What is Bitcoin mining and how it works?
Bitcoin mining
Bitcoin mining is the process of creating new Bitcoins by solving very complex mathematical problems that verify currency transactions. After successful bitcoin mining, the miner receives a predetermined amount of bitcoins.
Bitcoin is a cryptocurrency that has gained widespread popularity due to wild price fluctuations and a rapid increase in value since its inception in 2009.
As the price of cryptocurrencies and bitcoins has skyrocketed in recent years, the increased interest in mining is understandable.
However, for most people, the prospect of Bitcoin mining does not seem very good due to its complexity and high cost. In this section, we will cover the basic principles of bitcoin mining and the main risks to be aware of.
How does Bitcoin mine work?
Mining (blockchain mining in general) provides a secure and reliable method of ordering data using economic incentives.
Third-parties ordering transactions are decentralized and receive financial rewards for correct behavior. Bad behavior, on the other hand, leads to a loss of economic resources, at least as long as the majority remains honest.
In the case of Bitcoin mining, this is accomplished by creating a sequence of blocks that can be mathematically proven to be stacked in the correct order for a given resource consumption.
This process is based on the mathematical properties of cryptographic hashing, a method of encoding data in a standardized manner.
Hashing is a one-way cipher, which means that it’s almost impossible to decipher the input data unless every possible combination is tested until the result matches the predefined hash. So how are bitcoins mined?
Bitcoin miners sift through trillions of hashes per second until they find a hash that meets a condition called “difficulty”. Since both difficulty and hashes are very large numbers represented by bits, the condition is simply that the hashes are less than the difficulty.
The difficulty is readjusted with every bitcoin block in 2016, i.e. approximately every two weeks, to keep the block length constant.
The hash generated by the miners is used as an identifier for each particular block and consists of the data that is in the head of the block.
The most important components of the hash are the Merkle root – another aggregated hash that encapsulates the signatures of all the transactions in that block – and the unique hash of the previous block.
This means that changing the smallest component of a block would significantly change its expected hash, as well as the hash of all subsequent blocks. Nodes would immediately discard this incorrect version of the blockchain, protecting the network from tampering.
Due to the complexity requirement, the system ensures that bitcoin miners are doing the real work – spending time and energy to search through possible combinations.
This is why Bitcoin’s consensus protocol is called “proof-of-work” to distinguish it from other types of block creation mechanisms. To attack the network, attackers only need to recreate all of the network’s mining power. In the case of Bitcoin, this would cost billions of dollars.
But how long does it take to mine 1 Bitcoin? It usually takes about 10 minutes to create one BTC, but this only applies to powerful processors. The mining speed is determined by the bitcoin mining equipment used.
Why Does Bitcoin Need Mining?
If you only buy or trade Bitcoins, you may not have given much thought to how mining works. But since the users are behind BTC, it’s useful for anyone dealing with Bitcoin to have a basic understanding of the technology behind it.
Bitcoin, like many other blockchain technologies, is a decentralized system, which means that no single entity controls the network and keeps no central records of users’ balances.
Bitcoin relies on users making their own copies of historical records of transactions. Mining is the process by which users reach a consensus on the accuracy of these shared records.
Every 10 minutes or so, the network generates enough transactions to create a new “block”, a package of transactions encoded in such a way that they are unforgeable. A user who manages to add a new block to a record is rewarded for mining it.
Mining, however, is not just about finding new transactions and shipping them. If that were the case, everyone would be doing it. Mining Bitcoins requires an expensive process that involves solving complex computer puzzles to prevent fraud.
Miners’ computers run cryptographic formulas trillions of times per second, hoping to be the first to reach a value within a narrow mathematical range.
Success in this task opens the door to sending a block, and if other computers on the network believe that value matches their records, the miner is rewarded.
The idea behind this is that mining tilts the economic incentives toward the miner behaving honestly. After spending all the effort and money to mine a block, you may not want to risk losing a potential payment by, for example, entering incorrect bitcoin data into your account.
Is Bitcoin mining legal?
