Bitcoin is a modern-day digital currency also known as cryptocurrency. It has gained too much popularity right from 2009. Bitcoin is owned and managed by its controller/ owner/ peer to peer. It has no central user or owner, unlike traditional currencies. Bitcoin is managed using a modern-day technology known as Blockchain. Blockchain is again a new kind of trending list of encrypted digital blocks which are digitally linked together in a very secure way. This whole linked encrypted data maintains the whole database for Bitcoin. It has been interesting to know that Bitcoin was the very first real-world application of Blockchain technology.
Introduction to Mining of the Bitcoin
Source: unsplash.com
Gaining cryptocurrencies by simplifying some cryptographic equations with the help of computers is known as Crypto Mining. The Mining process involves validating data blocks and adding records of transactions to a public record, also known as Ledger. This entire process is known as Blockchain. As a result of this entire process, the miners receive payment in the form of cryptocurrency. This process is known as Mining as it allows new digital currency coins into circulation. Miners involved in the whole Mining process solve complex mathematical problems using
Various kinds of mining software. This whole process verifies the transactions on the network and sends them to the Blockchain. Miners are then rewarded with cryptocurrencies for their work. The blocks of Blockchain can hold thousands of transactions. This number can change for distinct cryptocurrencies as every cryptocurrency has its block size and transaction speed.
Bitcoin Block Reward
Source: unsplash.com
Miners for Bitcoins are approximately rewarded 6.25 Bitcoins. This amount is expected to go down up to 3.125 Bitcoins by 2024. This reward is sanctioned along with the respective transaction to the respective miner, the one who has found the solution of the puzzle very first.
On the machine network for Mining, this process is repeated approximately after the duration of 10-minute. Further, the level of the difficulty for the Network Difficulty in puzzle is adjusted after every 2016 block, which approximately takes 14 days. This happens to take care that, on average, one machine gets the access to solve the puzzle in only 10 min.
For the calculation of the network difficulty, a process of calculating the total amount of hash rate contributing to the Bitcoin network is adapted.
Can Mining be more profitable than buying Bitcoins directly?
Source: wired.com
It is a bit of a twisted question. The answer to this question can vary upon the understanding and the capability level of various cryptocurrency earners. For some who are pro or, let us say, very good at solving puzzles and earning Bitcoins, the process widely known as Mining, buying Bitcoins might not be a profitable method. On the other hand, Mining will not just be an option to make the way towards cryptocurrency for someone who is not very good at it. Rather in such a situation, the choice left with the individual will be buying Bitcoins directly.
Talking about someone good at Mining will be a better option to survive in the crypto market. Successfully mining just one Bitcoin block and maintaining that since 2010 would mean that they now held $450,000 worth of Bitcoin in their wallet in 2024.
This is how profitable Mining of Bitcoin could be combined with Patience.
What are Mining Hardwares?
Source: medium.com
Talking about Mining hardware, they are just simple computers that are created only for mining Bitcoins. As powerful is this Mining hardware with being more energy efficient – the miner can make more and more profit out of the mining process.
What does Hashrate mean in Crypto Market?
Source: unsplash.com
The estimate for the miner’s hardware computational power is known as git Hashrate. In other simple words, the more computational power of the respective miner, the more profitable Mining of the Bitcoin and earning greater rewards, but all this leads to the more difficult puzzles to solve. So basically, it is a computational arms race in which the person or community with the most efficient and powerful computational power will be able to mine the most of the Bitcoins in the race.
Why is it like more the computational power, increase in the number of Bitcoins?
More computational power means extended mining of the Bitcoins because the greater the efficiency of the computers leads to better and extended solutions for the puzzles. And the more the solutions, the greater the rewards miner will receive.
Up till 2019, the hash rate was calculated in a hash per second (H/s) unit. Because of some exponential growth of Mining (as it can be seen), H/s was very soon pre-fixed with some other SI units, listed below:
| Kilohash | KH/s (thousands of Hashes/ second) |
| Megahash | MH/s (millions of Hashes/ second) |
| Gigahash | GH/s (billions of Hashes/ second) |
| Terahash | TH/s (trillions of Hashes/ second) |
| Petahash | PH/s (quadrillions of Hashes/ second) |
Conclusion
As mining of Bitcoins surely involves too many variables and puzzles. It is the exclusive reason why purchasing Bitcoins can prove to be a much simpler method to earn profit from it. However, for the person having enough capacity to deal with those too many variables efficiently, Mining of the Bitcoin can end up rewarding so much more than simply holding.
One of the most important pointers for the Bitcoin profit makers is the price of the Bitcoin itself. If, like most of the other people, one is investing dollars to pay electricity bills for running their hardware and on its maintenance, they need to ensure that they make enough profit out of it to make up with the hardware and electricity expenses to earn profit out of the whole process. To know more about Cryptocurrency like Ethereum Click Here.
