Bitcoin Mining and hosting in cryptocurrency explained in simple words.
Every day, the market of cryptocurrency soars to new highs and lows. Although very volatile in nature, the market has sent numerous people from rags to riches. Every day, we see new currencies are launched and traded. However, you might wonder, how are they coming and how are they being regulated?
The generation of bitcoin is made possible through bitcoin mining. In simple words, you need a highly advanced system of supercomputers to create or enter a blockchain and receive bitcoin through the process. The systems are used to run an algorithm to solve a computational problem, and finding a solution to it gives bitcoin in return.
These systems are crucial for keeping records of the total bitcoins that are available and keeping track of the owner. Since the system is decentralized, it offers immense confidentiality, flexibility, and transparency, in addition to security, unlike the current banking system.
Bitcoin hosting is a part of this process. Bitcoin miners, those who mine the currency, need servers to maintain the data. They would need to have a tremendous internet service alongside access to great cloud computing storage. Since the computers used in mining are large and heavy, they need space as well.
As you can see, bitcoin mining at home is often not viable. As a result, they avail themselves of the services of a data center, which is called bitcoin hosting. This is also known as colocation. The main benefit is that you get hassle-free maintenance of your devices and high-level data security.
A potential risk of bitcoin hosting is that if for any reason, the facility goes out of power, your mining device will go down too. Many companies offer a service called redundancy to ensure that the systems continue to make profits, but they can cost you a fortune. Thus, it is your call in the end.
Many companies are now giving hosting services for cryptocurrencies as the popularity of the process is increasing. However, you should find the facility most suitable for your hardware. Generally, two hardware are used, GPU and ASIC, and both have different requirements.