Digital Currency Mining

Bitcoin mining is an activity where an investment is made in time or computing power to “solve” a new block for the blockchain.

The mining activity is described as solving a mathematical problem, it is actually guessing at the answer until it fits, submitting the answer and hoping a consensus of bitcoin agents.

There are many examples in blogs and on video sites of people building computer systems with Nvidia and AMD video cards to specifically aid in the mining of cryptocurrencies. Specialized hardware also is available for the mining of bitcoins. One objective of the hardware is to try many solutions in parallel in the pursuit of a solution that solves the next block. Specialized hardware will employ hundreds of cores, while video cards are combined to create thousands of cuda cores.

Each core produces a hash, the data being some transactions that are not yet posted as well as a transaction that signifies the payment reward for solving a block with the miners bitcoin wallet address as part of the transaction. A block also contains a link to the previous highest block. Since new blocks are appearing every minute or two, while solving the algorithm must constantly check for new transactions and the address of the last block.

Another component that is hashed into the block is the nonce. Once a hash is calculated for a block, all agents of the cryptocurrency can instantly (low computation requirement) know if the block is a valid solution. There can be more than one valid solution, but once adopted by the consensus of agents there is only one valid solution containing the transaction for the reward for solving the block.