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Bitcoin Mining: Everything You Must Know

Bitcoin mining is similar to Gold mining but not the same process.

What is bitcoin mining?

Bitcoin mining is similar to Gold mining but not the same process. bitcoin mining is a process by which a computer network confirms available transactions on the blockchain in exchange for a token or a drop as a reward for proof of work.

Bitcoin mining is done using a very developed to a high degree of complexity computer to solve the hard and complex mathematical computer problems, this also helps to develop the blockchain ledger as the computer solve the new bitcoins the enters into circulation.

Cryptocurrency mining can be hard and also not easy to set up for an individual to earn but it is a quick rewarding and easy way to earn a huge amount of money over time. every bitcoin miner gets paid or settled in bitcoin as the reward for work done by your computer setup and with time, the increase in value of bitcoin or any other cryptocurrencies you are mining, let miner earn more.

Mining pays occasionally or at irregular intervals depending on your computing setups but for a good computer setup, you should be earning more than you spend on the initial setups.

But wait, i want you to read the below article that explains more about mining before you invest your time and equipment. This will let you know whether mining is really for you or not.

Key points of what Mining Gives you

  • Mining will let you earn free bitcoin without having to pay for it.
  • As a miner, you will receive Bitcoin as a reward for completing “blocks” of verified transactions that are added to the blockchain.
  • You need either a GPU (graphics processing unit) or an application-specific integrated circuit (ASIC) in order to set up a mining rig.

A New Gold Rush

The primary aim of mining bitcoins is to get rewarded in bitcoin not that you have to be a miner to own a bitcoin but you can also buy bitcoin and other cryptocurrencies using fiat currency and also trade it for fiat on an exchange like Coinpaga. you can also get rewarded with bitcoin by writing for platforms that pay you as a writer.

The purpose of bitcoin mining reward is to encourage and motivate people to assist the major aim of mining which are the prevention of double spending on the blockchain network, the legitimacy and monitoring of bitcoin transactions, ensuring a transaction is valid.

The reason for these actions is because bitcoin is a “decentralised” cryptocurrency  which means the transaction is confirmed by many individual computers around the world to complete unlike a country centralised currency that needs a central bank or government to regulate or oversee its currency

How To Mine Bitcoins

Miners around the world are getting rewarded for their work as an auditor. They are ensuring the prevention of double spending on the blockchain network, the legitimacy and monitoring of bitcoin transactions, ensuring a transaction is valid. This process is meant to keep Bitcoin users honest and was created by bitcoin’s founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the “double-spending problem.”

What is Double Spending?

Double spending is a plot whereby a bitcoin owner will spend his bitcoin twice the amount that was in a block. let’s use physical currency as an example. let us assume you have a 20$ bill legal paper bill to spend and you go on to spend this bill at a store. in the end, you have a notion left but you have an idea of making a fake 20$ bill that looks alike and you make it.

if you go to the store to spend that fake bill that will be a double spend and the store owner has run into a loss once he or she figure out you have to spend a fake bill. in every country, this has always been a crime and also been controlled. so in bitcoin, there is a big risk that the sender makes a fake currency in the chain that will wait to be confirmed by the miners while holding the original coin.

Mining has two processes, one is your computer being at work and the other is your computer getting good luck to marge the right transaction to the right block. Once a miner computer was able to verify a 1MB worth of bitcoin transaction popularly know as “block,” these miners will get a reward with some quantity of bitcoin (will explain more that below) this 1MB limit was set by the creator Satoshi Nakamoto and is a matter of controversy, some miners set they believe the block size should be increased to accommodate more data, which would effectively mean that the bitcoin network could process and verify transactions more quickly.

Note that verifying 1 MB worth of transactions makes a coin miner eligible to earn bitcoin—not everyone who verifies transactions will get paid out.

“So after all that work of verifying transactions, I might still not get any bitcoin for it?”

yes, that is correct!

to earn your mining reward you will have to meet two conditions which are
1. your computer will verify up to one MB worth of transactions
2. You need to be lucky to be the first miner to arrive at the right answer. this process is known as proof of  work.

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Image by Sabrina Jiang © Investopedia 2021

“What do you mean, ‘the right answer to a numeric problem’?”

The truth is that there are no mathematical problems the miners are solving, miners are actually trying to be the first miner to first to come up with a 64-digit hexadecimal number (a “hash“) that is less than or equal to the target hash. basically, it is guesswork.

So the first miner to come up with each possible guess on the order of trillions will get the rewards it’s incredibly onerous work. so for a miner to solve a problem he must have the greater computer power to mine successfully. these are measured in terms of megahashes per second (MH/s), gigahashes per second (GH/s), and terahashes per second (TH/s).

That is a great many hashes.

If you want to estimate how much bitcoin you could mine with your mining rig’s hash rate, the site Cryptocompare offers a helpful calculator.

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