Bitcoin is not called “digital gold” for nothing. This currency is mined, as it was done during the gold rush period in America in the 20th century. What is the essence of mining? Good question, the answer to which we have prepared in the new material.
What is the essence of mining
Mining is the process of solving computer problems, the result of which is the creation of new Bitcoins and other currencies. Mining includes many complex operations and requires a thorough approach. First of all, technological.
What is Bitcoin mined on
Coin mining takes place on the so-called farms. As a rule, this is the room in which the ASIC devices are located. Put simply, this is a supercomputer, exceeding the usual power of a thousand times. Mining involves large costs for electricity. Also on the farm you need to maintain a certain temperature level or cool the processors to prevent them from overheating.
Competition in mining: the essence
Mining is the creation of a block with data in the blockchain. Each block consists of a previous block header, a transaction hash, and a random number. Having formed a block, the miner receives a reward in the form of Bitcoins. There is competition in the work, as several specialists work on the blocks.
Given the difficulty in organizing the farm and the work of other miners, the question arises: how profitable is it to get a currency? Earlier, before the boom of Bitcoin, it can be produced even from stationary computers. But as cryptocurrency was popularized, mining and increasing capacity, costs for Bitcoin mining also increased. Based on this, we can say that mining alone is only worthwhile when there is enough money for it. Otherwise, it is better to team up and mine “digital gold” together. With this scheme, the reward comes faster, but its size will be smaller, as it is divided into all participants in the process.
Amount of payments to the miners
Every four years they are reduced according to the directive Satosi Nakamoto, because by this name a person or a group of people who have developed the Bitcoin protocol is known. In 2013, the award for the block created was 50 Bitcoins. Now it is equal to BTC 12.5.
What is the essence of mining? At first glance, mining seems to be not a very time consuming process. However, the creation of a farm can cost tens of thousands of dollars, and maintaining its life also requires constant cash injections. In addition, it will take a lot of time before the farm pays off and starts making a profit. So it is impossible to become a miner on the spur of the moment.