Bitcoin mining, how it is done, and devices that can mine bitcoin, all this and more, we explain in a simple way in this topic. Bitcoin mining is the name of the new Bitcoin encrypted digital currency creation mechanism out of the total supply of Bitcoin as a reward for solving block forms and adding them to the Bitcoin Blockchain. The name of mining is not the true meaning of the process of extracting the value of Bitcoin, but rather, the mechanism for obtaining the value of Bitcoin by documenting transformations and transactions with computer power. This mechanism is secured by a cryptographic method known as Proof of Work, which is a consensus algorithm that decrypts Bitcoin blocks with mathematical computational hashing power. This algorithm is designed to ensure the security of the Bitcoin network.
Bitcoin mining means burning a megawatt scale of electricity through computer equipment like the computer through which you read this topic, but it is dedicated to its computing power for mining around the clock and your regular computer may burn if you try to participate in mining Bitcoin through it, because it will race with mining computers With his modest abilities and will not stand until his temperature reaches its highest level and the end of it is damaged.
If you are someone familiar with the world of cryptocurrencies and its algorithms, you might wonder why Bitcoin doesn't convert to a POS consensus algorithm? We will not need computing power, large computing power expenses, electricity and cooling. The answer is not that simple, as you think, because PoW is the algorithm that ensures the network is decentralized, in an uncontested manner, and is more decentralized than PoS.
Since the entire market situation is largely dependent on bitcoin, BTC mining is an important component of the cryptocurrency industry and will continue to evolve until the last coin in the Bitcoin network is mined. In this topic, we will talk about Bitcoin mining, and talk about whether Bitcoin mining is still profitable and the future of Bitcoin.
A complete explanation of Bitcoin in detail: What is Bitcoin in simple and understandable terms
Bitcoin mining is a profitable investment if you have the right hardware and environment for mining. Prospecting for digital gold, i.e. Bitcoin, is a difficult, expensive and very profitable process on two sides, the first is the high price that increases the value of your bitcoins in 9 digits in a good time, and the value you extract from mining. It is the most expensive virtual asset that gains its value through supply and demand, and what strengthens the demand for it is the limited number in the world, its decentralization, and a strong bid for traditional means of payment, intercontinental in seconds, and its value can be held in many digital forms.
Let us tell you the beautiful story of Bitcoin in lines, at the dawn of the cryptocurrency industry, the first Bitcoin did not cost a single penny, then it was given one cent, and at the end of 2017 the price of one bitcoin rose to $ 20,000 and now at the end of 2020 and the beginning of 2021 the price has reached To 24 thousand dollars, and this is not the maximum, it may increase without stopping, but with high volatility, the price may return to the four digits at any moment. But let's be positive about our data, with those who cared about cryptocurrencies who started mining Bitcoin on their own in 2010. Of course, it is impossible to determine the exact amount of profits they made for everyone who believed in the Satoshi Nakamoto project 10 years ago, most of whom made fortunes and became Of the world's wealthiest. Although the volatility of bitcoin is unpredictable, the digital money industry is very promising. So what does it take to start mining Bitcoin?
Mining is an account on special equipment for an encrypted and limited amount of encoder code. The task is performed by enumerating the numerical combinations. In the course of this work, a new cryptocurrency block is formed. Includes all data on currency conversions between users for a given period, a link to the previous block and the final hash sum. It is the one you need to find to complete creating the block and start a new block. When the miner finds the hash signature, the rest of the network nodes validate the block and after that it becomes an integral part of the blockchain, and the device owner is rewarded with BTC cryptocurrencies.
Explain blockchain in detail: What is blockchain technology? Simple and easy explanation
Copies of data are stored on many networked computers and each is updated regularly, with information about new blocks added. A crypto network is a chain of many nodes in different parts of the world. Includes all owners of cryptocurrencies, but only some of them are involved in its maintenance. In order to generate income by participating in the search for new blocks of the Bitcoin ecosystem, you need a specialized ASIC computing device. During the block formation process, miners process transactions, protecting the system from double spending attack. Since it is profitable to mine Bitcoin, a large number of people are involved in this business. The POW consensus algorithm provides better decentralized proof of work than alternative network security methods. But decentralization is one of the main guarantees that people who want to invest in the Blockchain project will not fall victim to cybercriminals.
