What’s the first thing you think of when you hear, ‘Bitcoin Mining’? Maybe a human somewhere among the vast lands, digging the ground and striking at a treasure? Well, that’s not very far from the actual definition of Bitcoin mining. This comprehensive Bitcoin mining guide will explore everything about this exciting process in the field of cryptocurrencies mining.
What is Bitcoin Mining?
Powerful computers solve complex mathematical problems – this is how Bitcoin mining works. Humans can never do these problems manually, and neither can ordinary computers. They are very specialized computers that mine Bitcoin cheaply.
There are two outcomes of Bitcoin mining. When the computers solve the mathematical problems, they discover new Bitcoin (consider this something like a reward). Two, the more problems these computers solve, the more secure the Bitcoin network becomes. So, you can imagine the entire Bitcoin network goes towards more security. With Bitcoin mining, there is a continuous verification of Bitcoin transactions. All Bitcoin transactions are accessible on a public block called the Blockchain.
How is Bitcoin Mined? – Bitcoin Mining Basics
The people/machines which mine Bitcoin are Miners. These people process and verify the transactions before record as blocks on the Blockchain. As a reward, these miners get transaction fees in the form of Bitcoins. Computers achieve this with ease, but the process of verification becomes hard with increasing sophistication in computers.
There is competition among miners in the peer-to-peer networks. How to mine Bitcoins fast? The faster the processing of the mining computers, the more attempts it makes to complete the Bitcoin verification and, in the end, earn Bitcoins along with the transaction fees. As a part of this Bitcoin mining beginners guide, here are some steps in Bitcoin Mining
Bitcoin Transaction Announcement
People day trade bitcoin or invest in Bitcoin or cash out Bitcoin and create Bitcoin transactions. As a short overview, Bitcoin mining starts with verification of transactions, if they are valid. Then these transactions are put on a block. The most recent block’s header is selected, and a new one is inserted on top of it with a hash. After this, the miners complete the proof of work. Finally, the new block is created on the blockchain and added to the network.
Coming to the first step, that is Bitcoin transaction verification. The miners ensure that no Bitcoin user has spent the same Bitcoin twice in two different places/transactions. There is a risk with a digital currency that the user can create a copy of the original Bitcoin.
For every verification of 1MB of Bitcoin transactions, the miners get a reward with a certain quantity of Bitcoin. But note that they will only be eligible, and ultimately, not every miner who verifies will be paid out.
Two Conditions to Mine Bitcoin
To earn the bitcoin, you require a combination of effort and luck. Verifying 1MB of Bitcoin transactions minimum is the easy part, the harder one is to be the first miner to solve a computational problem.
Advanced Computation in Mining
By an advanced mathematical problem, it is not a long equation, the miner has to be the first one to come up with a hash – 64 digit hexadecimal number that is either equal to or less than the target hash. So, if you look at it in a way, it is guesswork. And you might guess, but there could be trillion possibilities. Of course, there can be. That’s why mining computers have incredibly heavy processors with high hash rates.
Circulation of Bitcoin Through Mining
As this Bitcoin miner beginner’s guide mentioned above, mining is responsible for bringing new Bitcoins to the network. When the founder created the first block, it was called the genesis block that had an initial set of Bitcoins in circulation. From there on, every other coin came into existence thanks to the efforts of miners. As of November 2020, there are 18.5 million Bitcoins in circulation.
But as per the Bitcoin protocol, there is an upper cap of 21 Million Bitcoins for circulation. But, the rate at which mining happens will reduce overtime to compensate for the approaching target. According to predictions, the last mined Bitcoin will be in 2140. But note that the miners will be paid for verifying the Bitcoin transactions even if they do not mine new coins.
Requirements for Mining Bitcoins
If you want to be strong enough to mine, you will need a computer to mine Bitcoin with GPU. More specifically, you will need an ASIC (application-specific integrated circuit). There are modern applications that enable bitcoin mining from your computer or your phone. Traditionally, bitcoin mining happens in large warehouses with multiple computers all working to predict the target hash. Note that this equipment can range anywhere from $500 to thousands of dollars.
What is the Use of Mining Bitcoin?
