What is Bitcoin Mining?
Bitcoin is a new and powerful way to make transactions that are both secure as well as anonymous. Mining helps keep this system alive by providing the computational power needed for security purposes, but also provides new bitcoins in return.
Bitcoins are a type of digital currency and they’re created by performing highly complicated computer math problems. Every time this is done, new bitcoins get added to the global supply!
Mining for cryptocurrency is difficult but can be rewarding. It has a magnetic appeal to investors, who are excited about the possibility of earning crypto tokens- even though it’s just pennies from heaven like California gold prospectors in 1849. Plus, being technologically inclined makes mining seem fun!
Before you decide to invest your time and equipment, read this explainer about mining. We will focus primarily on Bitcoin throughout the article so whenever we say “bitcoin” it refers to individual tokens but when talking specifically about the network or concept of bitcoin then we’ll use just one word Bitcoin.
The cryptocurrency industry is growing, and this means that your options are ever-increasing. Earn Cryptocurrencies by writing articles on platforms that pay in cryptocurrency, or even create a crypto account with interest. However one of the primary draws for many people to mine Bitcoin was their desire to be rewarded with it.
A crypto blog platform where users can reward bloggers and get paid in a proprietary cryptocurrency called STEEM is Steemit. Users who hold on to their tokens will eventually see profits as more people join the community, increasing demand for the currency.
The reward that miners receive for legitimizing and monitoring transactions is an incentive to spread out responsibilities among users around the world, making Bitcoin a decentralized cryptocurrency.
How to Mine Bitcoins?
The auditors of bitcoin are getting paid to make sure that users aren’t double-spending their money. They do this by verifying the transactions and ensuring there’s no “problem” with it all conceived by Satoshi Nakamoto, founder of cryptocurrency itself!
There are some issues with Bitcoin that have to do more with the protocol of transactions rather than how it is used by people. Double spending can occur in a number of ways, but one way concerns legitimate users who may attempt to spend their money twice on different exchanges or merchants before they know about each other.
Digital currency is a medium of exchange that doesn’t exist in physical form. Because it’s virtual, digital currencies like bitcoin are susceptible to theft and copying by users who might want them for themselves.
So, what would happen if you had a fake $20 bill and one of those same genuine ones? The genuine bills are worth their weight in gold. If you were to try spending both the real bill and fake, someone looking at both bills would see they have the same number which means it is false. This process Bitcoin miners do by checking transactions to make sure users haven’t illegally spent bitcoin twice, more detail below.
Satoshi Nakamoto, the creator of Bitcoin, set a 1 MB limit on what miners can verify to earn their reward. This is controversial because some believe that larger blocks would allow for faster transaction processing and verification times.
Verifying 1MB worth of transactions will make you eligible to earn bitcoin. Because not everyone who verifies transactions will be paid out, the process is called mining.
Transactions that are under 1MB can be as small or large. The transactions’ size will depend on the amount of data they take up.
So you’re saying there is no reward for all that hard work?
That’s right! To earn bitcoins, just meet two conditions: First off- produce the verifying transactions ( verify ) then secondly -and most importantly- publish them on an open ledger called Bitcoin’s Blockchain.
- You will need to verify 1MB worth of transactions Which is the easy part.
- In order for the miner, you have to be the first person who gets a solution for one of these problems. The way that it works is called proof-of-work mining.
“What do you mean, ‘what is the right answer to a numeric problem?'”
Good News: Some people think that mining is difficult, but it’s actually quite simple. Miners are just solving mathematical problems to confirm transactions on the Bitcoin network. they don’t even need any special knowledge or skills. They’re just trying to be the first miner with a hash number less than or equal to their target number. It’s all guesswork.
Bad News: Miners need a lot of computing power to solve these problems. To do so, they have the highest hash rates measured in terms of mega-hashes per second (MH/s), Giga hashes per second(GH/s) and terrahash rates(TH). Mining is an important part of Bitcoin circulation because it works as its own currency that was created by Satoshi Nakamoto way back when we were still using fiat currencies like dollars or pounds sterling instead.
Mining and Bitcoin Circulation
In 2020, 18 million Bitcoins were released by miners every day as new cryptocurrency while also serving another vital purpose such as minting coins. This process helps keep both bitcoin circulation and price stable since they’re only created through mining activities that require powerful computers with high-speed Internet connections (or else those blocks would not get processed).
The process by which bitcoin came into being is called mining. In the absence of miners, Bitcoin as a network would still exist and be usable but there wouldn’t ever be any additional bitcoin because there’s a cap on how many total bitcoins will ever come to fruition.
The last bitcoin won’t be mined for another century, but the miners will still get paid to maintain Bitcoin’s integrity.
Coin mining is a process of adding transactions to the public ledger or blockchain. The more coins you have, the greater your voting power will be when changes are proposed in Bitcoin’s network protocol. Miners hold a lot of power in the Bitcoin mining process, and they have some say on what goes down.
How Much a Miner Earns?
In 2020, one block of Bitcoin mining would earn you about $111,875. In 2009 when the currency was first mined it only earned 50 BTC per reward and by 2016 that number has been half to 6.25BTC which is equivalent to approximately 17k a piece in 2018 dollars.
The Bitcoin Clock shows time in real-time, and it’s an easy way to keep track of the halving. Interestingly enough, throughout history, there has been a strong correlation between price and inflation rate (how many new coins enter circulation). When scarcity increases then so does the price.
Want to know how many blocks have been mined so far? There are a few sites, including Blockchain.info that provide live updates of this data in real-time.
What Do I Need to Mine Bitcoins?
The reason individuals can no longer mine Bitcoin is that the difficulty of mining changes over time.
In order to ensure the blockchain’s smooth processing of transactions and ability to verify, one block is produced every 10 minutes.
However, with a million mining rigs in an attempt for the hash problem solution, they will likely solve it faster than if there were only ten working on that same issue at once. So Bitcoin adjusts its difficulty every 2 weeks or so when solving this issue.
As of November 2019, the difficulty level for mining Bitcoins is more than 13 trillion. Mining for bitcoins has become increasingly difficult as block production creates new Bitcoins at such an unpredictable rate and there are so many people trying to mine them that we have now reached thirteen thousand billion times harder than ever before!
Many miners are turning to new, more powerful technology like GPUs or ASICs in order to stand out among the crowd. These can cost up to $500 and go into tens of thousands of dollars for individual equipment purchases. Some people even buy graphics cards (GPU) as a less expensive way than ASIC’s but still get competitive results with their Ethereum mining endeavors!