Bitcoin mining is the basis of the Bitcoin network. Miners provide safety and confirm transactions in the crypto net. This is achieved by solving computational problems that allow them to form a chain of blocks of transactions. That is why we have a term “blockchain”. You mine Bitcoins and receive a reward in the form of newly created Bitcoins and fees for processing the transaction.
The sense of Bitcoin mining
When you mine Bitcoin, you support many aspects, but the key purposes of mining include emission of new Bitcoins, confirmation of transactions and safety.
- Emission of Bitcoins. Traditional currencies such as the dollar or euro are issued by central banks. The central bank can issue new banknotes at any time when they consider it has a beneficial effect on the economy. In the case of Bitcoin, the system works quite differently. You mine Bitcoins and get rewards with new Bitcoins every 10 minutes. The frequency of the issue is fixed in the currency code. Miners cannot cheat the system or simply create Bitcoins. To create new coins, they have to use their computing power.
- Confirmation of transactions. Miners include in their blocks the transactions that users make on the Bitcoin network. A transaction can be considered safe and completed only after it is included in the next block. Only then it is officially recorded on the cryptocurrency blockchain. Large transactions should receive confirmation from several miners at once. For instance, transactions from $10,000 to $1,000,000 require six confirmations de facto to guarantee the safety of a transaction.
- Safety. You mine Bitcoin and protect the network of the best cryptocurrency simultaneously. The more miners participate in mining, the more secure the network will be. The distribution of the computing power of the network between thousands of miners from different countries makes Bitcoin almost invulnerable to attackers. In addition, no one can stop the network or change the records made on the blockchain.
You start to mine Bitcoins
For most people mining Bitcoin is quite an irrational decision. It has to do a lot with expenses on electricity. Most of mining is focused on large specialized farms that have access to cheap electricity. It’s just too expensive if a common person makes up his mind to mine Bitcoins. It is unlikely that he makes a profit. However, if mining interests you as a hobby, there are certain steps you can take to mine Bitcoin right now.
- Create a Bitcoin wallet. When you mine Bitcoins, the coins must go to your personal Bitcoin wallet. You cannot mine Bitcoin without a special wallet.
- Find the proper Bitcoin exchange. Having earned some Bitcoins from mining, you will probably want to sell them. If you believe in Bitcoins bright prospective, there is no need to do that. In addition, on exchanges, you can also buy existing Bitcoins without getting involved with mining.
- Buy mining hardware. You cannot mine Bitcoins without a special device called an ASIC miner. ASIC miners are specialized computers that were created for the sole purpose of mining Bitcoins. There is no use trying to mine Bitcoins on your home computer or laptop. It will bring you no profit, but expenses on electricity only.
- Choose a mining pool. Once you get your mining hardware, you need to choose a pool. By joining a mining pool, you are sharing your computing power with it. Once your pool completes a block, you get paid in accordance with the computing power provided to the network.
- Install mining software. Bitcoin mining software will connect your mining hardware to the chosen pool. It must be used to configure the issuance of a certain computing power to the pool. Also in the software, you inform the pool to which Bitcoin address you want to receive payments.