Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.

The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.

Source: Wikipedia

Hosted mining (interchangeably referred to as "co-location") is the process of hosting your mining hardware in a safe, secure, and affordable hosting-datacenter for a nominal fee. This provides many advantages such as cheaper utility rates and reduced maintenance issues.

A colocation centre or colocation center (also spelled co-location, collocation, colo, or coloc) is a type of data centre where equipment, space, and bandwidth are available for rental to retail customers. Colocation facilities provide space, power, cooling, and physical security for the server, storage, and networking equipment of other firms—and connect them to a variety of telecommunications and network service providers—with a minimum of cost and complexity.

Source: Wikipedia

To learn more about digital currencies, we suggest visiting DigitalCurrencies.com.

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