Today’s article is going to teach you the basics of Bitcoin Mining. What is Bitcoin Mining? How does it work? Will it be a good idea for you to participate in it or should you look at other ways to profit from this booming industry instead?
This is just a few of the questions we help you answer today!
If you have already heard about Bitcoin, the world’s most valuable cryptocurrency, it is also highly likely that you have heard about Bitcoin mining. To many, these terms seem like another geeky term that has a very complex explanation that they should not bother trying to grasp.
As the world gradually opens up to the concept of digital currencies, however, it is important that we all acquaint ourselves with such concepts, in order to make wise decisions in as far as investing or even transacting in bitcoin is concerned.
In this article, therefore, I will try to expound on the concept of bitcoin mining in a way I hope you will understand.
What is Bitcoin Mining?
Bitcoin Mining refers to the process of adding all the transaction records to the public ledger that contains past transactions.
It is also defined as the acquisition or creation of new bitcoin through the provision of solutions to complex computational work.
The bitcoin network has a public ledger on which all past transactions are stored, and this ledger is known as the blockchain.
The blockchain is used to confirm to all those in the bitcoin network that all past transactions were legitimate, and that the already spent coins were transferred accordingly. Bitcoin Mining is designed to be a very resource-intensive and difficult process.
This is usually so that the number of blocks found each day by the bitcoin miners remains steady. All the individual blockchains are required to present proof of work that is valid.
The key purpose of mining is usually to set the history of the transactions that have already occurred in such a way that it is computationally impractical to make any modifications by any one entity.
When the blockchain is downloaded and verified, the bitcoin nodes are usually able to get to an agreement about the manner in which the ordering of events in the transactions occurred.
As earlier on stated, mining is also used as a way to introduce new coins to the system. The miners get paid transaction fees and a “subsidy” of the newly created bitcoins. In this way, the new coins are usually disseminated in a decentralized manner, and people are usually motivated to provide security for the bitcoin system.
The number of coins given to miners upon the completion of the complex arithmetic is usually agreed upon by everyone in the mining network. The first block rewards were 50 BTC, and this number halves after 210,000 blocks have been created.
Why then is Bitcoin mining known as “bitcoin mining” as opposed to any other technical term?
According to the inventors of the Bitcoin mining concept, there is a lot of resemblance between the mining of minerals and the mining of Bitcoin.
In both cases, a lot of resources are required to successfully get the rare commodity (the bitcoin and the minerals), and it takes a long period of time for new units to be availed to anyone who wishes to acquire either of them.
How does bitcoin mining happen?
Having introduced the concept of bitcoin mining, we can now move to expound how it is actually done. One thing you should remember is that the Bitcoin mining process is capital intensive, thus you should get your money right before you can start planning on how you will earn a living through this venture. You should also consider if you are well able to follow the mining process outlined below:
1. Do a background study
Before you can kickstart the mining of bitcoin, you should do a background study about the legal and tax framework that surrounds this type of income. This is in order for you to avoid getting frustrated when any laws and policies work against you.
2. Acquire the mining hardware
Bitcoin miners are necessitated to get their hands on an Application- Specific Integrated Circuit (ASIC) Miner. An ASIC Miner is a specialized computer which is built for mining of bitcoin exclusively. The arithmetic solved during the bitcoin mining process require such a highly functional computer which will enable them to get the solutions as fast as possible.
3. Choose a mining pool
A mining pool is essentially a group of miners who team up to solve the difficult arithmetic, with the aim of sharing the reward (the new coins). Joining a mining pool increases yours odds at earning an income from the mining process.
4. Acquire bitcoin mining software
With the bitcoin mining software in place, you can know much you are contributing to the mining pool you just joined. Your contribution to the mining pool is quantified through your hash rate (The speed at which your ASIC Miner is able to complete an operation in the mining process).
There are many other facts that revolve around the concept of bitcoin mining, but with the information, I have presented to you in this article, you have a very solid foundation in this field of knowledge.
Final words and other recommendations
Bitcoin mining is not for everyone, and to be honest it is not something we (at Gold Retired) recommend as it is very complex and (most importantly) hard to find a legit way in the jungle of scams out there.
Also, it is not (in our opinion) the best way to make a good profit from Bitcoin.
If you want to make money on Bitcoin and other cryptocurrencies then trading is king (in our humble opinion), there are many places where you can trade, some of the most well-known places are first of all, the most well-known and trusted Binance.
Other than that, the absolute easiest way is to just invest and hold your Bitcoin and wait for it to grow by itself, even if no one can say for a fact it will explode in value moving forward there are many things that indicate that it will.
The FREE Physical investing kit offered by this company (#1 rated) is for you who plan to invest more than 5k and is a very good place to start educating yourself in the subject.
The more you learn about it the more you will believe in the potential earnings, a good way to start getting educated is by first of all NOT buying ANY coin (unless it is any of the real cryptos) as this industry is probably the one who contains most scams out there. Our estimated guess is that around 95% of all the coins out there are scams, completely useless, and will disappear completely.
Stick to the ones that are real like Bitcoin and Ethereum for example.
If you want to learn (and you should) how to avoid ALL Bitcoin scams then read this page
I hope you found this short article on what Bitcoin Mining is to be helpful and that you now have a better understanding of the subject. Please share your own experience in the comment section below as it can help others! Also, if you have any questions about this I will be more than happy to answer them below!
I wish you success!
Michael, founder of Goldretired.com