One reason why bitcoin mining is attractive for prospective crypto investors is the reward in the form of Bitcoin. However, it is easier said than done. There is just too much competition to mine Bitcoins, and you need a very high powered-CPU to enable that. However, bitcoin mining is essential for the sustenance of cryptocurrency. Here’s why
Issue New Bitcoin
Every time a computer becomes the first to solve the hash puzzle described above, a new Bitcoin is added to the blockchain network. To date, there is around 18 million Bitcoin in circulation, and all of them, except those created initially, exist thanks to bitcoin mining. The miner who does it the first also receives a block reward which ranges, currently, it is at 6.25 BTC.
Confirm Transactions and Include in a Block
Even if a miner does not mine any new Bitcoin, they will get paid for verifying transactions on the block. What this means is that they will check if the transactions made by other previous Bitcoin users are legitimate. As in the case of digital currency, there is always a possibility of fraud by creating a digital copy of Bitcoin. For every 1 MB of block the miners verify, they are eligible to earn Bitcoin as a reward. Now, this 1 MB block can have either one or several transactions depending on the size of the data. This 1 MB limit was set by Satoshi Nakamoto, the founder of Bitcoin.
Blockchain Network Security – Why Bitcoin Needs Miners?
With more miners becoming a part of the Bitcoin network by continuously hunting for Bitcoin and verifying transactions, the network becomes less vulnerable to attacks. If any cryptocurrency hacker needs to gain control of this network, they need to gain access to more than 50% of the mining equipment at the same time. It requires an unrealistic level of technology and is complicated, so the probability of that occurring is almost zero. Thus, miners help stabilize the Bitcoin network significantly.
Bitcoin Mining Machine
Bitcoin Mining requires specialized and powerful equipment. The fuel for this large-scale process is computing power that some supercomputers and Bitcoin mining rigs fulfill.
As of now, there is a limited range to choose the ASIC but there are still quite a few options. Some will want more affordable equipment that they can operate from their homes, while others may be ready to invest in the hope of bitcoin mining some real coins. The consideration while choosing Bitcoin mining machines is their computing power, the amount of electricity they consume, the temperature at which they operate, and of course, their cost. This Bitcoin mining guide enlists a step-by-step process of how to mine via different types of equipment
How to Mine Bitcoin on ASIC?
You can use ASIC to mine specifically for Bitcoin and SHA-256 Algo coins. ASIC’s do one specific task, and that’s why they are better than a CPU or GPU. Although many manufacturers produce their own ASIC and chips, the most popular ones are a few; one of them being the Bitmain AntMiner S9.
The S9 has 189 ASIC chips. This machine produces total hash rates of about 12-14 tera hashes per second. Compared to this, CPU’s achieve only a few mega hashes per second.
Once you connect the ASIC to the power supply, connect the ethernet cable to it, which will provide access to the Internet. Turn on the miner that will power it up. Next, from your computer or mobile phone connected to the same network as the miner, enter the miner’s IP address. Modern miners do not require you to enter IP addresses manually, they just scan the devices present in your network and see their IP addresses. Once done, log in to the miner from your browser. Inside the account, configure your miner by clicking on the Miner Configuration Tab. Here you will add more information about the mining pool.
For information, you will need to enter the IP address of your mining pool, a name for your worker, and a password. After you save this setting, the miner will commence the mining, and you can see its performance on the Miner Status page.
Although this process is specifically for the S9, other miners more or less follow a similar way to mine through the ASIC. Having one ASIC required a large investment and only those who want to do bitcoin mining as a profession prefer it. If you do bitcoin mining as a hobby, head over to the next section in this Bitcoin mining guide.
How to Mine Bitcoins at Home?
Bitcoin mining is becoming extremely popular, so there is a demand for people to pursue it as a hobby at their homes, without any special requirement. In the beginning, when the first Bitcoin miners evolved, you could do it from a normal CPU without any other equipment because the network was small and needed much less computing power.
How to Mine Bitcoin on Laptop or PC?
One of the ways to mine Bitcoin from a laptop is to use Nicehash. This is a marketplace where you can buy and sell hash power, something that your laptop needs in more amount to perform the bitcoin mining. If you are facing difficulty mining Bitcoin, you can bid for hash power through Nicehash and pay them for it in the form of Bitcoin.
Parallelly, create a Coinbase wallet to store your mined coins securely. When you set up your Nicehash account, use the address of this Coinbase wallet. After this, go to Nicehash where you can download the mining software. Depending on the graphics card you have (AMD or Nvidia) download the correct mining software.
