Conducted with the support of the Proof of Work protocol, Bitcoin mining and BTC miners are represented as the spinning wheel of the Bitcoin ecosystem.
By mining Bitcoin, miners are actually validating all transactions going through the BTC blockchain, making sure that no double spending or empty transactions are able to go through the system.
By solving complex equations, miners are actually solving a puzzle that leads to each transaction being validated while new blocks are created, and miners are rewarded for their work in form of BTC units.
Since mining of BTC represents an operation that is crucial to the functionality of the network through validating transactions, here are the types of Bitcoin mining.
Types of Bitcoin Mining: Hosted Bitcoin Mining
Hosted mining is the type of Bitcoin mining where you can actually connect your machine to a company which is focused on providing services for Bitcoin mining.
The advantage of this type of mining is reflected in the fact that everything you need in order to be able to become a Bitcoin miner is provided by the mining company.
This includes electricity needed for mining, which can be very expensive since Bitcoin mining is conducted through Proof of Work, which is not as cost-efficient as Proof of Stake.
This is the case because Proof of Work demands a lot of energy in order to be able to acquire an efficient performance, consequently making your electric bills higher and more costly.
The company is also providing miners with cooling and other needed configurations, while they are taking a certain percentage of what you make as a miner per every solved equation and validated transactions.
For starting with hosted mining, a miner-to-be would need appropriate equipment in form of mining hardware.
You can also choose to host your hardware mining by yourself, but this is not quite effective and cheap as your electric bills and hardware that you will need to use will cost you a lot more than you can probably earn.
Types of Bitcoin Mining: Cloud Bitcoin Mining
Cloud mining is the type of Bitcoin mining that doesn’t require any sort of equipment like it is the case with hosted mining.
With Bitcoin cloud mining you can actually work as a Bitcoin miner without the equipment required with hosted or individual mining. Cloud mining is also available for other cryptocurrencies besides Bitcoin and it represents a rather popular option for miners across the globe.
With cloud mining, you are actually working with a group of miners all based on the same mining pool.
Mining pools are ecosystems where a number of miners are working as one (just like a hive) in order to solve the equation and get block rewards while validating transactions. Mining pools are being offered by numerous cloud mining service providers.
The rewards are being equally split across the mutual mining pool while the cloud service providers are taking their share of the profit as well.
There are many pools across numerous cloud mining service providers, and it is always recommended to choose your service providers carefully as there are always scammers waiting to take advantage of unsuspecting enthusiasts.