Bitcoin mining is creating new Bitcoin by cracking puzzles. Mining includes computing systems equipped with specialized chips competing to unravel mathematical puzzles. The first one to solve the puzzle receives Bitcoin. The mining process also confirms transactions on the network and makes them reliable.
Sometime after the introduction of Bitcoin, people could mine it on desktop computers with regular CPUs (central processing units). But the process was prolonged. Now it is created using huge mining pools spread across many geographies. Miners aggregate mining systems that consume a tremendous amount of electricity to mine the crypto.
Think of this process as mining gold. One can mine gold from the earth using extensive tools and machines; Bitcoin mining also uses big systems like data centers. These systems crack mathematical puzzles made by Bitcoin’s algorithm to produce new coins.
In places where they generate electricity by fossil fuels, Bitcoin mining damages the environment. Consequently, many Bitcoin miners operate in areas where they use renewable energy to reduce climate change. But how does this process work? How can we know if we can mine Bitcoin? Read the following article to get the necessary information.
What is Bitcoin?
Bitcoin is the most popular crypto also the first cryptocurrency. This coin is offered on the digital mediums of exchange that only operate online. Bitcoin is on a decentralized computer network or blockchains that tracks transactions in the cryptocurrency. When computers on the network confirm and process transactions, new Bitcoins are mined or created.
Networked computers, or miners, process the transactions and, in return, earn Bitcoin.
Blockchain powers Bitcoin. These distributed ledgers (blockchains) are the technology that powers many cryptocurrencies. They are a decentralized ledger of all the transactions in a network. Many approved transactions together make a block and are linked to create a chain. Bitcoin mining is adding a block to the chain.
You can learn more about mining, Bitcoin, and cryptocurrency in general on the Bitunivex website, an exchange platform in Australia. However, we have presented a brief introduction to all the concepts above right here.
What is mining?
In brief, crypto mining is how digital coins come into existence. As you may think, this kind of mining does not include callused hands gripping pickaxe handles. Computer processors do all the work and chip away at complicated math problems.
One might wonder why these cryptocurrencies even need to be mined: It is digital money with no backing but what people will pay for it. Fiat currency is the kind that government supports and can be created by turning on a money printer machine, so it stands to reason that crypto could do the same.
Bitcoin mining means making new coins on the network and releasing new coins into circulation. It is also how the network verifies recent transactions, and it is a crucial component of blockchain development and maintenance.
One can mine crypto using sophisticated hardware that solves exceptionally complicated computational math problems. The first computer that finds the solution to the problem gets the next block of Bitcoin, and the process starts again.
Crypto mining is costly and only occasionally profitable. However, mining appeals to many crypto investors since miners receive rewards for their work on the network. This might be because the entrepreneurial miners see mining as an easy income, so why not do it?
The Bitcoin reward is to entice and motivate people to help in the primary purpose of mining: to legitimize and observe Bitcoin transactions, ensuring their validity. Because many users worldwide share these responsibilities, Bitcoin is decentralized crypto. It does not depend on any central power like a central government or bank to oversee its regulation.
Still, before you invest the time, energy, and equipment, read this article to see whether mining is for you.
What is Bitcoin mining?
After you have figured out the gist about crypto, Bitcoin, and mining, it is time to go into a simple detail to help you understand how the process of mining works.
Bitcoin miners use hardware and software equipment to solve mathematical problems on the blockchain. With every new Bitcoin mined, a new block is added to the blockchain, and with each blockchain, the network becomes more secure. Now, what are these computational problems?
What is the Bitcoin mining puzzle?
At the center of Bitcoin mining is a math puzzle that miners can solve to earn rewards. The puzzle is called PoW (proof of work). Although it is often called complex, the mining puzzle is simple and can be labeled as guesswork.
By solving computational math problems, miners can make the crypto’s network reliable by verifying its transaction information. They affirm 1 MB worth of transactions—the size of a single block. The idea behind confirming Bitcoin transaction info is to prevent double-spending. With fiat currencies, counterfeiting is always a problem.
Digital info can be recreated relatively easily, so with Bitcoin and other cryptos, there is a risk that a spender can make a fake copy of their coin and send it to another party while still keeping the original.
If you would like to know how the guessing process works, let us give you a very tangible example. Imagine you pick a number, write it down and then ask a group of people to guess a number between 1 to 100. Those people do not have to pick the exact number. They must be the first person to guess a number less or equal to the number you have selected. For instance, you chose 30, and then they guess 32, 28, 25, the one who has said 32 loses since they went beyond your number, and the one who said 28 wins since they were the first person to get close to and less than your number. The Bitcoin mining math puzzle is the same situation described above but with 64-digit hexadecimal numbers and thousands of computing systems.
