Don’t worry, dear reader, because in this article I’m going to show you what Bitcoins mining is: What does Bitcoin mining mean and How the mining process works.
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What does it mean Bitcoin mining?
In this section we are going to see 6 basic concepts that explain in a very simple way the meaning of mining Bitcoins:
- The mining of Bitcoin is the backbone of the Bitcoin network because it is a fundamental process for the proper functioning of Bitcoin.
- The miners provide security and confirm all Bitcoin transactions.
- Without the miners, the Bitcoin network would be attacked and dysfunctional.
- The mining of Bitcoin is carried out by means of specialized computers.
- Miners perform their function by performing a certain computational problem that allows them to chain blocks of transactions to Blockchain.
- Miners are rewarded with newly created Bitcoins and transaction fees.
Perhaps in order to understand the basic concepts of mining Bitcoins that I have just explained you should read the following article first: What is Blockchain and how does it work?.
Summary: Mining is a very important process of the Bitcoin network because in addition to providing security and confirming transactions, they add new blocks to the Blockchain. Minar Bitcoin offers as a reward newly created Bitcoins.
How Bitcoins mining works
What does Bitcoin mining really do?
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As I have already commented, Bitcoin mining performs the following functions:
- Emission of new Bitcoins.
- Confirmation of transactions.
- Network security.
Mining is used to emit new Bitcoins
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Traditional currencies, such as the euro or the dollar, are issued by central banks. The central bank can issue new units of money at any time based on what they believe will improve the economy.
Bitcoin is different because it is a cryptocurrency. With Bitcoin miners are rewarded with new bitcoins every 10 minutes.
The emission rate is set in the code, so miners can’t fool the system or create bitcoins out of nothing. They have to use their computing power to generate the new bitcoins.
Miners confirm transactions
The miners include in their blocks the transactions sent through the Bitcoin network.
A transaction can only be considered secure and complete once it is included in a block.
Why? Because only when a transaction has been included in a block is it officially embedded in the chain of Bitcoin blocks.
Large transactions require a larger number of blocks for validation. Here is a brief summary of the size of the transactions and the number of blocks you need to validate them:
- Transactions with 0 confirmations can be cancelled.
- A confirmation is sufficient for Bitcoin payments of less than €1,000.
- Payments between €1,000 and €10,000 require 3 deposit confirmations.
- Payments between €10.000 and €1000.000 need at least 6 confirmations to be validated and considered secure.
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Miners protect the network
Miners protect the Bitcoin network network by making attack, alteration or arrest more difficult.
The more miners mine, the safer the network will be.
The only way to reverse Bitcoin transactions is to have more than 51% of the hash power of the network. The distribution of hash power among many different miners keeps Bitcoin safe and secure.
How to mining Bitcoins?
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Do you really want to mining bitcoins? If you have thought about mining Bitcoin I must tell you that in many cases is not a profitable process because it is a highly specialized process. Most of the Bitcoin mining is done in large factories where there is cheap electricity.
However, if you feel like mining Bitcoins for hobby, I’ll show you the steps you need to follow to extract bitcoins right now:
Step 1: Buy mining Bitcoins hardware
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You must have one thing clear: You can’t mine Bitcoins without using ASIC mining equipment. ASIC miners are specialized computers that were built for the sole purpose of extracting bitcoins.
Don’t try to mine Bitcoins on your desktop computer because the only thing you will get is to spend electricity.
[amazon box=»B07BHP6C1F,B07BPZGFM7,B07573ZJ3D» template=»horizontal»]Step 2: Select a mining platform
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Once you have the mining hardware, you must select a mining platform, also called minning pool.
Without a minning pool you will only receive rewards when you create a block by your own means, this is called solo mining and is not recommended because of the hash rate of a single hardware.
What are the advantages of mining pools? As you’ve heard before, unity is strength. Joining a mining group shares the same hash rate with the group. Once the group finds a block, you get a payment based on the percentage of the hash rate contributed to the group.
In short, joining a mining pool increases the likelihood of success in earning rewards for mining Bitcoins.
Step 3: Get the Bitcoin mining software
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Bitcoin mining software is the way you connect your mining hardware to the selected mining pool.
The functions performed by Bitcoin mining software are as follows:
- Add our hash rate to that of the pool. This quantifies our contribution to the creation of new Bitcoins.
- Indicates the public address where the rewards obtained by the mining pool will be sent.
If you don’t have a bitcoin wallet or Bitcoin address, learn how to get one here.
Mining software is available for Mac, Windows and Linux.
Step 4: Make sure that in your country it is Legar minar Bitcoin
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I recommend that you consult a local advisor for further assistance in determining whether Bitcoin mining is legal and the tax implications of carrying out the activity.
Step 5: Is it profitable for you to mine Bitcoins?
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Before embarking on such an ambitious project as the mining of Bitcoins, you’ll have to make calculations and check that it’s profitable for you.
There are Bitcoin mining calculators that perform the necessary calculations to tell you if it is a good idea to invest.
What hardware is needed to mine Bitcoins?
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Bitcoin mining equipment (ASIC) are highly specialized computers used to extract bitcoins.
When Satoshi created the Bitcoin concept his intention was to mine with the CPU’s of desktop computers. However, the entrepreneurs soon discovered that they could get more hash power from the graphics cards and created mining software to enable it.
GPUs were surpassed by ASICs (Application Specific Integrated Circuits).
Today all serious Bitcoin mining is done in ASICs, usually in thermally regulated data centers with access to low-cost electricity.
What are Bitcoin’s mining pools?
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Mining pools allow small miners to receive rewards more frequently by allowing them to join other miners in a group called a mining pool.
But not all are advantages, there are some problems with mining pools.
- Pools are groups of cooperating miners who agree to share the rewards of the blocks in proportion to their contributed mining power.
> Compared to the carbon emissions of PayPal employees’ cars while travelling to work, Bitcoin’s environmental impact is negligible. Then you might think that there are particular interests that don’t want Bitcoin to succeed. > You may wonder why Bitcoin creation has not been accelerated with the appearance of more powerful hardware: The creation of new Bitcoins is regulated by the Difficulty, an algorithm that adjusts the difficulty of the Working Test problem according to how quickly the blocks are resolved in a given time (approximately every 2 weeks or 2016 blocks). . Conclusion: The difficulty varies with the hashing power deployed to maintain the average time between blocks around 10 minutes. In other words, it is the system itself that self-regulates and prevents new blocks from being created faster than designed.Is Bitcoin mining a cost of electricity?
Difficulty mining Bitcoins
We know the maximum number of Bitcoins is 21 million. No more can be created, so we have a finite and determined number of Bitcoins on the market.
