What is Involved in the Bitcoin Mining Process?

by Andrew McGuinness     Jul 16, 2019

As you may have heard, whether you are an investor or whether you have spent a decent amount of time surfing the field of technology online, bitcoin is a cryptocurrency that is mined. This is difficult to fathom at first, because mining is something we associate with the outside world, really only with coal.

Bitcoin mining, unlike coal mining, doesn’t get your hands dirty. However, it involves just as many tireless hours of hard work. Rather than manual labor, it’s mental labor, but in many ways it is very much like coal mining. Here are a couple of facts about what exactly goes into the mining process of bitcoin and other cryptocurrencies.

1. Purpose

As an investor, rather than putting money into a bitcoin investment, there are other ways to receive bitcoin. One of these routes is by mining bitcoin yourself. This may seem more doable than it actually is. Cryptocurrency mining involves a lot more time, money, and effort than one might first expect.

2. How to mine

In order to mine bitcoin, you not only need quite a bit of knowledge within the field of technology, but you need enough funds to support the task of mining as well. Of course, there is not a lot of equipment involved in mining, just one substantial item: a high-powered mining machine. These include graphics processing units (GPUs) and application specific integrated circuits (ASICs). These machines can range greatly in prices from expensive to incredibly expensive.

3. Is it worth it?

Tens of thousands of dollars could be spent on GPUs and ASICs for the main purpose of mining bitcoin. The problem is, not only are the materials used for mining expensive, but in order for these pieces of equipment to run and have the chance to successfully mine bitcoin at some point, they will need to use a considerable amount of power.

The bills may amount to a higher fee than you are able to handle, while keeping in mind the fact that no bitcoin is guaranteed to those who mine. You will need to spend this money simply in the hopes that something will come of it.

The thing is, if a bitcoin does happen to be successfully mined, the highest returns you will have ever seen as an investor or otherwise will be in store for you. Mining is one of the riskiest investments you can make because it is not very likely that miners will gain as much as they put in, but if you do happen to become successful, the reward will pay off.

4. Life of a miner

A miner’s aim is not always the same. Some miners have the main goal of mining for bitcoin to no end. Others, however, choose different routes in order to make some profit. For example, miners may work to confirm transactions and sniff out faulty payments.

A big problem with cryptocurrency is that, unlike fiat currencies, it is not physically there for you to touch and see. This means that it is possible for bitcoin users to take advantage of this digital feature by double-spending. This involves using the same money to make more than one purchase.

This is where miners come in. Miners may earn up to 12.5 bitcoins upon looking through 1 MB worth of transactions, confirming their validity as well as cancelling out the possibility of faulty purchases. However, despite the fact that 12.5 bitcoins are on the line once you complete the analysis of this 1MB of transactions, you will only be one of many other miners that has the chance to actually win this.

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