Bitcoin mining entails adding transaction details to the blockchain digitally. Blockchain is a public, distributed ledger that holds the history of all Bitcoin transactions. Ideally, Bitcoin mining compares to a record-keeping process. However, miners execute this process using powerful computers. Every Bitcoin miner is a part of the decentralized, peer-to-peer Bitcoin network that enables this payment system to remain secure and trustworthy.
Bitcoin miners solve complex math problems to add new blocks to the blockchain ledger. Upon finding a solution, the system adds the latest confirmed transaction block to the following link within the blockchain. And the system rewards the miner for solving the problem with a Bitcoin block as a mining incentive.
Bitcoin Mining Basics
People acquire Bitcoin in the following three ways:
- You can purchase Bitcoin on crypto exchanges like The News Spy. Perhaps, you can check The News Spy platform to check out the platform.
- You can accept Bitcoin payments for services and goods. Many people can pay you with Bitcoin for providing services and goods online.
- Mining new Bitcoin. This process requires competitive mining computers or rigs, low-cost power, mining software, and membership in a mining pool.
Essentially, mining is a process by which the world gets new Bitcoins. Bitcoin miners' focus is on solving complex problems to introduce new blocks of information about a Bitcoin transaction. Bitcoin uses blockchain technology that provides a publicly distributed ledger or record of all trades.
Ideally, this ledger is a digital blocks' chain. Every block has information about a Bitcoin transaction added by miners to using powerful computers to solve math problems. The Bitcoin network introduces a block to the chain after miners solve a problem successfully.
10 Minutes per Bitcoin Block
Bitcoin's creator, Satoshi Nakamoto, designed the network to allow a miner to generate a new block within 10 minutes. The math problems' difficulty adjusts automatically to maintain the 10-minute pace. The difficulty of mining new Bitcoins increases when the network has more computing power and miners try to produce new tokens by solving math problems. On the other hand, the difficulty level decreases when the network has less computing power and fewer miners.
Bitcoin Mining Evolution
Initially, Bitcoin mining was relatively simple. That's because people could mine Bitcoin using personal computers. However, the increasing popularity of this virtual currency increased its mining difficulty.
Therefore, you need a computer with higher processing power to mine Bitcoin. Miners tried to invest in gaming computers to enhance their mining abilities. However, the mining process became more complicated, requiring more powerful computers.
Eventually, experts created specialized chips and computers for mining Bitcoin. Currently, Bitcoin mining requires efficient hardware with high energy efficiency and computing abilities. Also, solving the Bitcoin algorithm, adding new blocks to the ledger, and earning Bitcoin requires a lot of electricity. Lowering electricity costs and investing in powerful computers are the only way to make Bitcoin mining sustainable and profitable.
As hinted, a miner gets a Bitcoin reward after solving a math problem and adding a new block to the blockchain. And the Bitcoin network halves this reward for every 2,016 blocks that miners generate. Also called halving, this process occurs every four years. Here's a history of the Bitcoin block rewards and the halving process.
- 20112: 25 Bitcoins
- 2016: 12.50 Bitcoins
- 2020: 6.25 Bitcoins
In 2020, a Bitcoin miner received 6.25 Bitcoins for solving a single block. And this halving process will continue until the miners generate the last block. Since miners create a Bitcoin block every 10 minutes, Satoshi Nakamoto estimated producing the final coin in 2040.
Bitcoin mining is not a simple process. It requires high computing power, electricity, and skills to solve mathematical problems. Nevertheless, some people invest through companies that specialize in Bitcoin mining. Others purchase Bitcoin via crypto exchanges or accept payments through this digital currency.