Bitcoin Mining benefits
There are many upsides to mining Bitcoins. To name a few:
1- Lining the pockets of miners
2- Supporting the Bitcoin ecosystem
3- Securing the Bitcoin network
4- Releasing new crypto into circulation
In addition to the coins minted through the genesis block (the first block, which founder Satoshi Nakamoto made), all the other Bitcoins came into existence by miners. In the absence of miners, Bitcoin would still exist as a network and be usable, but there would never be any additional Bitcoin. Nevertheless, because the rate of Bitcoin mined goes down over time, the final Bitcoin will not be circulated until around 2140; this does not mean that transactions will not be verified. Miners will keep on verifying transactions and earn fees for doing so to keep the integrity of Bitcoin’s network.
To receive new Bitcoins, you have to be the first miner to guess the right or the closest answer to a numeric problem. This process is proof of work. To start mining is to engage in this PoW activity to find the answer to the puzzle. What is this number, however? It is a 64-digit hexadecimal number (a hash) less than or equal to the target hash.
Mining risks and disadvantages
There are some downsides and disadvantages to mining Bitcoin, however. These are some of them:
1- Solving complex computational math problems could take a lot of time and energy.
2- Mining difficulty influences the rate of generating Bitcoin. Mining difficulty changes every 2,016 blocks or about every two weeks. The more miners, the more complex the problems will get.
3- It is a financial risk since one might purchase and pay a load of money for mining equipment and earn little in return.
4- Mining crypto is prohibited in some places. To investigate if you can mine crypto in a particular country.
5- Computer systems that run mining algorithms require a massive amount of energy. Therefore, it harms the environment, including climate change; this is one of the reasons PoS (which Ethereum uses) came to being.
6- Price volatility is one of the investors’ concerns; this makes it difficult for miners to know if the mining costs are worth the rewards.
How much do Bitcoin miners earn?
The further we go, the rewards get smaller, and the math problems become more complicated than they used to be. For instance, mining one blockchain in 2009 would bring you 50 BTC, but in 220, it came down to 6.25 BTC.
How can I mine Bitcoin?
These are the basic things one must have to do Bitcoin mining. You need:
1- Computer processor (hardware equipment like GPU or ASIC) and mining software.
2- A great accessibility to electricity (Do Bitcoin mining if you are OK with the expenses).
In Bitcoin terms, simultaneous answers frequently happen; however, there can only be one correct answer at the end of the day. When numerous simultaneous solutions are presented equal to or less than the target number, the Bitcoin network will choose by a simple majority (51%) which miner to honor.
Usually, the miner has done most of the work or, in other words, the one that confirms the most transactions. Then the losing block is called an orphan block. Orphan blocks are those blocks that are not added to the blockchain.
Is Bitcoin mining legal?
Bitcoin mining depends on your geographic location. The idea of Bitcoin can threaten the dominance of fiat and the government control over the financial market. Due to this reason, Bitcoin is illegal in certain places.
Bitcoin mining and ownership are legal in more countries. Some examples of countries where it was illegal were Egypt, Algeria, Morocco, Nepal, Bolivia, Pakistan, and Ecuador. Since 2018, other countries have prohibited Bitcoin mining, including Bangladesh, China, Dominican Republic, North Macedonia, Qatar, and Vietnam.9101112 Overall, Bitcoin use and mining keep legal around much of the globe.
Can I mine Bitcoin on PC or Phone?
In the early days of Bitcoin, anyone could run a mining program from their laptop or PC. However, as the network became more prominent and more people became interested in mining, the mining algorithm became more problematic due to the code for Bitcoin targeting finding a new block about every ten minutes. If more miners get involved, the chances for solving the correct hash faster increase, and so the difficulty grows to restore that 10-minute target. Now imagine if thousands, or millions more times, that mining power joins the network. That is, many new machines consume energy.
Since they are digital records, there is a risk of counterfeiting, copying, or double-spending the same coin more than once. Mining solves these problems by making it exceptionally expensive and resource-intensive to do one thing or hack the network. Indeed, it is far more economical to join the network as a miner than to try to undermine it.
The answer to the question is that you can mine Bitcoin on computers that have the following components:
- Best overall: Razer Blade 15.
- Best performance: Razer Blade 15 Advanced.
- Team Red gaming: ASUS ROG Zephyrus G14.
- Most configurable: HP OMEN 15.
- Best value: Acer Nitro 5
But you have to remember that since blockchain mining is resource-intensive, it might put a significant strain on your GPU or any other mining hardware. Your GPU could blow out, or your mining rigs might burst into flames. However, keeping your rigs working at a moderate pace and supplying enough power is generally safe.
Can I mine Bitcoin on my smartphone? You cannot mine Bitcoin on your smartphone since they cannot handle this process.
IS mining Bitcoin safe?
Bitcoin mining serves a vital function in authorizing and confirming new transactions to the blockchain and avoiding double-spending by bad actors. Also, it is how new Bitcoins are introduced into the system. Based on a complex puzzle, the task includes producing PoW (proof of work), which is energy-intensive. This energy is embodied in the value of Bitcoin and its system and keeps this decentralized network stable, secure, and trustworthy.
So, yes, Bitcoin mining is safe as long as you follow the protocol, do your research about prohibitions, and do not mind the initial expenses before making any profits.