If you are wondering if bitcoin mining is legal, the answer is yes, given that it is recognized by various jurisdictions. For example, Enigma (based in Iceland) has opened one of the largest bitcoin mining operations in the world.
In Israel, cryptocurrency mining is considered a commercial activity and is subject to corporate tax. On the other hand, in the US, cryptocurrency miners are considered money transmitters by the Financial Crimes Enforcement Network (FinCEN), which means they may be subject to regulations governing such behavior.
Additionally, in November 2021, El Salvador’s President Nayib Bukele announced that a new coin-shaped “bitcoin city” would be built near the base of the Conchagua volcano.
Bitcoin mining in the city will be powered by geothermal energy. To start building the city, El Salvador will raise $1 billion in “bitcoin bonds” through cryptocurrency infrastructure provider Blockstream.
However, Bitcoin mining is banned in Algeria, Nepal, Russia, Bolivia, Egypt, Morocco, Ecuador, and Pakistan. To find out if bitcoin mining is legal in your country, you should always check the local regulations in that country.
How much can you make by Bitcoin mining?
We have seen that mining Bitcoins is not easy, but it is certainly possible to dream about it. Here is an example of mining Bitcoins that can help explain what you get when you earn the reward per block.
It is important to note that the reward for mining Bitcoins is about the same every 10 minutes. Your reward, if you’re lucky, depends on whether you mine the block yourself (which is unlikely) or share it with other miners in the pool.
Bitcoin pays a mining reward every time a new “block” is added to the permanent transaction register. The reward drops every few years but is currently 6.25 BTC, which was worth about $105,000 in December 2022, when the Bitcoin exchange rate was below $17,000.
In addition to this reward, bitcoin miners also earn income through transaction fees, which are automatically charged when crypto-currencies are transferred from one cryptocurrency wallet to another. Unlike block rewards, transaction fees are not fixed. They depend on the state of the network, for example, the number of transactions at any given time.
When new blocks are added to the Bitcoin blockchain, fees are temporarily reduced. This is known as Bitcoin halving, and the next halving is scheduled for 2024. On that date, the reward amount will fall to 3.125 BTC, equivalent to around $53,000.
When 21 million bitcoins are in circulation, the block reward will cease to be paid, and miners will only be remunerated by transaction fees.
But there will probably be no end in sight for blockchain rewards: current estimates suggest that this will happen around 2140.
Risks of Bitcoin mining
Volatility of the price
Bitcoin’s price has fluctuated wildly since its introduction in 2009. Since November 2021, Bitcoin has traded at less than $20,000 and at nearly $69,000. Because of this volatility, it is difficult for miners to know whether their rewards will exceed the high cost of mining.
Regulation
Very few governments have adopted cryptocurrencies like Bitcoin, and many are more likely to view them with skepticism because these currencies operate outside of any government control. There is always a risk that governments will ban the mining of Bitcoin or cryptocurrencies altogether, as China did in 2021, citing financial risks and an increase in speculative transactions.
What about electricity costs?
If you don’t have a cheap source of electricity, it’s entirely possible that your mining costs will exceed the amount of money you receive as a reward. Here’s an example of mining Bitcoins that might be relevant to the average American family.
ASICs vary in cost, efficiency, and performance, so you should do your research before you start. But as an example, a commonly used ASIC is the AntMiner S9, which was available on Amazon on Dec. 21, 2022, for a price between $600 and $700.
NiceHash, a mining platform, estimates that the AntMiner S9 could yield about 26 Bitcoins per month, based on prices as of Sept. 16. But with average prices for household electricity, you would pay about $161 to run the device.
So you will lose money even if you take into account the cost of the equipment.
However, this does not mean that mining is never profitable. These calculations can change if electricity prices go down or the value of Bitcoin goes up. If you assume that the value of Bitcoin will increase over time, you can consider your monthly losses as a long-term investment.
FAQ
How to mine Bitcoin at home?
To start mining Bitcoin at home, you need to start a Bitcoin wallet and a mining rig, install Bitcoin mining software and join a mining pool.
How long does it take to mine 1 Bitcoin?
