers data, software, services, and research to government agencies, exchanges, financial institutions, insurers, and cybersecurity companies in over 50 countries, says Africa is booming in terms of cryptocurrency adoption. But Cryptocurrency mining in Africa still has much resistance and challenges to overcome.
Lack of reliable and affordable internet
Without a reliable internet connection, mining crypto will never happen. Few people have managed to venture into the cryptocurrency world. This can be attributed to the lack of reliable, fast, and affordable internet connections in most African countries.
Without stable internet connection and other mining gear, Cryptocurrency Mining In Africa is growing at a slower pace than in any developed country.
It would take hundreds of ASICs to solve one mining problem in order to maximize success chances. Thus, you may end up paying high electric fees due to the extremely high power output requirements. Setting up mining pools in most African countries is tedious and expensive. Moreover, the cost of power varies from country to country but is still costly.
N/B Energy is consumed at incredibly high levels during the crypto mining process. There has been concern from environmentalists and financiers regarding energy consumption, which they believe does not justify it.
Understanding the world of cryptocurrency
A significant challenge in cryptocurrencies adoption in Africa, aside from the lack of affordable and reliable internet, is the lack of financial literacy, especially in rural areas.
Many people do not know there are other types of investments besides real estate and stocks. Most people don’t even know much about how billionaires build their wealth, except that they think money plays a role in it.
The need for regulation and trust
The cryptocurrency world is constantly changing, so lack of regulation is one of the largest risks. Regulating companies could put them out of business overnight for no fault of their own, but it’s exactly what the industry needs.
Most African countries have no regulatory framework for cryptocurrencies. Some countries such as Nigeria with a huge economy in Africa, ban cryptocurrency.