Tech InDepth: Understanding crypto mining and its ups & downs 


Crypto mining is a term that you might have encountered in recent times. It is supposedly responsible for soaring graphic chipsets (GPU) prices, but helps drives cryptocurrency profits as well. Oh, and it is also the reason for laptops getting seriously damaged all across the globe. But what exactly is crypto mining and how does it work? Most importantly, why is mining so important right now? We take an in-depth look at crypto mining.

What is crypto mining?

Cryptocurrency mining, or crypto mining for short, may sound like it’s a procedure where new cryptocurrency coins are made (or mined). But it is not that straightforward. First, let’s have a quick look at how cryptocurrency transactions work.

Cryptocurrency is completely digital with no records of possession and transactions in the physical world. It is also not centrally controlled or issued like say the currency of a nation such as the Indian Rupee or the US dollar. There is no physical book to keep track of who owns how much or details of transactions among crypto owners and/or crypto-accepting businesses. Instead, all cryptocurrency transactions are maintained via a blockchain network and added to digital ledgers.

These digital ledgers need to be maintained to keep track of the various cryptocurrency transactions taking place around the world. These global ledgers simultaneously update crypto transactions for respective cryptocurrencies on millions of computers powerful enough for the task. The idea is that because the network is decentralised, no one person or entity can control it and therefore modify it to their advantage. These millions of computers that keep track of these transactions are what you’d call crypto mining systems or rigs.

Crypto mining computers, rigs and farms

In theory, anyone can make a crypto mining rig. The only requirements are a powerful computer, mining software and a cryptocurrency wallet. Once set up, this computer will be connected to a global network, where it will become an addition to the many computers already crunching numbers. This computer will then use its processing power to maintain the ledgers we discussed above.

Mining for most cryptocurrencies works better with Graphics Processing Units (GPUs) than Central Processing Units (CPUs). This is the reason crypto mining is much more efficient and profitable on gaming computers. Modern GPUs like the Nvidia RTX 30-series or the newer AMD Radeon graphic cards are very popular choices for crypto mining. This is also the reason why the demand for these GPUs has been sky-high for the last few years, leading to increased prices.

virtual digital assets, cryptocurrency, Crypto mining requires more powerful setups for better profits. (Image Source: Reuters)

On the other hand, mining with laptops is a horrible idea. These are not designed to deal with the heat that can get generated when your system has been mining for a while. This excess heat may cause your laptop permanent damage or simply kill it. Hence, mining is best suited for dedicated systems that can handle the power and excessive heat.

Users who want more profits out of their mining may set up more powerful computers with multiple graphic cards added to them. These computers are then used solely for mining and can even have up to eight GPUs chained together. Some miners even have multiple such rigs set up working simultaneously, in what is often referred to as a crypto mining farm.

Crypto hashrate

Another term you should familiarise yourself with is hashrate. A measure of the computational power that goes into mining, the hashrate represents the speed at which a given mining rig operates. The higher the hashrate, the faster the process of mining that particular cryptocurrency. A higher hashrate also translates to increased chances of a miner finding the next block. This also means increased mining speed and higher profit margins.

cryptomining, cryptocurrency, crpto hashrate, What the hashrates for various cryptocurrencies look like. (Image Source:

The advantages and disadvantages of crypto mining

It may cost a fortune to set up a powerful crypto mining rig or farm. The electricity bills that will follow when your PC is mining for long hours also add to the overall cost. Crypto mining essentially uses your GPUs at their maximum potential as long as the mining software is up and running. This also decreases the overall lifespan of your graphic cards. But despite these pointers, a lot of people still want to mine crypto. Bizarre? Not really.

When you “donate” your system for crypto mining for a particular currency, the software rewards you with some of that currency too. If you’re mining Bitcoin, you get some as compensation for your troubles. This is how miners make money, and is also where the ‘mining’ name comes from.

While the price of a cryptocurrency is high, mining can be very profitable. People with powerful mining setups can make much more money than what they had initially invested in building their rig. However, mining also comes with its risks.

The biggest risk is the fluctuation of cryptocurrency prices, which can change by the hour. One may see sudden highs and lows as well. This makes it a somewhat risky venture for both miners and investors. For instance, if you’ve been mining Ethereum, and the price of Ethereum suddenly drops, you may find yourself losing money instead of making profits. The volatile nature of cryptocurrency is why many people also look away from mining.

Crypto mining and the environment

Another negative impact crypto mining is the environmental one. Mining cryptocurrency requires a lot of computing power and hence, a lot of electricity. That kind of energy consumption on the global scale is considered by many to be doing more harm than good.

As per some statistics by Digiconomist via Investopedia, Bitcoin mining generates about 96 million tons of carbon dioxide emissions every year. For context, this is equal to the carbon footprint of some smaller countries. Similarly, mining for Ethereum, (a newer and faster cryptocurrency) reportedly produces over 47 million tons of carbon dioxide emissions annually.

But this topic continues to be debatable. People also argue that electricity is used in traditional banking, and that one day, it will be sourced from more renewable sources. Regardless, cryptocurrency is evolving quickly and we may soon have more efficient cryptocurrencies as well as ways to mine and maintain them.

Read More: Tech InDepth: Understanding crypto mining and its ups & downs 

Notify of
Inline Feedbacks
View all comments