What is Mining and Staking?

Mining and Staking are the two most common ways to earn crypto, while being an active part of the crypto network.  Miners and stakers form the basis of a crypto network, and do most of the work verifying transactions and building the blockchain.

Photo by Sushobhan Badhai on Unsplash

When a crypto is created its founders asks themselves an important question.  How will our transactions get verified?  Verification is called Consensus and is the process where transactions are confirmed as true and then secured into the blockchain.  There are a variety of consensus types, but by far the two most common are Proof of Work (Mining) and Proof of Stake.  Once a crypto has made the decision to use a particular type of consensus, they invite others to join their network as Miners (if they have chosen Proof of Work) or Stakers (if they have chosen Proof of Stake).  Each type has its own reward structure.  If you are a miner, then you will be rewarded for the amount of computing power you add to the network.  If you are a Staker, then you will be rewarded for the amount of currency you stake.

Mining
In order to mine a coin, you will require a computer.  The faster and more powerful, the better.   There are three types of computers that you can use to mine, and the equipment you use depends on the particular crypto you wish to mine.   CPU Mining; GPU Mining; ASIC Mining;

CPU Mining
CPU Mining is the first type of mining created.  This kind of mining uses a computers CPU (Central Processing Unit) to process the transactions.  All computers have a CPU, so this type of mining is accessible to all those who own a computer.  However, mining is a very intensive task, so the CPU is unavailable for other tasks if it is being used to mine.  Many cryptos are no longer able to be mined using a CPU as either the level of difficulty has been raised to the point that it is not financially viable to mine using your computers CPU or the code has been altered so that it is no longer possible to mine with a CPU.
​However, there are coins that can be mined using your CPU.  Check out CPU Coin List for a list of what can be mined.   

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GPU Mining
Computers that are built to render or edit graphics, or computers built for gaming will include a graphics card that has its own CPU (called a GPU, Graphical Processing Unit) that is built to specifically process the type of calculations that graphic rendering requires.  This type of processing is much faster and more efficient than a standard CPU.  GPU mining is designed to use a GPU, and as it is more powerful and can provide adequate resources to the network, GPU mining is often profitable for miners.
In order to profit to most from this type of mining, miners often construct purpose built mining rigs, that include multiple graphics cards, joined together using a frame (pictured above).
You can check our what cryptos are profitable to mine with a GPU from What To Mine. 

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ASIC Mining
ASIC (Application-Specific Integrated Circuit) is a mining specific CPU that is designed to be as efficient as possible when processing mining calculations.  These CPUs are usually installed into a mining specific case (such as the Bitmain D3, pictured here), and sold as a mining specific computer.  These computers can only be used for mining.   ASIC mining a specific to some cryptos, as the code for the crypto must be compatible with an ASIC miner.  What to Mine has a calculator that will allow you to estimate your profits, depending on the power of your miner.  This style of miner range in price from $NZ3,000 to $NZ20,000, but are the most powerful miners available, so are able to produce the best return on investment.

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Staking
​In order to stake, you also need a computer.  But not a powerful one, just one connected to the internet.  You will also need the currency of your choice.  This is your stake.  This stake is locked up in a virtual safe, and if anomalies are detected from the node, the stake is forfeited.   This is your incentive to not defraud.  Your reward for this depends on the crypto you are staking, but is usually 5%.   
Most cryptos that are staked will have a calculator page that will help you calculate how much currency you need to stake in order to make a profit (over and above your expense of electricity and equipment you might purchase.  
Staking is generally a less technical venture, so is open to all those who have a computer connected to the internet, and spare cash.
For a list of cryptos that you can stake, check out Proof-of-Stake Coins List.  This includes the reward percentage, and appropriate links to get you started staking.