What is Bitcoin Mining?
The backbone of the Bitcoin network is Bitcoin mining. Cryptocurrency mining is conscientious, expensive, and only occasionally rewarding. Miners provide security and approve Bitcoin transactions. Without Bitcoin miners, the network would be criticized and dysfunctional. Bitcoin mining is done by specific computers.
Bitcoin mining is performed by high-powered computers that solve complex computational math problems; these problems are so complex that they cannot be solved by hand and are complicated enough to tax even incredibly powerful computers.
Bitcoin Mining Key Points
- Bitcoin mining is the process of creating new bitcoin by solving a computational puzzle.
- Bitcoin mining is necessary to maintain the ledger of transactions upon which bitcoin is based.
- Miners have become very sophisticated over the last several years using complex machinery to speed up mining operations.
The part of miners is to protect the network and to process every Bitcoin transaction. Miners complete this by solving a computational problem that permits them to chain together blocks of transactions (hence Bitcoin’s famous “blockchain”). For this facility, miners are rewarded with newly-created Bitcoins and transaction fees.
How does Bitcoin mining works?
Miners are safeguarding the network and approving Bitcoin transactions. Miners are receiving payment for their work as auditors. They are doing the work of confirming previous bitcoin transactions. This agreement is meant to keep Bitcoin users honest and was perceived by bitcoin’s founder, ‘Satoshi Nakamoto’.
By confirming transactions, miners are helping to prevent the ‘double-spending problem.’ Double spending is a scenario in which a bitcoin owner illegally spends the same bitcoin twice.
How to Mine Bitcoins:
- By getting Bitcoin Wallet: When making bitcoins from mining, they go straight into a Bitcoin wallet. You can’t mine without a wallet.
- Find a Bitcoin Exchange: When making bitcoins from mining, you may require to sell the coins to pay for power costs. You may also require to buy coins on exchanges.
- Get Bitcoin Mining Hardware: Without an ASIC miner, you cannot mine bitcoin. ASIC miners are specific computers that were built for the only purpose of mining bitcoins. Don’t even attempt mining bitcoins on your home desktop or laptop computer. You will make less than one penny per year and will waste money on electricity for sure.
- By selecting a Mining Pool: After you get your mining hardware, you are required to select a mining pool. Without a mining pool, you would only collect a mining payout if you found a block on your own which is called solo mining. It is not recommended as your hardware’s hash rate is very improbable to be anywhere close enough to find a block solo mining.
You share your hash rate with the pool by joining a mining pool. Once the pool catches a block, you get a payout based on the percent of hash rate donated to the pool. If you donated 1% of the pools hash rate, you would get .125 bitcoins out of the current 12.5 bitcoin block reward.
- By getting Bitcoin Mining Software: Bitcoin mining software is in what way you actually hook your mining hardware into your chosen mining pool. You are required to use the software to point your hash rate at the pool. Also in the software you tell the pool which Bitcoin address disbursements should be sent to. There is mining software available for Mac, Windows, and Linux.
After performing all these steps, you need to confirm that is Bitcoin Mining Legal in your Country. You need to consult local counsel for further help in determining whether Bitcoin mining is legal and the tax implications of doing the activity. Like other businesses, you can generally write off your expenses that made your operation profitable, like electricity and hardware costs.
You should also run some calculations and see if Bitcoin mining will really be profitable for you. You can use a Bitcoin mining calculator to get a rough idea as many factors related to your mining success are constantly changing. A doubling in the Bitcoin price could rise your profits by two but it could also make mining that much more competitive that your profits remain the same.
Some facts about Bitcoin mining:
Rewarding Bitcoin Miners
With as many as 300,000 purchases and sales occurring in a single day, verifying each of those transactions can be a lot of work for miners.2 As compensation for their efforts, miners are awarded bitcoin whenever they add a new block of transactions to the blockchain.
Source : https://www.investopedia.com/
- You can make cryptocurrency without having to put down money for it by mining.
- Bitcoin miners obtain bitcoin as a reward for finishing “blocks” of confirmed transactions which are added to the blockchain.
- Mining rewards are rewarded to the miner who discovers a solution to a complex hashing puzzle first, and the probability that a participant will be the one to discover the solution is related to the portion of the total mining power on the network.
- Double spending is a phenomenon in which a bitcoin user illegally spends the same tokens twice.
- You need either a GPU (graphics processing unit) or an application-specific integrated circuit (ASIC) in order to set up a mining rig.
- Cryptocurrency mining was originally performed using CPUs, or Central Processing Units. However, its limited processing speed and high power consumption led to limited output, rendering the CPU-based mining process inefficient.
How to Earn Free Bitcoins:
- You can earn free bitcoins by scams and gambling.
- You can earn free bitcoins by faucets.
- You can earn free bitcoins by playing games.
- You can earn free bitcoins by Bitcoin Mining.
- You can earn free bitcoins by Affiliate programs.
- You can earn free bitcoins Getting paid directly in bitcoin.
Finally we can say, Bitcoin mining has a magnetic appeal for many investors interested in bitcoin because of the fact that miners are rewarded for their work with bitcoins.