What is bitcoin mining?

What is bitcoin mining?

Table of content:

  • What is mining bitcoins today?
  • What is bitcoin mining actually doing?
  • What is the purpose of bitcoin mining and what is its parameter?
  • Why mining is popular?
  • Advice

What is mining bitcoins today? The influx of miners is attributed to the increase in the cost of bitcoin and other cryptocurrencies. Only since the end of March, bitcoin has risen in price up to 17 thousand dollars. Another growing cryptocurrency is Ethereum (ether). The process of the appearance of new bitcoins is one of the most important aspects of the cryptocurrency industry.

Mining is an extraction (is in relation to minerals) of bitcoins, which occurs through the search for a certain number (hash) with certain parameters specified by the system.

The creation of new coins is the solution of a certain mathematical problem in the search for symbolic combinations that must satisfy a number of requirements. After a user finds a solution, he receives a reward – some amount of cryptocurrency. Earnings on mining require significant computer resources.

In contrast to gold mining, when you can waste a lot of time and effort, and you can immediately break a good jackpot, in the production of bitcoin everything is planned in advance.

How much gold is hidden in the bowels of the Earth we do not exactly know, and the bitcoins can not be more than 21 million.

Moreover, more than half have already “minted” by the miners.

When the last bitcoin is extracted, science is not known exactly, although quite specific figures (2140 year) is called.

But all this is a very distant date for our dynamically changing world.

Every ten minutes in the world one block is extracted and shoved into Blockchain, for which the miners receive 12.5 BTC.

In a day, 1800 coins are obtained. However, the reward for each block will decrease, and each time it will be more difficult to extract it.

Why? Because so conceived by the great Satoshi Nakamoto!

Because if it were easy, they would have been extracted long ago and did not know what to do next.

What is bitcoin mining actually doing?

The process of mining is long enough, and it does not get any shorter. On the increase in the number of miners, the cryptocurrency reacts by increasing the complexity of the algorithm. In addition, it is very volatile. Nevertheless, the receipt of a certain amount of currency at regular intervals allows the miner to hedge the risks.

Alone, the miners basically do not work – they combine into pools, sharing the computing power, which allows them to extract new coins quickly. The reward received is divided among all its participants – depending on the power expended by each.

At certain intervals, a small portion of the mined cryptocurrency is dripping into the miner – this is not 25 coins every few months, but, for example, one-hundredth of one coin, but once every ten minutes.

Everything that the pool participant has “mined” remains with him, he can use the cryptocurrency as he wants: leave it in his purse or send it straight to the currency exchange, having joined the auction.

Payback of mining farms which use video cards now vary from 7 to 10 months. If we are talking about a classic home farm for six video cards, now it can be collected for 2300 dollars. The average net income per month is (taking into account the cost of electricity from such an economy) about 350-400 dollars. Approximately 10 dollars a day.

Now you can reach payback in 6.5 months. This is a good entry, not dreamy, real. With a competent allocation of funds, plus investment at the peak of the cryptocurrency, you can increase the payback to 4-5 months.

This is a passive business that everyone can do at home, by watching video lessons on YouTube. You can buy video cards, a processor, a motherboard, connect its all, plug into the outlet and that is it – you can already begin to mine. Further refinements – how to optimize the farm, how to properly configure it. With this, you may have a little bit of a problem, but if a person is willing to enter the crypto business seriously, it will take no more than a week to study all these questions.

What is the purpose of bitcoin mining and what is its parameter?

During the mining, a number of parameters are recorded in the header of the block.

A new block can be written into the block system only by the node that will first perform the computational work to solve a cryptographic problem of great complexity.

Nonce is a numeric parameter that is searched for during the mining (PoW algorithm) and written to the block header. Actually, the purpose of mining, as a competitive process for the right to add a block of transactions to the block, is the selection of such a Nonce, so that the desired block hash is less than a certain Target number, which is equivalent to obtaining a hash of the block starting with a certain number of zero bits.

Difficulty Target, also called difficulty bits or bits is the target complexity, the maximum number of which should not exceed the block hash. It actually determines the number of zero bits at the beginning of the desired hash. It is often abbreviated as Target.

Actually Target is the number itself, and bits is a special format of the Target record in the block header. In bits, two numbers are written at once: the first byte is the exponent, the remaining three bytes are the mantissa.

Why mining is popular?

There is no centralized management in the virtual currency production system. Therefore, it can not be blocked or subordinated. The system is anonymous. Users are not required to provide official personal information. Due to this, it is simply impossible to track any transaction. Mining on video cards works according to the initial algorithms. Because of this, it is impossible to create more bitcoins and altcoins than it should be. Transactions can not be canceled, and all information about them is stored in a common database. In doing so, it uses blocks that arise during the creation of bitcoins. Earnings are provided from the resources of a separate computer. In this case, the extracted bitcoins can not only be exchanged within the network for various goods and goods, but also converted into real money.

In addition, mining has become popular, because this is easy decision. You invest the minimum money, connect to the Internet, plug into the outlet – and that’s it. Something that can pay off in two months and bring you money – I think that any person will be interested, even if before that he was not connected with finance and IT.

Mining farms at work are very hot, they give off a temperature of about 50 degrees. All it important just to optimize the heat output from the container outside, to the store. As a heater – windlifter. At the output of such a container gives 30 degrees of heat stably, and if the room is up to 100 square meters, the container safely keeps the temperature 23-25 degrees. That is, this is such a comprehensive solution: thanks to the mining, the owner also saves in winter on heating.

Advice

The first tip: do not think that mining is a deity, which in two months will make you a millionaire. If you approach this with a normal entrepreneurial approach, then you can build a good system business, which will consistently bring good money into your pocket.

There is a term – a mining-sinusoid. Crypto market always develops like a sinusoid. The main principle is never to enter the peaks. That is, if you see somewhere a payback for a month – think about it. You are not the only one so clever. Payback, most likely, will turn out to be fake.

Therefore, the second advice to beginning miners: never enter the peak of profitability.

It should be mentioned that for newcomers is better to buy video cards and begin to air them either with Ether or Zcash. In ASIC, we do not recommend entering yet, because this is the story of the peak profitability. Recall when the new, and the first serious ASIC went to Dash, the complexity of mining this cryptocurrency increased so much that the equipment simply became non-profitable. ASIC all began to buy up sharply, when they saw payback in seven days. Therefore, now all sellers in the market will sell equipment at inflated prices. Plus, ASIC is sharpened only by one algorithm, this is also bitcoin’s minus.

What is bitcoin mining for the beginner?The main thing is not to deify the mining. However, in today’s realities it is important to study crypto market. In addition, every beginner should remember: never enter the lime peak income. There are people who also see this profitability and will also want to enter at the same time. And you are most likely to fall into the trap of the first paragraph.



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