Download the software from the executable file, and let it boot up while setting up for the first time. Meanwhile, have your Bitcoin address copied so you can paste it immediately when the software prompts you to under the Wallets tab.
The miner will perform several tests to assess the hardware on your laptop. It will take up to 2 hours. Once it finishes that, the mining process will start, and you can see the estimated pay-out on the user interface.
How to Mine Bitcoin on Android?
It is a fact – at the rate at which bitcoin mining is happening across the world and the demand for hash power, your smartphones will take months of continuous operation just to mine a fraction of Bitcoin. So experts suggest bitcoin mining alternate cryptocurrencies and trading them for Bitcoin. Here are some of the Bitcoin mining apps for Android phones:
MinerGate – It is a mobile version of the MinerGate client for desktop mining and has an incredibly intuitive user interface. You can mine Monero, Bitcoin, and other alternate cryptocurrencies through this platform. This app is one of the few that has its wallet for storing the mined Bitcoins. You can also withdraw coins through Changelly.com, a cryptocurrency exchange of MinerGate.
CryptoMiner – It might not have an attractive user interface like MinerGate but supports many Bitcoin mining algorithms and currencies like Bitcoin. You can select the algorithm, several processing threads, and also the processing priority.
Like this, there are a few more applications on Android which use similar processes to mine Bitcoins and other currencies. Read the reviews of all of them, and better, talk to a mining expert who already has experience mining on Android.
How to mine Bitcoin Blocks on iPhone or iOS?
If you have an iPhone, you have an option to mine Bitcoins through MobileMiner. This CPU Miner is for iOS devices.
The initial effort to set-up MobileMiner is hard, but post that, it requires less maintenance. You have to use XCode to set the project and then link it to a crypto wallet. Use iPhone 7 onwards since they have more powerful processors.
To install MobileMiner, first use your Apple ID to be enabled as an Apple Developer. Then log in with your Developer login ID on the Mac App Store and connect your iPhone to your Mac. Make sure your iPhone is a trusted device. Download the MobileMiner.IPA and iOS App Signer from the GitHub page.
Steps To Mine Bitcoin On iPhone
Then, create a new XCode project and name it ‘iPhone Miner’. Check that the language is Swift, ensure that you are a personal team, and also create a name for the organization. Enable Unit Tests and UI Tests.
Following this, open the iOS App Signer, select the .ipa file, Provisioning Profile, and Signing Certificate from the XCode Project. Then, save this IPA file on your desktop.
In the next step, open the XCode, select Window -> Devices and Simulators -> Select your iPhone -> Click on ‘+’ -> Choose MobileMiner.IPA from the installed applications. This will now appear on the home screen.
Lastly, click on Settings -> General -> Profile & Device Management -> Select the profile under the Developer App -> Click on the ‘Trust’ Button -> Voila! The app will run on your iPhone now.
Following this, the configuration steps are straightforward, and you need to do it each time for a different currency. Next, you need to ensure that the app is continuously running in the background while your phone is idle. Note that it may cause your phone to heat up and consume battery power quicker.
Bitcoin Solo Mining Guide – Bitcoin Mining Software
Although Bitcoin mining hardware handles the computing power for the process, the software is equally essential if you are a solo miner, bitcoin mine with a pool, or cloud mining. The initial Bitcoin miners created various software that mined Bitcoins with the rigs. Since then, the Bitcoin software and operating systems have come a long way. These initial tools were just make-shift solutions and not efficient in the mining process.
Today, Bitcoin mining software is fully-fledged like any other software with intuitive user-interfaces and diverse functionalities. The main job of the software is to act as a middle-man between the Bitcoin mining hardware and the miners’ work. They send the mining hardware work to the Bitcoin network and receive the completed work from the bitcoin miners. While monitoring this information transfer, the software also displays statistics such as input rate, output rate, hash rate, temperature, etc.
If you are doing mining beyond a particular transactional value, you will need a Bitcoin mining tax software as well which will calculate the taxes you owe to the Government.
One of the vital things to need before using Bitcoin mining software is a crypto wallet. All software when you set up will ask you for a Bitcoin wallet address where it can transfer the payout from bitcoin mining.
Popular Bitcoin Mining Software for Windows: Brains OS
Famous Bitcoin Mining Software for Linux: Hashr8
Popular Bitcoin Mining Software for macOS: Hive OS
How to Mine Bitcoin Cryptocurrency?
