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Common Questions Asked By Those New to Mining Bitcoin


September 2, 2020 ( Newswire) Although most people are used to cold hard cash or credit cards as a means of purchase, the world of cryptocurrency is quickly becoming more mainstream. Though many types of currency exist such as ethereum, NEO, or STEEM, bitcoin is by far the most popular. There are three ways to acquire bitcoin. One can purchase them on an exchange site, trade them for goods and services, or mine them with their own equipment. Even though bitcoin mining does not involve hard hats and chisels, there are many important tools of the trade, and a definitive procedure that must be followed.

What is bitcoin mining?

The bitcoin system of currency is strictly digital. Transactions are recorded and tracked in an online ledger, and this series of actions is knowns as a blockchain. Bitcoin mining involves a person solving puzzles via computer, in order to verify these transactions, and ensuring that the bitcoin is only spent once. According to Forbes Magazine, the world of bitcoin is quite heavily encrypted to protect privacy. Since there are so many miners studying these transactions and keeping the business legitimate, the world of cryptocurrency can remain decentralized. As miners verify transactions, more bitcoin are created to keep the cryptocurrency going. CNBC explains that finding the correct key for the transaction is like finding a ¨needle in a haystack,¨ but once a miner accomplishes this he is rewarded 25 freshly spawned bitcoin. Despite the enormity of the task, 25 new bitcoins are given out about once every 10 minutes.

In the 10 years the Bitcoin world has existed, people have harbored quite different views on the system and its legitimacy. Early on, Bitcoin sustained a blow to its reputation when it was associated with the Dark Web, and especially places like the Silk Road, known for selling body parts and worse. But the security of the decentralized system has caught the attention of businesses and governments in a more positive way recently. Governments are even considering using bitcoin´s blockchain technology in some of their business transactions to make them more protected.

How many bitcoin are in circulation?

Satoshi Nakamoto launched the bitcoin business in 2008. As of November 2019, roughly 18 million bitcoins are currently in circulation. Internet Advisor explains that each bitcoin equals just over seven thousand dollars. Additionally, each bitcoin that exists is only there because someone mined it into existence. The Bitcoin Protocal states that there is a limit to the number of bitcoin that can be mined into existence. They will be capped at 21 million. But because the rate of discovery slows with each passing year, that limit supposedly will not be reached until the year 2140.

How do I do it? What do I need?

Because the mining algorithm has become more difficult, a miner can no longer use a regular desktop computer to crunch the numbers. Miners are searching for a 256-bit number key, and there are millions of possibilities. The job involves processing a large number of hashes to find the correct combination, and a specialty mining rig is needed. Miners use a graphics processing unit, (GPU) or more often, an application-specific integrated circuit (ASIC). A budget system can be as little as 500 dollars, and faster systems can be upwards of tens of thousands of dollars. Consumers get what they pay for, and if they want to be able to be the first to crack the code, the more expensive systems are faster and more efficient. Besides the investment in this featured mining rig, would-be miners need to consider the cost of electricity. With the large amount of electricity pulled to run these programs, countries like China and Iceland are more successful at mining because of their cheap electricity. If a miner wants to turn a profit, the equipment and electricity usage will be the biggest expenditures.

How much internet speed?

Miners new to the business might think that it takes an enormous amount of internet speed to count the transactions. But that is not actually true. Internet Advisor explains that even 15 Mbps is enough because a miner really just needs to sync the data. One consideration for those mining at home is to make sure to have enough bandwidth. Depending on the number of people using the internet at any given time, the lack of adequate bandwidth could slow the machines and make finding the keys nearly impossible.

Is this a profitable enterprise?

The bitcoin are unrolled in a slow and methodical way, so there really is no way to make fast cash. A miner also has so much competition and it is very difficult to be the first to compute the hashes and earn the 25 bitcoin. Many miners turn to third party pools, so that if a key is found, they are able to split the profits among all those in the pool. CNBC reports that another upside of joining a pool is that a miner can use cheaper equipment.

Just like in the California Goldrush, people can also consider the ¨pickaxe¨ strategy. When Wild West miners could not find their own gold, they went into business making pickaxes. In the case of Bitcoin, a person could invest in a company that makes Bitcoin paraphernalia, such as GPU´s or ASIC´s. These support roles could turn out to be more profitable than the mining itself.

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