The digital gold issuance is limited to 21 million Bitcoin units. The Bitcoin Blockchain ecosystem is not regulated by any country or organization. Currently, in principle, anyone can mine and mine bitcoins via the mining process with the right equipment. However, not everyone can set up the equipment and start the mining process on their own, because it is a somewhat complicated process and needs experts at the moment.
Bitcoin mining operation
The creator of the first cryptocurrency (Bitcoin), Satoshi Nakamoto, invented the code for the program in a way that protects digital money from inflation. This is represented in:
- The maximum number of Bitcoin cryptocurrencies is set at 21,000,000 BTC.
- It is mathematically extracting coins through computers
- Reduction of the mining bonus or solving block shapes after every 210,000 blocks mined.
- Reducing the number of bitcoins extracted every 10 minutes out of a total of 21 million Bitcoins by nearly half every 4 years
Why is all of the above so strict?
Simply, in order for the value of Bitcoin to increase over time, the limited number of currencies indicates Bitcoin is not mutually exclusive, meaning that there is no one who prints it in crises or when needed, as is the case with local currencies. When we say mathematically, we trust in mathematics in order to verify and calculate everything related to the currency in a way that no human can interfere with. The reward is scaled up because this increases the number of supply of the currency and warns its source over time because it is limited, and as we know with gold that its value is high Because of its vow and the difficulty of searching for it.
But how will I benefit from the value of Bitcoin in a currency that I can spend?
You can immediately exchange the acquired coins for fiat currencies, and in a very easy way through the many services that provide this around the clock, and many of those who are unable to mine Bitcoin wish that you would offer them what you have coins to trade in or hide. But as a cryptocurrency metal, you are looking for profits, and as indicated, you can also profit from the rise in the price of bitcoin, in the period when the price of bitcoin is much lower than the historical maximum, so it is not appropriate to spend it.
Who is Miner Bitcoin So?
Miner are people or individuals, individuals or companies, who connect to the Bitcoin network or the Bitcoin blockchain one or more machines equipped to participate in mining activity or documenting transactions on the blockchain. The metal or documentary equipment mainly consists of a high-strength graphics card or GPU, or dedicated computers such as ASIC or CPU computer processors linked, loaded and installed with mining software or a copy of the entire blockchain network.
Bitcoin mining how is it done (devices, equipment, and wallets)
Bitcoin mining or authentication of a Bitcoin transaction is based on solving mathematical equations for a set of transactions collected in a block in the blockchain network in which many miners participate. All transactions from the day Bitcoin appeared on that blockchain and in those bonds, every person owns Bitcoin and the value that he owns, (of course it is not the person who is known, but rather the address of the wallet that the person owns). Operations - and + in the accounts of bitcoin owners are registered, and those transactions are processed and documented according to the distributed bonds or the Bitcoin blockchain.
No one, even the miners themselves, can change, or falsify data and records of Bitcoin transactions, which commands all transactions in a secure record, and the documentation computers can mine and approve the transaction and the transaction or not. Via coded mathematical algorithms to solve the intricacies of the vast amount of transactions that occur every second. Commander that calls for supercomputers in their analytical capacity.
The equipment you need to mine bitcoin
Before it was possible to mine bitcoins on a desktop computer, even on a laptop. But with the increasing popularity of digital currencies, mining equipment began to improve and various forms of mining hardware appeared. In principle, this was the initial concept of Satoshi Nakamoto, the inventor of the first cryptocurrency. He might have imagined the Bitcoin network as a community of regular computer owners. Although some experts believe that Satoshi anticipated the possibility of mining GPUs, thus giving rise to mining farms.
