Bitcoins are mined and not printed like fiat currencies. Bitcoin mining began in 2009 when early adopters of bitcoin got the astonishing chance to earn block reward for solving complex transactions to earn 50 BTC every 10 minutes. Earlier, there were only a few requirements, and no powerful hardware was required. More than a decade ago, all miners required was a powerful computer with an internet connection. The mining process has become complicated, and now instead of considering mining as an option, people prefer to buy bitcoins from crypto exchanges.
If you want to start bitcoin mining as a semi-passive source of income and want to learn about the mining process, in this article, we will help you learn some basics that will make you learn it is possible to make a profit from the mining process or not. You must learn about each specific detail if you want to enter into the bitcoin mining process and about bitcoin equaliser if you want to trade bitcoin.
In reality, the mining process is the backbone of the entire work of blockchains, and mining has three main aspects: a record of transactions, proof-of-work calculations, and block reward.
Record of Transactions
The bitcoin transactions are first verified and are then added to the distributed public ledger. Blockchain makes every transaction viewable that has ever been initiated and completed in the history of blockchain. Blockchain maintains the records of transactions.
Bitcoin is designed using mathematical puzzles. The complex mathematical puzzles are required to be solving in every 10 minutes by a bitcoin mining machine. The only miner that solves the mathematical puzzles before others and adds a blockchain block into the blockchain is provided block reward.
The block reward is set in the mining protocol, provided as an incentive to miners who solve the accurate transactions timely. The reward for solving a block of transactions in 2020 is 6.25 BTC. The block reward has been reduced to 6.25 BTC from 50 BTC.
Solving the bitcoin transactions is repeated after every 10 minutes for every miner and mining machine. The difficulty of mathematical puzzles is adjusted to ensure that a machine out of all the machines solves the puzzles faster in a timespan of 10 minutes. The difficulty of the network is calculated according to the amount of hashrate that contributes to bitcoin. Do you know what hashrate is?
Hashrate is a measure of the computational power of miners. Also, it can be understood as the more miners mine bitcoin, the complexity of solving puzzles get harder. In reality, mining bitcoin is a race where individuals with high computing power can only win the race of mining more bitcoins. The machine with more computing power is likely to provide more and accurate solutions to miners to earn the block rewards. Hashrate is measured in hash per second, and many pre-fixed terms include Kilohash, Megahash, Gigahash, Terahash, and Petahash.
How to calculate the earnings of the bitcoin mining process?
If you are planning to come into the mining process, you must have heard about different people's advice and opinions about energy consumption in bitcoin mining. It is a fact that there are many expenses involved in mining, and the main is energy consumption. The revenue generated through the mining process must outweigh all those costs to be lucrative.
A time of 10 minutes is given to miners to mine a block of transactions, and the miner who solves the transactions faster is awarded a block reward. Miners use mining machines to mine new bitcoins, and in return, they are rewarded with a block reward. The block reward was 50 BTC in 2009, but it is set to be half every four years, and as of 2020, it has been reduced to 6.25 BTC.
Mining is a great way for many people to earn bitcoins and enter into the bitcoin community. The miners are known as the biggest contributors in the bitcoin world as they mine bitcoins. Without miners, the mining process wouldn't have been possible. It is suggested to mine bitcoins at places where electricity expenses are less and mining is lucrative.