1:19
beginner
June 13, 2022
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what is bitcoin mining?

Bitcoin (BTC) is a cryptocurrency that functions on a Proof of Work (PoW) system, where a series of computers compete, or ‘work’, to form the next block in the chain and, in return, be rewarded with BTC. This system is how BTC operates; the computers act as ‘miners’ who work to create the new block.

BTC miners compete to solve incredibly complicated math problems that necessitate expensive computers and massive amounts of electricity to add a block. Miners must be the first to arrive at the accurate or closest solution to the question to complete the mining process. Miners solve algorithms by making as many guesses as they can at random, which takes a lot of processing power. As more miners join the network, the difficulty rises.

When BTC was created back in 2009, mining was possible from a personal computer because significantly fewer people were trying to mine. However, there are now ‘Bitcoin Farms’ where thousands of specialised computers are set up to compete and create the new block. Therefore, your chances of successfully mining from a personal computer are minimal. Application-Specific Integrated Circuits (ASICs) are the computer hardware needed to mine, and they can cost up to $10,000. Environmentalists have criticised ASICs for consuming a large amount of electricity, which has limited miners’ profitability.

An immense amount of electricity is needed to power the computers, not to mention the upkeep that goes with them now (such as cooling). As of April 2022, the 19th million out of 21 million BTC was successfully mined, leaving only 2 million BTC for miners to compete against each other. If a miner successfully adds a block to the blockchain, they will be rewarded with 6.25 BTC. Every four years, or every 210,000 blocks, the incentive value is lowered in half. BTC was trading at roughly $40,000 in April 2022, making 6.25 BTC worth nearly $250,000.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

what is bitcoin mining?

Bitcoin (BTC) is a cryptocurrency that functions on a Proof of Work (PoW) system, where a series of computers compete, or ‘work’, to form the next block in the chain and, in return, be rewarded with BTC. This system is how BTC operates; the computers act as ‘miners’ who work to create the new block.

BTC miners compete to solve incredibly complicated math problems that necessitate expensive computers and massive amounts of electricity to add a block. Miners must be the first to arrive at the accurate or closest solution to the question to complete the mining process. Miners solve algorithms by making as many guesses as they can at random, which takes a lot of processing power. As more miners join the network, the difficulty rises.

When BTC was created back in 2009, mining was possible from a personal computer because significantly fewer people were trying to mine. However, there are now ‘Bitcoin Farms’ where thousands of specialised computers are set up to compete and create the new block. Therefore, your chances of successfully mining from a personal computer are minimal. Application-Specific Integrated Circuits (ASICs) are the computer hardware needed to mine, and they can cost up to $10,000. Environmentalists have criticised ASICs for consuming a large amount of electricity, which has limited miners’ profitability.

An immense amount of electricity is needed to power the computers, not to mention the upkeep that goes with them now (such as cooling). As of April 2022, the 19th million out of 21 million BTC was successfully mined, leaving only 2 million BTC for miners to compete against each other. If a miner successfully adds a block to the blockchain, they will be rewarded with 6.25 BTC. Every four years, or every 210,000 blocks, the incentive value is lowered in half. BTC was trading at roughly $40,000 in April 2022, making 6.25 BTC worth nearly $250,000.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

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