Mining one BTC takes about 10 minutes, but this is with the perfect hardware and software, which is not always available and which few users can boast of. More often than not, most users can mine one bitcoin in 30 days.
Can you mine Bitcoin on your phone?
Bitcoin can be mined on a smartphone, either an Android device or an iPhone. Phones are computers, and any computer can be configured to calculate hashes.
A hash is a one-way transformation of data. Calculating the correct hash as requested by Bitcoin software is the “puzzle” that miners are trying to solve.
How to mine Bitcoin on Android?
The program can be downloaded from the Google Play store, and once downloaded, it will mine money while running on your phone. Bitcoin miners use one of two types of mining pools: PPLNS (pay-per-last-n-shares) or SMPPS (shared maximum pay per share).
You can join either type and switch between them at any time. Your amount is determined by how often your gadget is constantly mining bitcoins.
How to mine bitcoin on iPhone?
You can easily earn cryptocurrencies with apps on iPhone and iPad. You can find many cryptocurrency mining apps on iPhone and iPad, but not all of them are good enough.
The most popular apps are Bitdeer, CryptoTab, and ECOS. With these apps, you can turn your mobile device into a mining rig and earn cryptocurrency.
How to mine bitcoin on pc?
To mine Bitcoin on a PC, you need to follow these steps:
Start a Bitcoin wallet
In order to store the mined bitcoins, you need a place to store them, so you need to start a Bitcoin wallet.
There are several options, such as a software wallet that a user can download to their computer, or a hardware wallet, which is a physical device that can be used to store BTC offline.
Downloading mining software
The user also needs to download mining software that is compatible with the operating system of their computer.
Join a mining pool
Joining a mining pool increases the chances of receiving new BTC, as the mining pool distributes rewards to members based on the mining power they have contributed.
Setting up the mining program
You need to set up the mining program by specifying the address of your Bitcoin wallet and the address of the pool the miner has joined. You also need to set the number of streams and the intensity of mining.
Start mining
Once the user has configured the mining software, they can start mining. The software will use the processing power of the user’s computer to solve complex mathematical problems to validate Bitcoin transactions and earn new BTC.
Will Bitcoin lose value when all is mined
How much Bitcoin is left to mine
The maximum supply of bitcoins is 21 million coins, and as of March 2023, about 18.9 million bitcoins have been mined. This means that there are only about 2.1 million bitcoins left to mine.
Bitcoin mining is the process of creating new bitcoins and verifying transactions on the blockchain network. However, when the number of bitcoins in circulation reaches the maximum supply limit of 21 million, the reward for mining new bitcoins will decrease. The current mining reward for a new block of transactions is 6.25 bitcoins, and this reward is halved every 210,000 blocks, which happens roughly every four years. This means that the reward will continue to decrease until all 21 million bitcoins are mined, which is expected to happen in 2140.
How many Bitcoins are mined per day
The number of bitcoins mined per day changes over time due to the design of the bitcoin protocol. Every 210,000 blocks, or about every four years, the block reward is halved. When Bitcoin was first launched in 2009, the block reward was 50 bitcoins per block. This reward was reduced to 25 bitcoins per block in 2012 and then to 12.5 bitcoins per block in 2016.
Currently, as of March 2023, the Bitcoin block reward is 6.25 Bitcoins per block. On average, the Bitcoin network generates a block every 10 minutes, which means about 144 blocks are mined per day. As a result, around 900 bitcoins are currently being mined every day.
It is important to note that this number will continue to decrease over time as the block reward halves every 210,000 blocks.
What happens if 100% of Bitcoin is mined
Once all 21 million bitcoins have been mined, the Bitcoin network will no longer create new coins as block rewards for miners. At that point, the Bitcoin network will rely solely on transaction fees as a reward for miners who continue to validate and confirm transactions on the network.
Transaction fees are already a part of the Bitcoin network, and they are paid by users who want to have their transactions processed by miners faster. As the block rewards decrease over time, transaction fees will likely become a more significant source of income for miners.
The absence of new coin creation also means that the overall supply of bitcoins in circulation will remain fixed, and the value of bitcoins may become even more volatile. The supply and demand for bitcoins will be the primary factor determining their value in the market. The final outcome remains to be seen, but it’s possible that the absence of new coin creation could lead to increased scarcity and higher prices.
