Cryptocurrencies have created a real revolution in the finance area. With the advent of Bitcoin, the emission of monetary currency has acquired a decentralized format. We all know that the relevant government agencies are accountable for fiat currencies issuing: central banks, or in the United States, the Fed. However, absolutely anyone can produce new digital coins.
In order to mine BTC, one needs to install the appropriate equipment, connect to one of the pools, and start earning. It is important to note that mining BTC comes with a considerable amount of expenses, such as electricity consumption. According to preliminary estimates, the first cryptocurrency mining accounts for 0.5% of the world’s electricity. That is, miners consume as much electricity as a small European country. And with the increasing complexity of the network, this problem will grow as well.
What about other cryptocurrencies? Do they all require a similar approach? In short, no, they don’t. In this article, we will try to figure out how it is still possible to mine cryptocurrencies. We will take two projects as examples: Cardano and Hedera Hashgraph.
What is Cardano mining like?
Can Cardano be mined the usual way? The short answer to this question is no. Cardano mining is not possible because it does not work on the Proof-of-Work system. You can stake on the Cardano network.
What does it mean? Basically, you just keep your Cardano wallet (the most popular one is called Daedalus) online and receive some percentage of your existing ADA coins as payment in turn. This consensus algorithm is called “Proof-of-Stake”, which confirms transactions through pre-existing ADA coins instead of applying special equipment.
You do not have to bother with mining methods. You will not have to deal with cloud mining, GPU or CPU mining. Stacking means saving a lot of money on hardware, cooling, and electricity. Instead, you can simply invest directly in the ADA coin and receive a higher percentage as rewards.
Moreover, the process is much easier from a technical point of view. All you have to do is keep your Cardano wallet online — the distribution of income will happen by itself. Thus, the more ADA you have, the more new coins you receive.
At the time of the first calculation of the reward, the total ADA staking pool was 13.8 billion coins (about $1.6 billion at the current rate at that time). It is precisely how much the project has reserved for motivational payments to participants. Each 5th day — or the so-called epochs in Cardano terminology — all active stakers are paid 0.3% of the reserves’ sum (about 41 million ADA).
Is there only blockchain?
As you probably know, cryptocurrencies base on blockchain technology. To confirm transactions, Proof-of-Work and Proof-of-Stake are used. Each of them has its advantages and disadvantages. For example, high power consumption, slow processing, high fees, etc. In contrast to this technology, there is the Hedera Hashgraph project, which solves most of these problems.
Cardano and Hedera Hashgraph are often compared nowadays. You can review the comparison HBAR versus ADA on Godex.io. This platform gives an excellent opportunity to exchange almost any cryptocurrency quickly, profitably, and anonymously. Here are some details on Hedera Hashgraph from our point of view.
Features of Hedera Hashgraph
- Hedera data is written to the DAG, not the blockchain.
- In DAG, network members act as nodes. These nodes cross-authenticate each other’s transactions. It makes the transaction speed higher as there is no need to use the block and consensus can be reached faster.
- It uses the asynchronous byzantine fault tolerance (aBFT) consensus algorithm. The use of the Gossip protocol contributes to nodes exchanging data quickly and efficiently. Besides, the Gossip protocol automatically creates a hashgraph data structure. Regarding aBFT, only two-thirds of the network nodes are enough to confirm a transaction.
As a result, it takes only 3-5 seconds to process transactions on the platform; and the initial throughput is limited to 10,000 TPS. However, as the network gets older, the TPS rises.
Can HBAR be mined?
Conventional mining like Bitcoin is not available here. Besides, at the time of this writing (April 2021), HBAR staking is not available either. Some reports claim the situation may change in the 3rd or 4th quarter of this year.
The third-generation blockchain (Cardano) works via the Proof-of-Stake consensus algorithm. The ADA staking yield is 4.6083% per annum. We can’t say the same about HBAR, as its mining is not yet available.