This Bitcoin mining guide outlines the general steps to mine Bitcoin; the traditional way. Check out the steps to know how to mine Bitcoin step by step
Get a Bitcoin Wallet Where Your Mining Reward Goes
It is a crucial step as this is where you get your Bitcoin rewards and can manipulate (trade, exchange, pay) them. These wallets have an address which you need to mention while setting up your mining process. The bitcoin address has a private and a public key linked to the private key. The work is similar to like a bank account number. If you want to receive Bitcoins from someone, you give them your public key. The transactions through the public key can be traced on the blockchain. On the other hand, the private key sends off the transaction, and if you forget the private key, you might lose your Bitcoin forever.
Although there are both hardware and software wallets available, for beginners, the latter is preferable. It is secure and easy to use while you operating different features on your stored Bitcoin. You can download the wallet to your computer and secure it in a way that no one can access it.
Find the Best Bitcoin Exchange to Sell
A Bitcoin exchange is a platform for selling and buying Bitcoins and trading them with other cryptocurrencies. Although there are many Bitcoin exchanges around, the best ones are those which have a wide variety of cryptocurrencies to buy from. Depending on the exchange, you can also buy cryptocurrencies using fiat currencies.
In the context of bitcoin mining, you can exchange the Bitcoin you earn to trade for other cryptocurrencies or convert them to fiat currencies. While choosing a Bitcoin exchange, also take note of the different fees levied on the transactions. If you want to maximize your profits, you have to select the bitcoin exchange that charges the lowest for every transaction you make through it.
Also, good crypto exchanges offer incredible levels of security for your transactions and currency storage. Some of the features are two-factor authentication, encrypted emails, SMS and Email alerts, etc.
Purchase Bitcoin Mining Hardware – ASIC Miners
If you want to mine Bitcoins there are some parameters you need to consider: price, electricity consumption, and importantly, the hash rate. Hash rate is a measure of how many calculations a machine can make per second to solve a block.
Do not choose the mining hardware based only on price. Consider an overall combination of electricity consumption, performance, and cost. It is not easy to get these machines these days because of the high demand. It can influence the price as well and make people charge more than the actual cost. Before you buy an ASIC Miner, calculate the profitability of the device through an online calculator. This profitability calculator considers the parameters of the mining rig, the electricity consumption, difficulty of the mining level, and fees. Through this, you will get a general idea of how much you may earn, and the amount you have to invest at the beginning.
Note that you will need a space for placing your mining rig as well. It is not advisable to put it in your home as they take a lot of space and emit heat. The best solution is to ask your nearest data center and place this machine there. Also, you will avoid the excessive noise that these machines generate.
Select the Mining Pool to Receive Payouts
Even if you have the highest-grade ASIC miner, it is just not possible to mine Bitcoin today. The number of Bitcoin miners in the world today is just too much to make Bitcoin mining profitable alone for you. One way to alleviate this is to join a mining pool – a co-operation between miners.
In the mining pool, the miner operator shares the computing power with the other pool members. When they mine Bitcoin, they share the reward with all the miners. But each miner has to pay a fee to the operator of the mining pool. This fee is in the range of 0% to 2% of the total reward they receive.
Some of the biggest pools in the world are AntPool, BTC.TOP, BTC.com, and many more.
Download a Mining Software for Your Computer
After you get your mining hardware and a Bitcoin wallet to receive the tokens from, you have to get a mining client that will run on your computer. This software provides you a link to the Bitcoin network. The software does the work of delivering the work to the miners, collects and compiles their work results, and adds the information to the blockchain network. There is plenty of mining software to choose from. The best ones can operate on all OS and provides exceptional performance in any and each of them. Before you buy mining software, make sure you gauge the advantages and disadvantages of each one of them.
Check if your Bitcoin Mining is Illegal in Your Country Before you Mine
Whether Bitcoin mining is legal or not depends entirely on the country you live in. Some countries believe that Bitcoin threatens the concept of their fiat currencies. But of course, Bitcoin mining is legal in more countries around the globe, but it is still better to check with your government on how to mine Bitcoin legally. Some of the countries where Bitcoin mining is illegal at the time of writing are Pakistan, Morocco, Ecuador, Algeria, Nepal, Bolivia, and Egypt.