Will Bitcoin lose value when all is mined
When all 21 million bitcoins have been mined, there will be no more new bitcoins created, and the network will rely solely on transaction fees for miners as a reward for validating and confirming transactions. The absence of new coin creation will mean that the overall supply of bitcoins in circulation will remain fixed, and the value of bitcoins may become even more volatile.
It’s important to note that the value of bitcoin and other cryptocurrencies is primarily determined by market demand and supply dynamics, and it’s difficult to predict how the market will react once all bitcoins are mined. While it’s possible that the lack of new coins may lead to increased scarcity and higher prices, other factors such as market sentiment, adoption, and regulatory changes could also impact the value of bitcoin.
Ultimately, the long-term value of bitcoin will depend on various factors, including technological advancements, adoption, and market dynamics. It’s important for investors to carefully consider the risks and potential rewards of investing in cryptocurrencies and make informed decisions based on their individual risk tolerance and investment goals.
Can Bitcoin go to zero
It’s theoretically possible for Bitcoin to go to zero, but the probability of that happening is generally considered to be low. Bitcoin has proven to be highly resilient over the years and has survived various challenges such as market crashes, regulatory changes, and security issues.
Bitcoin has several properties that make it unique as an asset class, including decentralization, scarcity, and censorship resistance. These properties have contributed to its popularity and adoption, and it has become a significant player in the financial industry.
However, it’s important to note that investing in cryptocurrencies, including Bitcoin, is highly speculative and associated with risks. The value of Bitcoin and other cryptocurrencies can be volatile and subject to various factors such as market sentiment, regulatory changes, technological advancements, and security concerns.
Investors should always do their own research and assess their risk tolerance before investing in cryptocurrencies. Diversification and a long-term investment strategy can help investors mitigate the risks associated with investing in cryptocurrencies.
What if Bitcoin collapses
If Bitcoin were to collapse, it could have several potential impacts on the wider financial system and the broader economy.
Firstly, if Bitcoin collapses, it could lead to a significant loss of wealth for those who hold Bitcoin or have invested in it. This could result in a decline in consumer confidence and spending, potentially leading to a broader economic downturn.
Secondly, the collapse of Bitcoin could have a ripple effect on other cryptocurrencies and the broader crypto market. If investors lose confidence in the crypto market, it could lead to a broader sell-off and a decline in the value of other cryptocurrencies.
Thirdly, the collapse of Bitcoin could lead to increased regulatory scrutiny of the crypto industry. Governments and regulatory bodies may take a more cautious approach to the adoption of cryptocurrencies, which could have implications for the future development and adoption of crypto-related technologies.
Ultimately, the collapse of Bitcoin is not likely to have a significant impact on the global financial system, as Bitcoin’s market capitalization is relatively small compared to the total value of global financial markets. However, it could have significant implications for those who have invested in Bitcoin or other cryptocurrencies.
How to use Blockstream Mining
What is Blockstream Mining
Blockstream Mining is a division of Blockstream, a blockchain technology company that focuses on the development of blockchain infrastructure and related products. Blockstream Mining offers a range of services related to Bitcoin mining, including colocation hosting, hardware procurement, and management of mining operations.
Bitcoin mining involves the use of specialized computers to solve complex mathematical problems in order to validate transactions on the Bitcoin network and earn new Bitcoin as a reward. Blockstream Mining operates its own mining facilities and also offers its services to third-party miners who want to host their mining equipment in secure and reliable data centers.
In addition to its mining services, Blockstream is known for its contributions to the development of the Bitcoin protocol and related technologies. The company has developed the Liquid Network, a sidechain for Bitcoin that enables faster and more confidential transactions, and has also contributed to the development of the Lightning Network, a layer-two scaling solution for Bitcoin that enables instant and low-cost transactions.
