What is bitcoin mining? Learn everything about it!

Discover what Bitcoin mining is and how it works!

What is Bitcoin mining? And do you know what the purpose of mining cryptocurrencies is? Bitcoin is a decentralized digital currency. In other words, it is not regulated by any Central Bank. 

And miners, which are spread all over the world, make it possible to monitor and validate transactions of this cryptocurrency.

If you want to know more about this topic, keep reading. We'll explain how it all works!

What is bitcoin?

Bitcoin is a decentralized digital currency that does not need third parties to function.

The currency can be used to purchase products, services and other items in establishments that accept Bitcoin as a form of payment.

Since Bitcoin is not regulated by governments, it is possible to carry out transactions without any intermediaries, such as banks or credit card issuers.

It is important to mention that unlike the real, dollar and euro, Bitcoin is a limited currency. But what does that mean?

Conventional currencies can be issued as nations see fit, but Bitcoin cannot.

The code for this cryptocurrency was created in such a way that only 21 million coins could be issued. To date, around 18.85 million bitcoins have been mined.

What is Bitcoin Mining?

Bitcoin mining is the process of verifying Bitcoin transactions.

Miners are the people and organizations that sustain the blockchain network that supports the cryptocurrency.

Mining is responsible for maintaining the blockchain, the network of blocks that contains the entire history of Bitcoin transactions.

Miners create blocks of transactions, which when verified, are added to the blockchain network.

Upon completing a block, the miner is rewarded in newly created bitcoin.

As this work is dispersed across thousands of users spread across different countries, bitcoin is a decentralized cryptocurrency, which, as we said, is not regulated by any Central Bank or government.

How does Bitcoin mining work?

To mine Bitcoin, you need to have a device with high processing capacity.

In other words, given the difficulty of carrying out this work, it is no longer possible to mine Bitcoins on home computers.

Miners acquire machines developed especially to mine Bitcoin.

And mining this cryptocurrency, in essence, is nothing more than solving mathematical problems in a competition between people who want to find the solution.

The first person to find the solution is the one who will be rewarded.

The process is based on trial and error. This means that finding a solution often requires billions of attempts.

In other words, the computer must perform a huge amount of calculations per second to find the perfect combination. And that's why these machines need to be highly capable.

When the matching sequence is found, the miner is rewarded with 6.25 units of the currency.

Every day, thousands of miners compete for the rewards on offer. Since a transaction block is formed every 10 minutes, the competition always starts over again during this period.

What does it take to mine Bitcoin?

As you already know, the first step is to get a computer with high processing capacity, capable of making several attempts per second.

And it is important to remember that the machines need to be on 24 hours a day. This is certainly a problem, especially because in Brazil, the cost of electricity increased in 2021.

Another factor that must be taken into account is the overheating of machines, which can happen if there is no specific cooling equipment.

The process, in general, is relatively expensive for those who want to become a miner.

After all, it’s not enough to just turn on your computer and wait for the cryptocurrencies to multiply. You need to take into account all the costs of electricity and cooling equipment!

Is it worth mining bitcoin on your own?

While it may seem like bitcoin mining is getting closer and closer to its limit, in practice, things are a little different.

Every four years, the amount of digital coins that can be mined is cut in half.

This means that the last bitcoin will only be mined in 2140. The closer we get to the limit, the more complex this process will become.

The market is indeed relatively open to anyone interested in becoming a miner. But that doesn’t mean it will be profitable for everyone.

After all, it is necessary to take into account that mining is a process capable of wearing out components relatively quickly.

In short, the CPU and video card used will probably have to be replaced in a short time, which implies additional expenses (which are not cheap at all).

But obviously, there are people and companies that manage to make significant profits in this market.

For this reason, dedicated miners, known as ASCI miners, have specific equipment for this purpose.

It is difficult to make individual mining bring considerable results, and therefore miners gather in mining pools, which optimize processing power and make the task more profitable.

Why is Bitcoin becoming so attractive?

The reason why Bitcoin has been attracting more and more people's attention is its appreciation.

Due to the rising prices, the cryptocurrency continues to attract people interested in investing in bitcoin, especially those who work in large mining pools.

Through these groups, it becomes possible to compete with specialized companies, which have high-power devices to mine bitcoins.

In fact, even banks have adopted blockchain technology or are thinking of ways to use it.

Some of these banks are even thinking about creating their own cryptocurrencies.

Conclusion

Now you know what Bitcoin is, what Bitcoin mining is and how this process works.

As you can see, we are talking about a process that involves high-power equipment and a lot of technology!