Configure Hardware and Software to Work with The Mining Pool and Start Mining Bitcoin
Once you have all the equipment and have done the research work, it is finally the time to start mining! Plugin your mining hardware to an electric outlet for power supply, link that with your computer with the mining software, fill in information about your Bitcoin wallet and the mining pool, choose the device, and voila! The mining begins!
Just a Tip: If you want to benefit more from the mining, one way is to keep track of what is happening in the crypto world through the news. This influences the price of Bitcoin considerably and can somewhere make a difference in the mining rewards you receive.
How Much Money Can I Make in Bitcoin Mining?
This Bitcoin mining guide will explain the prospect of Bitcoin mining in 2021. An amateur will think that given how expensive is a single Bitcoin, why not mine it instead? Well, it’s easier said than done. There is a lot of investment and effort that goes behind mining, and in most cases, sorry to say, you get almost nothing in return. This Bitcoin mining guide will try to gauge if Bitcoin mining is still profitable in 2021, and what are the elements that make it profitable?
Is Bitcoin Mining Profitable in 2021?
To calculate the profits of Bitcoin mining in 2021, you have to consider multiple variables. The ongoing costs include your bitcoin mining machine, the electricity needed to run it among many more. You will need to earn enough Bitcoins from the mining to cover these costs up and get some profits. Here are some factors that you can consider to mine Bitcoin at your home in 2021 with profits:
- Consider the electricity rates in the country or city you live in. Running a mining machine requires a lot of power supply. For instance, you will have to pay half the electricity cost you pay in the USA if you are in Russia for running the same machine. Check the mining machine you want to buy, and make sure to choose the most energy-efficient option.
- Take this forward and check how to mine Bitcoin efficiently through the right hardware. One ratio to look for is the electricity consumption of the miner versus the computer power it has. If computing power is more, you may earn more Bitcoin. If electricity consumption is less, your monthly bills will also be lower. When buying a Bitcoin miner machine, you need to think long term. One factor that miners look for is the price the Bitcoin needs to fall to for the mining to become unprofitable. You can find some of these charts already made for different machines on the Internet.
What Alternative Ways To Make Bitcoin Mining Profitable?
- The next way to increase your chances of making profits is to join a reliable mining pool. If you are mining with one or even multiple machines since the mining machines out there are large in number, the chances of finding a mining block are less. Some of the oldest pools out there are Slush Pool and F2Pool.
- Next, consider the fees for selling Bitcoin. For this, you need to compare what different exchanges offer. Always choose one that is cheap and is reliable. As in, the security is uncompromised.
You have to optimize these factors as much as you can to ensure that you create profits in Bitcoin mining in 2021.
Bitcoin Mining Calculator
To make the calculation easier and more portable, there are multiple Bitcoin mining calculators available all over the Internet. This Bitcoin mining guide provides information about the typical calculator available on the Internet.
In this, you enter the different variables going in the Bitcoin Mining. You enter the hash rate in TH/s, the price of Bitcoin, Power Consumption (watts), and cost per KW/h in $. Once you enter these, the calculator will provide you the estimates of profits you can make in a day, month, and year. Further, it tells you the Bitcoins you can mine in a day, month, and year.
Bitcoin Cloud Mining – How to Mine Bitcoin Easily?
Is it not at all possible for you to install hardware or software at your home or system? Well, there is a solution if you still want to do Bitcoin mining. You can do that by renting cloud computing power. The cloud mining firms ask the user to open an account with them, pay certain fees for remotely mining their bitcoins. This makes the process more direct and accessible to more people around the world. There is no maintenance or direct energy expenses since the mining is done via the cloud. Check out this section of the Bitcoin mining guide to know more about cloud mining
How does Bitcoin Cloud Mining Work?
Cloud mining uses the cloud to access capacity, database, and software. Pairing technology with cloud solutions is one of the fastest-growing ones in the world of IT. Cloud mining companies charge the users based on how much they use the cloud, similar to how your electricity board charges you on your electricity consumption amount.
There are several models of Bitcoin cloud mining. Hosted Mining is one, where the user leases or purchases the mining hardware that is present in the miner’s facility. It is the responsibility of the miner to see that the mining machine functions properly. Another model of Bitcoin cloud mining is leased hash power, where users lease hash power or computer power from a mining farm. From the farm’s overall profit of mining, customers get a share.