The history of Blockstream Mining
Blockstream Mining was established in 2017 as a division of Blockstream, a blockchain technology company founded in 2014 by a group of prominent Bitcoin developers, including Adam Back, Gregory Maxwell, and Pieter Wuille. The company has been a major contributor to the development of Bitcoin, including the implementation of the Segregated Witness (SegWit) soft fork, which was activated on the Bitcoin network in 2017 and increased the block size limit while also improving the network’s scalability and security.
Blockstream Mining was established to provide secure and reliable Bitcoin mining services to clients, using state-of-the-art mining hardware and data center facilities. The company initially operated mining facilities in Quebec, Canada, but has since expanded its operations to other locations around the world, including Georgia, Iceland, and the United States.
One of the key goals of Blockstream Mining is to promote the decentralization of the Bitcoin network by making it easier for individuals and businesses to participate in Bitcoin mining. By providing hosting and management services for mining equipment, Blockstream Mining aims to lower the barriers to entry for miners and increase the overall hash rate of the Bitcoin network, which helps to enhance the network’s security and reliability.
Blockstream Mining has also been involved in the development of new mining hardware and software technologies, including the development of the Blockstream Satellite network, which enables Bitcoin users to access the Bitcoin network using satellite technology, bypassing the need for an internet connection.
How Blockstream Mining works
Blockstream Mining offers a range of services related to Bitcoin mining, including hosting, hardware procurement, and management of mining operations. Here’s how it works:
- Hosting: Blockstream Mining provides hosting services for miners who want to host their mining equipment in secure and reliable data centers. This allows miners to access high-quality facilities with high-speed internet connectivity and specialized cooling systems, which are necessary for efficient Bitcoin mining.
- Hardware procurement: Blockstream Mining also helps miners to procure the latest mining hardware, such as ASICs (Application-Specific Integrated Circuits), which are specially designed for Bitcoin mining. By providing access to the latest mining hardware, Blockstream Mining helps miners to stay competitive and increase their chances of earning Bitcoin rewards.
- Mining management: Blockstream Mining offers mining management services, which include monitoring the performance of mining equipment, optimizing mining operations, and troubleshooting any issues that arise. This helps miners to maximize their efficiency and profitability in the mining process.
In addition to these services, Blockstream Mining also operates its own mining facilities, where it uses its own mining equipment to mine Bitcoin. This provides the company with an additional source of revenue and also helps to increase the overall hash rate of the Bitcoin network, which enhances its security and reliability.
Overall, Blockstream Mining works by providing miners with access to high-quality facilities and equipment, as well as expert management services, which helps to lower the barriers to entry for Bitcoin mining and increase the overall efficiency and profitability of the process.
Does Blockstream Mining charge a fee
Yes, Blockstream Mining charges a fee for its hosting and management services. The specific fees charged by Blockstream Mining may vary depending on factors such as the location of the hosting facility, the type and amount of mining equipment being used, and the level of management and support services required.
The fees charged by Blockstream Mining are typically based on a combination of fixed costs, such as the cost of electricity and data center facilities, and variable costs, such as the cost of hardware maintenance and management. Some of the fees that miners may be charged by Blockstream Mining include:
- Hosting fees: This is a fee charged for hosting mining equipment in Blockstream Mining’s facilities. The fee may be based on factors such as the size and power consumption of the equipment, as well as the amount of space required.
- Management fees: This is a fee charged for managing and monitoring the mining equipment, optimizing mining operations, and troubleshooting any issues that arise. The fee may be based on the level of support and management services required.
- Maintenance fees: This is a fee charged for maintaining and repairing mining equipment. The fee may be based on factors such as the age and condition of the equipment, as well as the frequency of maintenance and repairs required.
Overall, the fees charged by Blockstream Mining are designed to cover the costs of providing high-quality hosting and management services, as well as to generate a profit for the company. However, the specific fees charged may vary depending on the needs of individual miners and the competitive landscape of the Bitcoin mining industry.
How to use Blockstream Mining
Here is a step-by-step guide on how to use Blockstream Mining:
- Sign up for an account: To use Blockstream Mining, you will first need to sign up for an account on the Blockstream Mining website. You will need to provide some basic information, such as your name, email address, and payment information.
