What is Bitcoin Mining?
Bitcoin mining is a process through which a computer is used to crack various complex logarithm codes as a result of which a bitcoin is produced.
14:49 07 September 2021
This process of bitcoin mining also helps to keep a record of the transactions that are constantly taking place on the bitcoin network. These small records are saved in blocks which are then added to the blockchain technology. The blockchain network in easier words, is a ledger that keeps a straight record of every transaction that takes place on the bitcoin network.
Owing to the complex mathematical problems that these miners have to solve, transactions made through the bitcoin method are made very secure. The miner who solves these complex mathematical problems is given a block of bitcoin as a reward.
Similar to the process of mining for natural resources in which we are digging and searching for gold, in bitcoin mining, miners are put to work out the complex mathematical logarithms. So each time a problem is solved, a block is created and added to the chain of blocks known as the blockchain.
The main advantage of having this system of bitcoin mining is that the payment method is secured to a greater level. Moreover this system is not only based on a single person or organization but is dependent on a peer-to-peer system where each miner plays an equal part to keep up the record, solve problems and make sure that the transactions remain private and secure.
To maintain a steady workflow of the addition of blocks to the blockchain, the Bitcoin network allows every miner a time duration of 10 minutes to mine a block. This time is allotted based on the difficulty level of solving a problem, while the difficulty of the problem is dependent on the number of miners working on the network. Therefore when many miners are working on the network, the difficulty level of problem solving is increased. Similarly when less miners are available to contribute to the workflow, the level of difficulty is reduced.
The use of computers for mining purposes
When this system of bitcoin mining was introduced, users were able to solve mathematical problems on their home based personal computers. However as this popularity of this system began to take a surge, the difficulty level of mining also started to increase. Miners then began to use computers used for gaming purposes to mine. Progressing further the technology has led to the development of hardwares especially designed for this purpose.
Mining is a difficult process and requires a huge amount of computing power. With the course of time, chips have been introduced for computers only for the purpose of mining.If all these factors are favourably utilized together in a smarter way then the profitability achieved by mining bitcoinprofit is increased.
For every problem that is solved and a block is successfully added to the blockchain, the miner is given a reward. For every 2016 block that the miner manages to mine, the block reward is made to ‘halve’.
This network uses the joint contributions of miners all over the world and rewards them by awarding them with a block.
Why is there a need to mine bitcoin?
The bitcoin technology is decentralized which means that it is not under the control of the government or another organization such as the bank. It is this aspect of decentralization that the miners find most beneficial.
Factors that affect mining
The following are the factors that have an impact on the profit that is attained through mining bitcoin.
In order to carry out flawless mining and one that is done with fewer complications, it is important that miners use the most recent and advanced technology. Every year a new advancement is made and the miners need to update to equipment that makes mining more easy.
The electricity required to mine bitcoins is massive and expensive both at the same time. It is dependent on the miner how smartly they process their work and use minimal power to increase their mining profitability.
Value of Bitcoin
The value of each bitcoin is important as for every problem that these miners solve, they are rewarded with a specific amount of bitcoin.