Bitcoin Cloud Mining Scams
Mining is one and the only way to get Bitcoins without directly buying them from an exchange. But it consumes a lot of resources. For instance, you need sophisticated machinery, large electricity consumptions to mine a portion of a single coin. Some mining companies have started offering contracts where users can rent the cloud server space at a set rate always.
These companies offer contracts that last for a lifetime, they say. But with time, mining difficulty only increases. This means that the same effort will provide you lesser rewards. They do not need to be transparent about the returns and the true cost, instead, they boldly claim exponential returns. Do not fall for these scam companies who promise you guaranteed returns. No one can guarantee that in the Bitcoin and cryptocurrency world. This Bitcoin mining guide explores how to avoid scams in the cloud mining space.
How to Avoid Scams in Bitcoin Cloud Mining Space?
The best way is to do complete research of the cloud mining company to whom you are subscribing to. Check their reviews. Talk to some people who have worked with them as users and get their response. Check online for similar services and identify what is good and bad in each of them.
Second, this rule generally applies to all cryptocurrencies. Do not invest a bulk amount at once. Only invest a small portion that you would not mind losing completely even in the worst-case scenarios.
Here are a few points to remember as a part of the Crypto Mining Guide:
- Stay away from all fake crypto platforms that tell you to invest through them.
- Always prefer to mine/buy only credible cryptocurrencies, that is, those that are well-known and reliable. That way you can avoid some volatility as well.
- Be alert while signing up on the servers of cloud mining services. Talk to the company about how they secure your data and compare it with the standard security measures like those to avoid double-spending Bitcoin in the industry.
- Update the system you are using for mining to keep it free from malware. Do not open unsolicited emails/applications. Regularly conduct scans to remove any form of virus/worms or other malware.
When Bitcoin Mining Ends?
At the time of writing, there are around 18.5 million Bitcoins in circulation. Note that the upper limit of Bitcoins that can ever be mined is 21 million. Each new block that is solved on the blockchain adds 6.25 Bitcoins currently, which is set to become half in the next Bitcoin halving.
If you are wondering, how many Bitcoins are mined every day, the answer is about 900. That is the average amount given that miners solve 144 blocks every day with each block giving 6.25 Bitcoins.
Considering the Bitcoin miners, around 1 million unique miners are working out there to get new Bitcoin. The estimation of this number is thanks to popular mining pools like Slushpool which has 200,000 miners in itself.
According to these estimations, taking into consideration the average number of miners too, the last Bitcoin might come out somewhere in the year 2140. That is also when the last Bitcoin halving will occur. But note that this is just an estimation, a lot of things can change over around 120 years.
How to Pay Tax on Mined Bitcoins?
This Bitcoin mining guide explores the taxation of mined Bitcoins. The reward you earn from cryptocurrency mining is taxable because it is a form of income for you.
But the method in which you are taxable whether you are doing mining for a hobby or business. For hobbyists, for instance, the income goes on line 21 on the Form 1040 Schedule 1. This category is ‘Additional Income and Adjustments to Income’.
The expenses you bear concerning mining will be in Schedule A(Itemized deductions), and the miscellaneous will carry a tax of 2% of AGI Limitation.
For business miners, the income and expenses go to the Schedule C form that is called the ‘Profit or Loss Business’. This income carries the 15.3% self-employment tax that all business owners have to pay. To offset the mining income, you can cut the business-related expenses as well.
Bitcoin Mining Centralization
If we have to explain Bitcoin mining centralization through a simple fact: Only two mining pools, according to Btc.com control 51% of the hash rate of the Bitcoin network. Hash rate is the total computing power that is keeping the Bitcoin network safe and running. The major mining pools are F2Pool, BTC.com, and AntPool that control the majority of the Bitcoin network through mining.
While some experts have called for panic, some have reiterated that the Bitcoin network is tough to hack. For any miner to take over the network, they need to hack at least 51% of the miners in the network and this is a costly and resource-intensive process. An attack can cost around $21 Million a day, and even if the attack is successful, the price of the Bitcoin becomes so less than what they get out of it will be close to nothing.
To measure Bitcoin decentralization, the Nakamoto coefficient is used. The value of it presently is 2 means that two entities control more than 50% of the hash rate of Bitcoin.