- Choose a hosting plan: Blockstream Mining offers a range of hosting plans that vary based on factors such as the size and power consumption of your mining equipment, as well as the level of management and support services required. Choose a plan that meets your needs and budget.
- Ship your mining equipment: Once you have chosen a hosting plan, you will need to ship your mining equipment to the Blockstream Mining facility. The company will provide you with instructions on how to package and ship your equipment, as well as any customs forms or other documentation required.
- Set up your mining equipment: Once your mining equipment arrives at the Blockstream Mining facility, the company’s technicians will set it up and configure it for optimal performance. This may include installing software, adjusting power settings, and optimizing cooling systems.
- Monitor your mining performance: Once your mining equipment is up and running, you can monitor its performance using the Blockstream Mining dashboard. This dashboard provides real-time data on factors such as hash rate, power consumption, and earnings.
- Receive your earnings: Blockstream Mining will automatically transfer your Bitcoin earnings to your designated wallet address on a regular basis. You can also monitor your earnings and transaction history using the Blockstream Mining dashboard.
Overall, using Blockstream Mining involves choosing a hosting plan, shipping your mining equipment to the company’s facilities, and then monitoring your performance and earnings using the company’s dashboard. The process is designed to be user-friendly and easy to use, even for miners with limited technical expertise.
Does Bitmain mining service charge a fee
What is Bitmain
Bitmain is a privately-owned company that is primarily involved in the design and manufacture of specialized hardware used for Bitcoin mining. The company was founded in 2013 by Jihan Wu and Micree Zhan, and is headquartered in Beijing, China.
Bitmain’s flagship products are Application-Specific Integrated Circuits (ASICs), which are computer chips specifically designed to perform the calculations required for Bitcoin mining. These chips are used in Bitmain’s Antminer line of Bitcoin mining hardware, which is widely used by Bitcoin miners around the world.
Bitmain has also been involved in other areas of the cryptocurrency industry, such as the development of Bitcoin payment processing systems and the creation of its own cryptocurrency, called the “Antcoin”. However, the company’s primary focus remains on the design and manufacture of Bitcoin mining hardware.
The history of Bitmain
Bitmain was founded in 2013 by Jihan Wu and Micree Zhan, both of whom had a background in the cryptocurrency industry. Initially, the company focused on developing and selling mining hardware for various cryptocurrencies, including Bitcoin and Litecoin.
In 2014, Bitmain released its first ASIC-based Bitcoin miner, called the Antminer S1. This miner was quickly followed by the Antminer S2, which was even more powerful and efficient than its predecessor. Bitmain’s Antminer line of Bitcoin mining hardware quickly became very popular among miners due to its high performance and low cost.
In 2015, Bitmain became the largest Bitcoin mining pool in the world, with over 20% of the network’s total hash rate. The company also began exploring other areas of the cryptocurrency industry, such as developing its own cryptocurrency called “Antcoin” and creating a Bitcoin payment processing system.
In 2017, Bitmain released the Antminer S9, which was the most powerful and efficient Bitcoin miner at the time. The company also began to diversify its product offerings, releasing mining hardware for other cryptocurrencies such as Ethereum and Dash.
However, Bitmain faced some challenges in 2018, as the cryptocurrency market experienced a significant downturn. This led to a decline in demand for Bitmain’s products and forced the company to lay off a significant portion of its workforce. Additionally, Bitmain’s founders had a public falling out, with Jihan Wu eventually buying out Micree Zhan’s shares in the company.
Despite these challenges, Bitmain has continued to be a major player in the cryptocurrency industry, and its Antminer line of Bitcoin mining hardware remains very popular among miners. The company has also continued to expand its product offerings, with the release of new mining hardware for various cryptocurrencies and the development of new cryptocurrency-related products and services.
How Bitmain mining service works
Bitmain is primarily a manufacturer of Bitcoin mining hardware, and it does not directly offer a mining service to customers. However, Bitmain’s hardware is used by many mining pools and individual miners around the world.
To use Bitmain’s mining hardware, a miner must purchase an Antminer device from the company or from an authorized reseller. The miner will then need to set up the hardware, which typically involves connecting the Antminer to a power source and to the internet. The miner will also need to configure the mining software on the device, which will connect it to a mining pool and start the mining process.
