Crypto Mining is not just creating new coins. It also includes validating crypto transactions on blockchain then adding it to a distributed ledger.
Like physical currencies, when one member spends cryptocurrency, the digital ledger must be updated by debiting one account and crediting the other. The challenge here is that digital platforms are easily manipulated. The distributed ledger, therefore, only allows verified miners to update transactions on the digital ledger. This gives miners the extra responsibility of securing the network from double-spending.
Then new coins will be generated to reward miners for their work in securing the network. Proof of Work (PoW) is needed to ensure that only verified miners are mining. With this, it secures the network from attackers outside.
To start mining one has to have computers with special software specifically designed to solve complicated, cryptographic mathematical equations. In the technology’s early days, cryptocurrencies like Bitcoin could be mined with a simple CPU chip on a home computer. However, CPU chips have become impractical for mining most cryptocurrencies due to the increasing difficulty levels.
Today’s requirement for mining requires specialized GPU (graphics processing unit) or application-specific integrated circuit (ASIC) in the mining rig and also to be connected to a good internet connection at all times. Each crypto miner is also required to be a member of an online crypto mining pool as well.
In Mining , there’s what they call “pool” which allows the miners to combine their resources in order to increase their chances of finding and mining blocks inside a specific blockchain. If a mining pool succeeds, the reward is distributed to the mining pool, in proportion to the amount of resources that each miner contributed to the pool. Not all pools are the same because there are pools that earn more than others. Miners have the freedom to choose or change their pool. To find a good one you may try to search on google the CryptoCompare.
If you are wondering if this is legal, to be exact it still remains unclear.
Freeman Law (2021) states that Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States appear friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
