Bitcoin mining is a term everyone in the cryptocurrency and even many outsiders know about. This is a process performed by high-performance computers (also referred to as nodes) that solve complicated mathematical calculation problems. .
While there are certain similarities between bitcoin mining and the actual mining of precious metals such as gold, for example. Both processes are performed with the intention of receiving a reward.
In addition, while bitcoins exist in the Bitcoin protocol, they have not been released yet – as gold exists in the ground but has not yet been mined
However, the goal of Bitcoin mining is twofold. When the above mentioned high performance computer or any other type of mining hardware successfully solves the complex mathematical problem in the Bitcoin network, they create a new Bitcoin.
On the other hand, by solving computational math problems, Bitcoin miners actually secure the payment network through the proof-of-work consensus algorithm.
Why is Bitcoin Mining necessary?
There are some important considerations that need to be considered when mining bitcoin mining.
Consumers trust different types of printed currencies because they are backed by central banks. For example, in the US, this is the Federal Reserve. This is true even for digital payments made with cash currency.
Bitcoin is not regulated by any central authority. It can be said that it is "supported" by the computing power that secures the network. This huge network of computers and mining hardware records transactions and ensures their accuracy.
Unlike centralized authorities, however, bitcoin miners are distributed around the world and collect the transaction information in a public ledger for everyone. This ledger can be viewed using a block explorer, and there are many different websites that provide this service.
In other words, bitcoin mining is required for two different reasons: first to create new bitcoin files and secondly to create bitcoin to confirm the transaction information. If you do not want to buy Bitcoin, you can theoretically earn it through mining. Whether this is efficient for you as an individual miner or not is another story.
How does Bitcoin Mining work?
For a Bitcoin Miner To get block rewards, two conditions must be met. First, the miner must confirm a certain number of transactions and, secondly, which is the hardest part, solve a complex mathematical computational problem.
To put it simply, if ever, every Miner competes with all others. You get a 64-digit hexadecimal number called a "hash" that is less than or equal to the desired hash. In other words, the computer will spy out various hashes at a certain speed per second and guess all sorts of 64-digit numbers until they find the right solution.
Therefore, computing power is essential – the more powerful your mining equipment the greater the rate of hashrates per second you could achieve. That's why bitcoin mining hardware is especially important. Of course, the cost of mining would be based on operating costs such as electricity, internet connection, hardware maintenance, etc.
This is the main reason why Bitcoin miners began using machines that were specifically designed in 2013 to mine cryptocurrencies. These are referred to as application specific integrated circuits or ASIC mining for short. ASIC mining devices can cost a lot of money but are more efficient than traditional computers.
There are some important points to note in BTC mining. These are, so to speak, some of his pillar components.
One of the things to keep in mind in the world of bitcoin mining is blocks. Transaction data is recorded in files called blocks. Think of it as a page from your city's city book. Blocks are organized in chronological order in a chain – hence Blockchain 19459019. New transactions, as confirmed by miners, are merging into new blocks, with each new block being added at the end of the chain. Therefore, blockchain is also called a record of blocks.
- Block Rewards
Is Bitcoin Mining Profitable? This is probably the most frequently asked question. Unfortunately, there is no answer. Miners compete for block rewards. Other cryptocurrencies, such as Bitcoin Cash, also have their own block rewards that are different from those of Bitcoin.
At the beginning, each Bitcoin Block Reward was worth 50 BTC. However, the protocol works by halving the block reward after discovering 210,000 blocks. This takes about four years. As of July 9, 2016, the reward for discovering a block is 12.5 BTC.
Is Bitcoin mining profitable? It depends on whether. One would have to calculate the current block reward based on current prices and compare these with the mining costs that vary from miner to miner.
It is worth noting that the reward for successful Bitcoin miners will fall again in May 2020 and it will decrease from the current 12.5 to 6.25 BTC per block.
- Hash Rate
To put it simply: The hash rate represents the rate at which Bitcoin mining hardware can guess the correct hash. The faster your hash rate, the more likely you are to discover the new block you have. BTC mining is highly competitive and you must consider purchasing high-performance Bitcoin mining hardware. On the other hand, individual miners can use cloud mining or mine a coin of lower difficulty, more on that later.
The difficulty of bitcoin mining is often adjusted to get an average time of about 10 minutes to process a block. The rate is recalculated every 2,016 blocks.
If you wonder why ten minutes – because Bitcoin developers have decided that this is the time required for a steady and waning flow of new coin production.
What is a Mining Basin?
When mining cryptocurrency, a mining pool is the combined resources of miners who share all of their computing power over a network to share the reward according to the amount of work they do they have contributed to the discovery of a new block.
