top of page
  • Writer's pictureChiara - Alena Lintner

What is crypto mining?

Updated: Aug 4, 2022

Cryptocurrencies, crypto miner, crypto mining, cloud-mining, blockchain… Everyone has these basic terms already heard and can imagine what they mean or try it at least.

Every person can think of at least three examples of the term cryptocurrency such as Bitcoin, Ethereum, Ripple and many more. With the other terms, the whole thing looks a little different, doesn’t it?

Admittedly, at first glance everything seems a bit complex and the connection to the individual points is not visible but let’s start with the first step and clarify exactly what mining is. Gradually then everything makes sense and from the individual chain links will eventually become a chain ;)

So, let’s start with the real question of what crypto mining actually is. Well, the following lines try to clarify exactly this question.

Here is a brief explanation of important terms:

Crypto mining

is the action of creating new coins or blocks

Crypto miner

the person who create new coins


is a distributed database that maintains a continuously growing list of ordered record, called blocks

Crypto mining can be defined as the production of a coin of a cryptocurrency and as the process of validation (= check) of a transaction. Each coin has a certain value. This value is variable because it is bound to the current valid course of the crypto currency. It is important to know that every cryptocurrency exists only digitally. The coin in and of itself is only a Metaphor for a better idea of the currency. By using the technology of the blockchain a coin can be mined. For this purpose, blocks which containing data sets are stored chronologically in sequence. Thus, a coin or blockchain is nothing more than a large Database, to which more and more blocks are attached. However, a single block can only be attached if it has been checked and confirmed by the members of the network. After a certain repetition of this process, a coin is generated.

What exactly is this record or block?

Basically, a transaction. To be precise, it is a request for several bundled transactions that form a block of the blockchain. In order to complete this transaction, it must be validated by the network. These blocks are linked using cryptography with each other. In simple words, the validation is just the action of solving the cryptography by the computer. As soon as one miner among many in the network solved the cryptography first and if the solution is rated as correctly by the network = proof-of-work, then the new block is attached to the blockchain, and the crypto miner is rewarded by new generated coins for the validation. This process increases the number of coins in circulation with each transaction.

That is mining in general, but now we come to a more precise term, which is cloud mining.

Cloud-Mining: The possibility that any person can mine crypto currencies or just the Car-Sharing option in the Miningverse

Joking aside, here is the explanation for cloud-mining. Although the principal of car sharing will help us to understand cloud mining. The most common problem with crypto mining is that it requires very powerful hardware and a lot of energy to perform the mining process. Mining is often unprofitable for an individual person, as the investment amounts for equipment and the fixed costs for energy are simply too high.

However, cloud mining can solve this problem

Cloud mining is best explained by the concept of car sharing. The basic principle is the same, so cloud mining is now explained with an example of the use of car sharing. With car sharing, your own car is no longer necessary, because you just rent a car (= it is the hardware) only when you need it. So, you rent it for the duration and task such as shopping (= creating a coin). This eliminates the fixed costs for a car and also the initial investment for the actual purchase of the car. You only pay for the period and the action for which you need a car.

It's just the same with cloud mining. You just rent the hardware for the duration and the action to mine a certain number of coins in a specific time. In that way, you can eliminate the investment costs for the hardware and the following fixed costs for energy. With cloud mining you can just move the mined coins into your own wallet. And this is all possible without spending a huge sum of money for hardware and energy. Just let somebody else mine your coins for a little fee. Mining is thus transformed from one’s own doing into a service which can be used to obtain coins of every existing crypto currency.

That probably sounds too good to be true, which makes you feel inevitably asks the question:

Is cloud mining legal?

This is where you can just take a deep breath and lean back. Cloud mining is completely legal, because of only the hardware is rented and furthermore, a service of a third party is offered. The important thing to know is that the profit achieved by mining will have to be taxed. That is needed for achieved profit by cloud mining and also in case of use of own hardware.

In Austria, profits from crypto currencies are taxed at 27.5%. If you would like to find out more about taxes the best decision is to contact a tax consultant.

However, if you are not deterred by taxes and still interested in cloud mining, take a look at our flexible solutions and we are sure you will find the product which suits at best for you. If not, don’ t be worry! Just get in touch with our team and we will create a customized product only for you. And the most important thing to know: please don’t be hesitate to contact us for any question you have.

Which again raises the next question:

Why should you chose Alpine Blockchain?

127 views0 comments

Recent Posts

See All


Beitrag: Blog2_Post
bottom of page