Bitcoin Mining for Beginners
If you are new to the field of Bitcoin mining game, the concept can be a little overwhelming. This Bitcoin mining guide makes it a little easy to understand. To break down to simpler commonly asked questions, here’s a part of this Bitcoin mining guide:
Who is a Bitcoin Miner?
A miner is a component that solves a computational problem in the Bitcoin network to get a reward in the form of new Bitcoins. This component is a combination of time and resources.
What is a Bitcoin Block Reward?
The block reward is the new Bitcoins that are provided by the Bitcoin network to cryptocurrency miners who successfully solve the computational equations for each block. They receive a reward when they verify the transactions in the block or when they solve the computational equations.
What is Bitcoin Mining Pool?
A mining pool is a group of cryptocurrency miners who combine the individual computing powers to mine Bitcoins. The rewards they get are then divided amongst each of the individual miners. But each miner has to pay a small fee from the reward they get to the mining pool owner.
What is Bitcoin Halving?
Bitcoin halving is the number of Bitcoins the miners receive for adding new transactions to the blockchain, and this number is being cut into half. In May 2020, the reward cut down from 12.5 Bitcoins to 6.25 Bitcoins for every successful block solution. Calculating from this rate, the last Bitcoin will be mined in 2140. The halving event takes place every 210,000 blocks.
What is Bitcoin Mining Difficulty?
It is the measure of the resources required to mine a new Bitcoin. Depending on the total hash power consumed by the network, the mining difficulty increases or decreases. This value changes roughly every 2,016 blocks.
What is Bitcoin Difficulty Adjustment in Mining?
Every 2,016 blocks or two weeks, the Bitcoin protocol adjusts the difficulty of solving the new blocks on the blockchain network by altering the range of possible solutions. This coder adjusts the difficulty of the blockchain network based on the mining power amount in the network.
Frequently Asked Questions
This Bitcoin mining guide answers the most frequently asked questions in the field of Bitcoin.
How to Mine Bitcoins for Free?
If you want to cut the costs completely to mine Bitcoins, you have to choose a free Bitcoin wallet and download free Bitcoin software. After installing this software, connect the free wallet to this software. Following this, join a Bitcoin mining pool where you will get rewards in the form of Bitcoins when the group solves a block.
What is the Bitcoin mining of electricity consumption in Bitcoin farms?
According to some online tools, Bitcoin mining uses around 0.21% of the world’s total energy supply. In 2018, Bitcoin mining used 45 TWh in 2018 approx. In the coming years, Bitcoin mining energy consumption will be higher.
How to Detect a Bitcoin Miner Virus?
Bitcoin miner virus mainly reduces the performance of your system. More severe forms of the virus can also damage the system’s hardware from the inside. Your PC may shutdown more frequently due to overheating. The two components which the virus will attack are your RAM and CPU.
How to Mine Bitcoins in 2021? Should I Mine It?
It depends. Note that you need to consider the expenses and compare them with potential Bitcoin mining profitability. Bitcoin mining is still profitable, but only when done on a medium to large scale. If you want to mine for serious reasons, get all the required equipment, join a mining pool.
Are There Bitcoin Miner Stocks I can Invest?
Some Bitcoin mining companies issue stocks like Bit Digital, Marathon Patent Group, and Riot Blockchain.
Is Bitcoin Mining a Waste of Electricity?
Bitcoin mining is a high electricity consuming procedure. You can do all the mining through your equipment spending a lot of electric power, and still end up with nothing or negligible Bitcoins. So, technically, Bitcoin mining is still not energy efficient. A way to solve this is to consider cloud mining options.
Takeaway – Bitcoin Mining Guide
Thanks for reading this Bitcoin mining guide. Bitcoin mining is an exciting activity for cryptocurrency enthusiasts. Since the field is relatively new, there is so much improvement to happen, and it is happening. There are lots of Bitcoin mining tools for serious business professionals as well as for hobbyists. Bitcoin mining will become more mainstream and accessible to most of the public out there. Stay in touch with how the cryptocurrency world evolves, Bitcoin mining will improve for you to undertake it.
I am a data analyst by profession who loves to crunch numbers at daytime and come home wondering how my passive income numbers for the day look like. I believe in being rich rather than looking rich. Follow me for Cryptocurrency, FIRE, Personal Finance, Credit Cards and Digital Nomad updates