What is Bitcoin mining? How does one mine for Bitcoins? Here are some basics on Bitcoin mining a beginner needs to know.
Basically, Bitcoin mining consists of a number of computers trying to solve a complex mathematical problem at the same time. The computer to solve the problem first wins the Bitcoin.
It is the same concept as real mining, such as gold mining, but in virtual terms. The process of mining happens for every cryptocurrency transaction. A transaction is verified and added onto the block of chains called blockchain.
Anyone who’s able to access the internet and has powerful enough hardware, or through Bitcoin Cloud Mining, can participate in mining.
The profit in mining is based on a number of variables like the cost of electricity and the cost of equipment.
Block reward is the amount of Bitcoin you’ll receive for every mined block. The number of BTC released for each block reward — takes about 10 minutes on average to mine, does half every 4 years starting at 50 BTC in 2009.
However, in 2018, it’s 12.5 and decreasing until all of the Bitcoins have been mined, estimated to run out sometime in 2140.
Difficulty of mining
Are the mathematical problems really that difficult in Bitcoin mining? Yes and no, depending on some factors and computing power placed across the mining network, since the level of difficulty of mining can be modified.
It is done by a batch of blocks for an estimate of every 2 weeks. To keep the rate of block discovery continuous, the level of difficulty will modify itself. If lots of high-powered computers are directed to mine, the difficulty will modify, hence, makes mining harder.
If there are less high-powered computers on the network, the reverse will happen, where the level of difficulty will be modified and make mining easier.
Bitcoin mining & Blockchain
When a new bitcoin is generated, it is placed on the blockchain, serving as a public ledger of every valid transaction made.
Blockchain is an essential and necessary function for the Bitcoin ecosystem as it enables digital currencies to securely verify transactions, minus a third party.
Hardware for Bitcoin Mining
In the beginning, Bitcoin mining was mainly done on desktop computers with a basic Central Processing Unit (CPU). But the emergence of Graphics Processing Unit (GPUs), which are more efficient at mining than CPUs, are able to generate more BTC.
A newer hardware called Application-Specific Integrated Circuit (ASIC) was specifically created for Bitcoin mining. Released in 2013, it’s been improved hugely since then, with much more effective designs being released to the markets.
One thing’s for sure we will see more mining hardware emerge with the increasing computer power annually, with Moore’s law expected to end by around 2025.
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