Unlike traditional currencies that are printed, Bitcoins are mined. Mining is the method of creating new bitcoins by using high-powered computers and electricity. While most people choose to buy bitcoins from crypto exchanges, some also prefer to try their luck on the oldest way to obtain cryptocurrency, and that is through mining it. Mining bitcoins is different from mining gold on the blockchain; the new technology records and verifies bitcoin transactions.
Any person that has technical knowledge can mine bitcoins. A person with computer and technical knowledge can earn money by mining bitcoins, but it is not sure that you will succeed. The more computing power you use, there are better the chances that you can earn profits. But do you know what bitcoin mining is?
What is Bitcoin Mining?
In simple words, bitcoin mining means solving complicated mathematical equations to verify bitcoin transactions. Solving mathematical algorithms requires massive computational power and also allows miners to earn the rewards by solving algorithms. Earlier it was possible to mine bitcoins with simple computers, but it takes more time. In starting, all you need is a bitcoin mining rig. Rig may sound scary at first, but it can be a powerful computer or your simple everyday computer consisting of RAM, CPU, storage, and motherboard. The significant difference is of the video card or Graphics Processing Unit (GPU).
When a regular computer doesn’t mine, GPU powers applications, games, and videos. The computational power is ideal for all the requirements of bitcoin mining. Even miners can use laptops with high-performance GPUs that will excellently perform mining than an average GPU. It is better to use specialized hardware known as ASICs instead of personal computers with excellent GPUs. In order to mine bitcoin, an ASIC miner can excellently solve the mathematical algorithms.
What are the costs involved in mining bitcoin?
Electricity is one of the significant expenses that are involved in mining bitcoins. When a miner runs one or multiple machines endlessly, there is the possibility that hundreds of Watts add up and the electricity bill reaches the sky. Therefore, it is better to start mining where the electricity charges are less and require less power backup. Unfortunately, people who try to mine bitcoin with high-priced electricity often face losses and cannot profit from mining bitcoins.
Some miners also choose to join mining pools where multiple machines run together, increasing the computing power and chances of success. Of course, it is always better to run pools that consist of multiple machines instead of running a single machine. In addition, miners can choose to move to bitcoin form, where mining is done on several machines. Finally, some miners prefer cloud mining, where users who want to earn money rent their processing power to miners instead of investing in hardware and paying electricity expenses.
How to obtain bitcoins?
Mining bitcoin works on a proof of work consensus method that rewards crypto coins as a reward. Miners tend to solve complicated mathematical problems to add one block to another of data or transactions into a long chain of blocks. As a result, many pools and individual miners compete, and the first individual who mines bitcoins first and adds a block to blockchain is the one who wins block reward that is in the form of bitcoins.
There is a protocol where the block reward is set that the miners get for mining bitcoins. Bitcoin’s supply is fixed to 21 million bitcoins, and in 2009 when mining activity started, the miners were rewarded a block reward of 50 BTC. After that, the block reward gets halved every four years. Currently, the block reward has been reduced to 6.25 BTC. Mining is a great way to earn money along with investing and trading bitcoin. However, not all cryptocurrencies are required to be mined, and the mining procedure of all cryptocurrencies is also different.
Mining is an excellent method to get rewarded in bitcoin and contribute to the bitcoin community. First, however, miners must learn how to mine bitcoins profitably. If you’re still confused click here so we can help you out.