Bitcoin mining

How to mine Bitcoin? Everything you need to know about Mining

Mining Bitcoin has been in fashion since cryptocurrencies came into existence. It has been a good source of income for people who have a knack for solving difficult algorithms. Although, mining is getting more and more competitive as more people keep joining the space. But there still are a lot of people who don’t understand how the mining of Bitcoin, or any other crypto, works. Some people even think mining Bitcoin involves shovels and mountains. Well, that is not how we go on about mining Bitcoins. Below I’m going to help you understand how exactly this works. So, read this through.

Bitcoin mining involves CPUs, computers, and solving algorithms. It is an essential process for the working of the whole Blockchain development in a stable and proper manner. Bitcoin is a decentralized digital currency, right? So, have you ever thought about who verifies every crypto transaction? Miners do, Bitcoin miners hold the responsibility to verify every transaction, to avoid any illegitimacy in the Bitcoin chain. And they get rewarded for the same in Bitcoins.

Bitcoins Mine process

We know that the number of Bitcoins is limited to 21 Million. And currently, around 18.77 Million Bitcoins have already been mined as of August 2021. 1 Block of Bitcoin is mined every 10 mins. It is a limit set by the maker of Bitcoin, Satoshi Nakamoto. Whenever there’s a chance of discovery of more than 1 Block per 10 min, the complexity of the algorithm is increased by the system on its own. So, now that you understand what Bitcoin Mining actually is, let us try and understand what does a miner need for mining Bitcoins.

Equipment required to mine Bitcoin

Earlier the process of mining Bitcoins was not as difficult as it is today. Anyone could mine Bitcoins sitting at their homes from their personal computers. But that is not the case today. Miners require GPU (Graphics Processing Unit) or an ASIC (Application-Specific Integrated Circuit) in order to set up a mining rig. This equipment doesn’t come cheap. Getting these equipments can cost you thousands of dollars. It depends on the scale of your operation. ASIC is hardware made especially for mining Bitcoins. It requires a substantial amount of electricity to power it. It provides the maximum hashing power required to mine Bitcoins.ASIC Hardware

Every new Block has its own 64-digit Hexa number known as the target hash. The miner’s task is to guess that 64-digit alpha-numeric number first to earn the block. This number starts with 15-16 zeroes (depending on the difficulty rate of the algorithm). The miner that guesses the equal or a lesser number first receives the block.

Since it is near to impossible for an individual miner to crack the algorithm on his own. Generally, people join mining pools where the efforts and resources of several miners are combined together to crack the 64-digit code. And then the reward is distributed on the basis of the effort made by the individual miners.

How to crack the codes?

Mining Bitcoins is all about solving the algorithms, cracking the 64-digit Hexa codes. Many people spend thousands of dollars in purchasing the equipment required for mining but end up with nothing. It is not an easy process, you have to put up a lot of effort to mine bitcoins, as there are millions of others trying to solve the same algorithm along with you.

Below is an example of how a 64-digit hex code looks like.

Bitcoin Hash Code

In a Hexadecimal code, every digit has 16 possibilities. Numbers from 0-9 and alphabets a,b,c,d,e,f. A Bitcoin miner cannot guess this code on the basis of previous codes. He has to try multiple combinations to arrive at a number that is equal or lesser than the target hash code. Since there are 64 digits in the number, there are trillions of possible combinations, and this is why it is so difficult to crack for an individual person.

When a miner successfully manages to crack the code he gets the Block. 1 Block has 6.25 BTC at present, this number is halved every 4 years. So, a miner can earn around 6.25 BTC * $60,000 = $375,000 i.e. 2,81,25,000 INR. The money is good, but so is the cost involved in mining. The equipment involved in mining doesn’t come cheap. An ASIC miner can cost you anywhere between $2,000-$10,000. And then the cost of electricity ain’t cheap either. Still, people with expertise mine Bitcoins, earn good money doing it.

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