What is cryptocurrency mining?

[Raju149]

    Without Miners, cryptocurrency market would not work.

    Miners provide a two-fold role in cryptocurrency. Firstly, they process complex mathematical problems to “unlock” new coins. Secondly, they validate transactions on the network.

    They must have consensus on any change to the network for the blockchain to remain consistent. Non-consensus can lead to forks in the network. Forks are incredibly difficult to make happen on the Bitcoin network, and for many this is one of its strongest attributes.

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Simplified, cryptocurrency is generated by having computers solve complicated mathmatical stuff and when they do they get a coin as reward. The more coins there are, the more complicated the maths get and the more processing power is needed to solve it.

since the maths involved is based on floating point numbers (e.g. 1.234) graphics cards are very good at solving them. however for bitcoin, people developed special chips, which are even better at solving the maths for bitcoin (so called ASICs).

now though there's a new crypto currency called Ether gaining popularity, which has been specifically design so that it's almost impossible to develop ASICs for it. additionally AMDs latest graphics cards perform computations like this very well, don't use much power (and can be tuned to use even less) and are in a good price/performance bracket.

This all adds to people buying AMD graphics cards in the dozens so the are sold a lot faster than AMD (or its partners) can make them. it's basic economics that if there is more demand for a product than supply, the price goes up. in this case quite a lot. e.g. i bought my RX 480 for ~260€ in March and i could sell it on ebay for 350€.

Because AMD cards are almost impossible to get, miners are now starting to buy up nVidia cards as well and of course gamers also rather buy nVidia than wait a month or so for their graphics card.