Which Crypto Mining Technique has the Best Returns?
The Best Returns Crypto Mining Technique
When it comes to mining cryptocurrency coins and tokens, one should understand the differences between the different types of consensus mechanisms found in each, which are the methods in which each network validates transactions, adds blocks of data to its respective blockchain, and mints new coins or tokens.
This article will be keeping it fairly simple and be covering the two most popular and well-known consensus mechanisms that are used in today’s most popular coins and tokens: Proof of Work (PoW) and Proof of Stake (PoS), though it should be noted that there are several others out there.
Proof of Work (PoW):
Used by: Bitcoin, Ethereum (currently), Litecoin, Dogecoin, etc.
How it works: These systems are very energy-intensive and utilize a network of high-powered computers that compete against one another to solve complex mathematical calculations and find the correct numerical answer to a difficult problem, which in turn validates the next transaction on the blockchain and rewards the winning computer’s owner with a block reward of cryptocurrency.
Proof of Stake (PoS):
Used by: Ethereum (version 2.0 coming later in 2022), Cardano, Tezos, Algorand, etc.
How it works: Proof of Stake systems are much less energy-intensive and more environmentally friendly than their Proof of Work counterparts. Instead of participating in the network via high-powered computers, it works via users who are stakeholders (holders of the network’s coins or tokens). These cryptocurrencies are then staked (locked up) and used in a special smart contract to facilitate network transactions and data block validations. In some networks, the more coins/tokens a user has staked, the higher their chances of being selected as the next validator, though that isn’t always the case. In some networks for example, network validators are randomly selected by an algorithm in order to keep things fair for all stakeholders.
So which has the best returns?
In the end, as it turns out, the consensus mechanism of a blockchain/network doesn’t really determine if you’ll be getting more profits from one crypto versus another. In fact, there are numerous different factors involved in determining how much of a return you’ll receive when mining, which include but are not limited to: Your hardware, the cryptocurrency you’ve decided to mine, its current price, how much of it you hold (if applicable), whether you’re part of a mining pool, your electricity costs, and more.
To learn more about the factors involved in crypto mining and best practices for getting the best yield, check out our article on the topic.
Crypto Mining Technique info that has the Best Returns
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