Bitmain’s Antminer devices are designed to be highly efficient and powerful, allowing miners to generate significant amounts of Bitcoin or other cryptocurrencies with relatively low energy consumption. The devices are also designed to be easy to use, with intuitive software interfaces that make it simple for miners to configure and manage their mining operations.
Overall, Bitmain’s mining hardware is a popular choice among Bitcoin miners due to its high performance, low energy consumption, and ease of use. While Bitmain does not offer a mining service directly, its hardware is widely used by mining pools and individual miners around the world.
Does Bitmain mining service charge a fee
Bitmain does not directly offer a mining service to customers, but rather produces and sells Bitcoin mining hardware. However, if a miner uses Bitmain’s mining hardware to mine Bitcoin or other cryptocurrencies as part of a mining pool, there will typically be fees associated with that mining pool.
Mining pools are groups of miners who combine their computing power in order to increase their chances of mining a block and earning the associated block reward. Mining pools typically charge a fee for their services, which is usually a percentage of the block reward earned by the pool.
The exact fees charged by mining pools can vary widely depending on the pool, with some pools charging as little as 1% and others charging as much as 5% or more. Additionally, some pools may charge additional fees for things like withdrawals or other services.
While Bitmain does not charge a fee directly for its mining hardware, miners who use Bitmain’s hardware to mine cryptocurrencies as part of a mining pool will likely be subject to fees charged by that pool. It’s important for miners to carefully consider the fees charged by different mining pools and choose one that offers a good balance of fees and benefits.
Essentials of Cryptocurrency Mining
Mining for cryptocurrency buzz has been all over the internet lately even though it’s not a new thing and has been around for more than a decade.
We should mention that it’s not mining in a conventional sense as all the labor is done by a high-end tech and in a sense, it is blockchain gambling, where more computing power provides more often rewards.
In this article, we will cover what’s mining is and how one can profit from it and to do so, we need to elaborate on how does cryptocurrency and blockchain work a bit.
Cryptocurrency and Blockchain
Cryptocurrency is a secure digital currency based on cryptography, that is used as a token of exchange.
Cryptocurrency oozed its way to a stock market and the value of, for instance, one Bitcoin at the time of writing is $55,953. Some countries and cities are excepted cryptocurrencies as payment means.
There’re hundreds of different cryptocurrencies what’s common for all of them is blockchain despite different approaches for encryption.
On the basic level blockchain is a ledger- a digital one that stores information about transactions and this information is absolutely uncompromising due to the use of hashing. Hashing is a one-way cryptographic process that maps data of any size to solid-size output.
When it comes to the transactions the information is added to multiple individual ledgers. To ensure authenticity the transactions are signed and receivers collect the transaction and constructing ledgers.
Here a bit of computing involved where ledgers looking for correct values are found in the hash. After this block is closed and recorded in all of the blockchain.
Then the old block is added to the new ledger repeating the whole process, therefore, constructing the chain.
How does the mining work?
The reward in the form of cryptocurrency comes from the finding correct value in hash functions, authorizing transactions by it, and make the blockchain function.
It involves using computing power, the more of it- the better. With powerful cryptocurrency mining rigs, miners can earn an excessive amount of cryptocurrency.
Speaking of profitability, back in 2009 mining was extremely profitable with requirements for computing means being less. Taking Bitcoin as an example, according to the protocol mining reward cuts in half approximately every four years.
But remember that despite lower reward in BTC the price itself high rocketed. And now for mining one Bitcoin, you can get a reward of more than $300,000 as of 2021.
If you want to start mining be ready to spend thousands of dollars on PC with high-end GPUs, other computing parts and take energy costs into consideration as well- it’s not free, you should invest to earn.
You will need a bitcoin wallet as well, various software, and joining the mining pool won’t hurt as well to get the best out of what you have.
In conclusion
You should remember that mostly cryptocurrency is an asset and moreover a digital one. So it’s important to know where to sell it for fiat currency to get the highest profit.
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