But progress has gone further, and for a long time, central processors and GPU platforms were no longer suitable for mining Bitcoin. The more miners are than digital gold, the faster the calculations are complicated and low-power equipment stops handling the task. There was a need for digital miners who were able to replicate probabilities over long cipher chains at high speed. Therefore, ASIC special integrated circuit computing devices were launched.
ASIC is a highly specialized computer that performs only one operation, which is mining cryptocurrency on a specific algorithm. This type of computer is simply arranged and installed and linked with similar ones in order to combine computing power into a single entity.
As pictured, this rectangular metal box contains one control panel and one or more hash cards. Cooling system fans are installed at the end of the case, and the power supply can either be included with the device or sold separately. When choosing an ASIC digital bitcoin miner, you should pay attention to the following parameters:
- Hash rate
- Energy consumption rate
- Device price
The higher the hash rate, the faster you can make money. But if you can purchase a model with a lower hash rate, but more energy efficient and cheaper, the choice is clear. Bitcoin mining ASICs can mine other currencies that run on the SHA-256 algorithm. But it's impossible to mine Litecoin or Ethereum with those equipment that was only made for SHA-256.
Using the instructions you find with the device or via the Internet, you can install the device yourself, but you can hardly bear it in your home and operate it in because ASICs make a lot of noise and are intended for non-residential buildings because they are always operational for continuous mining. In addition, in the room where the ASIC digital miner works, it is necessary to observe the temperature and humidity regime required in the instructions. Also, the device should always be dusted and cleaned, because dirty with dust will lead to overheating, and the latter is the enemy of any device. If you don't have a non-residential, detached, clean building with good ventilation and connected to the mains and the internet, take your ASIC to your mining equipment hosts right after purchase.
Wallets and programs for the extracted bitcoin
Now everything is ready about the required equipment, but how do you get the bitcoin that you will get from the mining if you do not have a wallet connected to the mining device?
In this regard, the options are numerous, for example you can easily create a cryptocurrency wallet by downloading the appropriate application to your computer or phone. There are many wallets in many shapes for you to choose the right one.
In addition to a Bitcoin wallet, you need a personal computer to set up the ASIC machine you have dedicated to mining. You will download the IP Reporter application, and more settings will be made through the web interface that will allow you to connect to the device via a private IP from which you can configure the device, you must read how well, or it must be set by a specialist.
When mining bitcoin was on the CPU, then on video cards, it was necessary to install special software. Some of them, for example, BFGMiner, are still available for download. Such software can be used to set up production on ASICs in single mode. However, it is still better to join the mass mining pools through it.
Mining complexes
A mining pool, or mining pool, is a server that several miners connect to and solve the block problem together. That is, they deliver power to split their properties to the shared server in order to participate in solving block shapes. When a block solution is signed, the mining reward is split among all participants in that pool, in proportion to the share of the participating travel power in the community. The pool organizer makes a profit by charging a commission from each participating member.
If you want to share your computing resources, we recommend that you use Binance Pool , as the service has been running for several months and has already proven itself well and showed good profit. The more miners working in the complex, the greater the chances of finding a block faster than the competitors. However, you should pay attention to the stock accounting system, commission size, and website reputation.
ASICs hardware companies also have their own mining pools, for example, the same manufacturer of Bitmain mining machines has their own Antminer pool, which they can participate in in order to mine Bitcoin.
Bitcoin metal or documented operations, what are his profits and benefits from the above:
When we hear that the number of Bitcoin is limited in a certain number, it means that that number is for miners only. As for the bitcoin that is owned by people who have nothing to do with mining Bitcoin from near or far, they got it by buying bitcoin from two miners (and they may be people, companies Exchange brokers ... Each mining process or documenting a set of transactions and transformations (+ and -) that are collected in a block, whose size is specified, the miners receive a prize of bitcoin value also specified in the Bitcoin blockchain, that prize is distributed to the participants in solving that block.
According to similar documents, authentication. Any operation that is not identical to what is recorded in the data of the distributed blockchain that the miners own is considered suspicious, as the assumptions on which this blockchain was built reject those transactions.
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