Each member of the Mining Basin who can provide a valid partial proof of his work will be allocated a share. Mining sinks became popular as the difficulty of bitcoin mining increased over time, and it turned out that individual miners could no longer compete with larger pools and large mining operations.
What is Cloud Mining
On the other hand, individual miners can participate in the process without having to buy particularly expensive bitcoin mining hardware.
If you want to participate in BTC mining, but do not want to spend the time and resources to become efficient, you can leverage the shared processing power provided by remote data centers. The only thing you need is a home computer. In general, there are three types of cloud mining that you can use. These include:
- Hosted Mining
You can lease a provider-hosted mining machine.
- Virtual Hosted Mining
This is a method that requires you to create a virtual private server and then install your own mining software.
- Lease Hash Power
With Cloud Mining you can also rent a certain amount of hash power without having the best bitcoin mining hardware. This is probably the most popular method of all. Most vendors offer comprehensive calculators that help you determine current profitability based on the resources provided.
In cloud mining, however, special attention should be paid to fraudulent services providers. It is extremely important to perform thorough and thorough due diligence, especially if you intend to rent hash power. One of the largest cloud Bitcoin mining companies is Genesis Mining.
Mining Bitcoin was deliberately designed to be energy intensive. The computational power required to solve the above-mentioned complex mathematical problems requires a lot of power to power up the specialized mining hardware.
On the other hand, more resources are needed to attack the network than to defend it, making Bitcoin the safest blockchain today.
In fact, there is a whole pseudo-environmentalist brigade that aims at regular users believing that Bitcoin mining would somehow be the planet's death. Many of her arguments relate to the fact that large data centers used to perform mathematical calculations consume enormous power. Bitcoinist has recently outlined three reasons why this rhetoric is utter nonsense.
According to clean energy researcher Katrina Kelly-Pitou, the entire debate over the total power consumption of Bitcoin mining facilities is leading in the wrong direction. The study shows that power consumption can increase while the environment is minimally affected. This is due to the fact that these plants are gradually using more efficient and renewable energy sources. This not only makes mining more profitable, it also reduces the impact on the environment. The researcher also found that banks consume three times more power than Bitcoin network.
In addition, a brand new report found that 80 percent of Bitcoin mining is powered by renewable energy. This is not surprising as miners are naturally encouraged to search for the cheapest and cleanest energy sources, many of which are renewable (eg from hydropower (eg Iceland)).
If you're worried about Bitcoin consuming too much energy, you may want to think twice before turning on this year's Christmas lights. That's right – the lights that American consumers use to decorate their homes alone make up a staggering 6.63 billion kilowatt hours of electricity every year. This is more than the total national energy consumption of many developing countries each year. For example, both Ethiopia and El Salvador consumed less electricity per year.
However, if you decide to install a mining device in your garage, you can expect a more expensive electricity bill next month.
Best Bitcoin Mining Hardware: Considerations to Consider
There are some important parameters to consider when choosing the best bitcoin mining hardware. These include:
Of course, you want to know how much electricity your miner uses. The lower this number, the better.
As mentioned earlier, hash rate is critical for bitcoin mining. The larger this number, the better the machine in general.
This measurement takes into account the efficiency of your machine. If this number is low, it means that the machine consumes less power at the same power of the machine.
There are a number of different devices that are manufactured by some of the industry's largest companies such as Bitmain Technologies, Canaan Creative, Halong Mining, Innosilicon Technology and others of its kind.
What else is possible.
Bitcoin is not the only cryptocurrency that can be mined. Note, however, that if you use a special cryptocurrency encryption cryptocurrency device, you will need to check the compatible digital currencies because some devices can only detect certain crypto currencies. Bitcoin Cash, Monero, Dogecoin, Litecoin, etc. are among the most popular options.
If you've done it so far, you should have a general understanding of the key principles of Bitcoin Mining and why it is essential to its network.
At the same time, bitcoin mining is an alternative way of acquiring the digital currency. Of course, if you do not want to spend time and effort, let alone name special Bitcoin mining hardware, you can always read our detailed guide on how to buy cryptocurrencies.
We've been working hard to buy Bitcoin with Paypal, credit card, debit card and even cash. We also discussed some of the most popular platforms where you can buy Bitcoin.
Once you've done that, you can switch to our comprehensive guide to Bitcoin wallets and see if you want a web-based or an offline version instead of a hardware solution.
How do you assess the process of Bitcoin mining? Did you do it alone? Do not hesitate to share your thoughts or experiences in the comments below!