Bitcoin, the world’s first widely-adopted cryptocurrency, was created by the anonymous Satoshi Nakamoto in 2009. It operates without the oversight of banks or the government, relying on peer-to-peer software and cryptography instead.
Bitcoin runs on a decentralized computer system and new bitcoins are generated and enter into circulation through a process called “mining.”
What is bitcoin mining?
Simply put, bitcoin mining is the process of creating new bitcoins and the way a new bitcoin enters into circulation. Mining also verifies transactions and adds new blocks to the Bitcoin network.
How is bitcoin mining performed?
To successfully add a block, bitcoin miners have to solve complex math problems, called hashes that require the use of high-performance computing systems. Miners are then awarded block rewards, or a set number of bitcoins – since the reward is halved every four years.
Bitcoin mining is, in some ways, similar to mining gold or any precious metals. While precious metals miners will unearth gold, silver or diamonds, to be rewarded with new bitcoins miners need the help of supercomputing systems.
To earn new bitcoins you need to be the first miner to arrive at the right answer. And the method through which the creation and transaction of a new bitcoin are verified and tracked is called proof of work. The “work” is solving the highly complex math problems, and the “proof” is the solution the miners find to the issue.
Who can mine bitcoin?
In the early days, bitcoin could be mined by everyone, with a simple CPU chip on a home computer. Due to the increased complexity of the process, however, these chips have become impractical. Miners now need an application-specific integrated circuit (ASIC) or a specialized GPU and they also need to become a member of an online mining pool. Nowadays, one can choose among the best bitcoin mining companies for a successful mining outcome.
Is mining bitcoin profitable?
Bitcoin mining can still be extremely profitable. However, considering the extremely complex setup that is required for it, partnering up with bitcoin mining companies could be the best option.