How to Mine Bitcoin
Bitcoin (BTC) is the first and most popular cryptocurrency in the world. It was created in 2008 by Satoshi Nakamoto, whose identity has not been declassified to this day. In the «Bitcoin White Paper» he detailed, how to mine Bitcoin and how it works. Unlike fiat money, BTC does not have a physical backing, it is a set of mathematical codes. Another important difference is decentralization, this currency does not depend on any bank or any country.
What is Bitcoin mining?
Bitcoin mining is the process of solving cryptographic puzzles using mining equipment. As a result, new BTC coins are put into operation. Solved puzzles are necessary to confirm transactions in the Bitcoin network, guarantee their authenticity and security. Information about transactions is entered into blocks interconnected in a chain (blockchain). Changing transactions after they have been added to the blockchain is not possible.
How does Bitcoin mining work?
Bitcoin mining is like mining from the ground, where big machines are also used. Instead of machines BTC miners use GPUs, video cards and ASICs. Mining works like this: a person or a group of people create a farm of several devices. The task of these computers is to solve a cryptographic puzzle and write data to the blockchain. The first device, that was able to correctly match the combination to the cryptographic task, is rewarded with a part of the cryptocurrency.
The speed, at which a mining farm is able to solve mathematical problems, is called hashrate. This mining protocol is called Proof-of-work. The first miner to prove, that he did
the “work” and solved the math problem, gets the right to process a new block of
transactions. If you don’t know, how to mine bitcoin fast, you should
install powerful equipment and choose a good mining pool.
Why mine Bitcoin?
The main two goals of bitcoin mining are to generate coins, that can be exchanged for real money, and to confirm transactions. Solving puzzles to verify transactions eliminates the possibility of counterfeiting coins (double spending). Thanks to mining, all transactions on the network are safe and trustworthy. Despite the many myths around cryptocurrencies, bitcoin is gradually beginning to be accepted as payment by companies around the world.
How are Bitcoin miners paid?
Bitcoin miners are rewarded in BTC for validating a new block of Bitcoin transactions. Many miners work together in mining pools, which allows them to get rewarded more often. Miners, who successfully validate 1 block, receive a reward of 6.25 Bitcoins, which corresponds to hundreds of thousands of dollars at the current rate.
Every 4 years payments for 1 block in the Bitcoin network are halved. This event is called a halving. In 2024, the payment for 1 block will be 3.125 BTC. By 2140, Bitcoin mining will completely stop.
How to choose hardware for Bitcoin mining?
Many beginners are interested in how to mine Bitcoin at home. They must understand, that crypto miners invest in computer hardware, specifically designed for mining. BTC miners today use powerful mining machines, called ASIC miners. ASICs are equipped with chips for faster bitcoin mining. Due to the very high competitiveness in the Bitcoin network, today gainful bitcoin mining is possible only on the latest ASICs. Using PCs, GPUs and old ASICs is not very profitable.
Risks of Bitcoin mining
The main risk of mining is that the cost of equipment and electricity is not always paid off. Therefore, before buying equipment, you should calculate the profitability, using a calculator. In addition, equipment damage is possible due to voltage drops. To avoid damage, you should connect an energy stabilizer.
How to mine BTC
Read below, how to mine Bitcoin step by step:
- Install and setup hardware.
- Create a BTC wallet.
- Register in the pool.
- Install the mining OS and link it to the Bitcoin wallet.
- Start to mine.
The main answer to the question of, how to mine Bitcoin for beginners, is to choose a powerful and profitable pool. Also there are three factors for successful mining: the right equipment, low cost of electricity and a stable internet connection.