Collective mining offers an affordable alternative for individual cryptocurrency miners. Join Coin Pursuit as we explain the concept and how it works.
Here's how it works: a company that has extensive dedicated resources and hardware for mining basically rents out their use to interested miners. In turn, those miners are allowed to tap into those resources and take away the coins and the percentage of transaction fees within data blocks that are offered as rewards for successful mining. The miners don't have to pay for additional energy or hardware costs; all they have to do is pay their fee and oversee their share of the mining process. Resource rental is generally by the GH/s, or gigahashes (one billion hash computations) per second, though some collective mining companies are starting to offer considerably more powerful mining capability. Once a miner pays their fee, they're free to use the mining power however they wish, for the duration of their contract with the collective mining company. Since collective mining is a cloud computing process—in other words, it takes place exclusively online, as opposed to local machines—downtime can be a factor; as a result, most collective mining companies allow reimbursement for any outages that may occur on their servers or equipment.
As the mining process becomes more complex—and with many digital currencies, that appears to be the trend over time—collective mining is becoming more popular. Indeed, some businesses that now rent out mining capability to other miners started out as simple mining pools—until they saw not only a financial opportunity, but a way to help out fellow miners who might not otherwise have been able to take part in the process. Properly carried out, the concept of collective mining is a win-win situation for everyone involved.
Now that we've explored how digital currency is mined—and how it serves to create new coins and assure the security of transactions—it's time to move forward to our Cryptocurrency section. There, we'll take a closer look at cryptocurrency itself – what the different types are, and what characteristics these currencies share.
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