Bitcoin mining is a term that everyone in the cryptocurrency and even many outsiders are very familiar with. Bitcoin Mining is the process performed by high-powered computers (also known as nodes), which solve complicated computational math problems.
Even though there are certain similarities between bitcoin mining and actual mining for precious metals such as gold, for example, both processes are carried out with the intention to earn a reward. Furthermore, bitcoins actually exist as per the bitcoin protocol but they haven’t been brought out yet – just as gold exists in the ground but it hasn’t been mined yet.
Bitcoin mining is necessary for two different reasons – first, it is needed to create new bitcoin and second, it’s needed to confirm the transactional information. So, in theory, if you don’t want to buy Bitcoin, you can earn it through mining. Whether or not that’s efficient for you as an individual miner, however, is a different story.
In order to get rewards,Bitcoin miners should meet two conditions. First, the miner needs to confirm a certain amount of transactions and second, which is the trickiest part, solve a complex computational math problem.
While mining each miner is competing with all of the others to come up with a 64-digit hexadecimal number which is referred to as a “hash' which is less than or equal to the hash which is targeted. In other words, the computer will be spitting out different hashes at a certain rate per second guessing all of the possible 64-digit numbers until they reach the correct solution.
Bitcoin miners use machines which were specifically designed for mining cryptocurrencies. These are called Application-Specific Integrated Circuits or ASIC mining, for short. ASIC mining devices can cost a serious amount of money but are more efficient than traditional computers.
There are a few important things to be considered when it comes to BTC mining. These are some of its pillar components, so to speak.
Transaction data is recorded in files which are called blocks. Blocks are organized into a chain in chronological order called blockchain. Blockchain is also referred to as records of blocks.
Is Bitcoin mining profitable? This is probably the most commonly asked question. Unfortunately, there is no answer for it. Block rewards are what miners compete for. Other cryptocurrencies such as Bitcoin Cash, for instance, also have their own block rewards which differ from those of Bitcoin.
To put it in the most basic terms, hash rate represents the speed at which bitcoin mining hardware can guess the correct hash. Therefore, the faster your hash rate is the higher the chances of discovering the new block you have.
When it comes to cryptocurrency mining, a mining pool is the combined resources by miners who are sharing their overall computational power over a network in order to split the reward equally based on the amount of work that they have contributed to discovering a new block.
Cloud mining is what allows individual miners to participate in the process without having to purchase, particularly expensive bitcoin mining hardware.
If you want to take part in BTC mining but you don’t want to spend the time and resources to get powerful machines, you can use shared processing power provided by remote data centers. The only thing you’d need is a home computer. Generally, there are three types of cloud mining that you can take advantage of. These include:
You can lease a mining machine which is hosted by the provider.
This is a method which requires you to create a virtual private server and after that you can install your own mining software.
Cloud mining also allows you to lease a certain amount of hash power without having the best bitcoin mining hardware. This is likely to be the most popular method of all. Most of the providers offer comprehensive calculators that you can take advantage of to determine the current profitability based on the resources you are ready to spend.
If you manage to make it this far, you should have a general understanding of the main principles behind bitcoin mining and why it is essential to its network.
Decentralized cryptocurrencies have gained a lot of attention over the last decade. Bitco…
The Taproot Update was first proposed in 2018 by Gregory Maxwell, a Bitcoin Core (BTC) co…
Cryptocurrency is the hot topic discussed everywhere in the world. To understand the hist…
Bitcoin is a digital currency; its creation and transfer totally depends on an open sourc…
Cryptocurrency is truly Global and the concept of a global corporate tax rate is nothing …
There have been countless crypto-based get-rich-quick scams, from Bitconnect-style Ponzi …