What is Bitcoin Mining? — A beginners guide.
Bitcoin mining is the process whereby new Bitcoins are discovered. Think of it like actual mining, where miners use shovels and hoes. For Bitcoin mining, however, the miners use powerful computer systems to solve complex mathematical equations.
When the equation is solved, the miner who solved it is rewarded with more Bitcoin. The mining process also confirms transactions. When a transaction occurs in the blockchain, it must be validated before being added to a block. So, miners are essential in the blockchain ecosystem.
Overview of Bitcoin mining to date
In the early days of Bitcoin mining, desktop computers were used. It was a tedious process, and the algorithm only got tougher with each mathematical puzzle solved.
In the hope of finding a better option, miners discovered the GPU, which stands for graphic processing units. These enabled faster and more effective mining. The biggest drawback of the system was its electricity consumption. A lot of power was required for processing. Field programmable gate array (FPGA), another type of GPU, was released as an improvement but later suffered the same fate.
Nowadays, miners use custom mining machines that are more powerful and efficient than the previous machines.
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How does Bitcoin mining work?
The Bitcoin mining process is lucrative but highly competitive. Miners usually require expensive computers and access to electricity to profit from Bitcoin mining. If a miner cannot solve any equations, they would have wasted funds and time on the operation, which is quite expensive.
Currently, a miner could earn 6.25 Bitcoin for completing a transaction and adding a valid block. However, this amount decreases by half at four-year intervals. Miners also receive all the transaction fees paid during the validation process.
Once a transaction is validated, a new block is added to the blockchain, and the process is repeated. The algorithm is pre-designed to modify the next mathematical puzzle’s difficulty to regulate the number of added blocks introduced to the blockchain.
If you want to start, you can join a mining pool. Mining pools are groups of miners that combine their resources to get the most efficient equipment and share the rewards. There are countless Bitcoin mining pools or rigs in operation worldwide.
In conclusion
Many crypto traders believe cryptocurrencies like Bitcoin will become the global currency for the buying and selling of goods worldwide. We created our crypto community on Telegram to help people get more value off their crypto. We share tools and resources to help you learn crypto, earn crypto and enjoy the best from your decentralized currencies.
