- 1 What is bitcoin mining ?
- 2 Why Bitcoin needs miners ?
- 3 How do you mine bitcoin ?
- 4 What you need to mine Bitcoin ?
- 5 How to mine Bitcoin ?
What is bitcoin mining ?
Bitcoin mining is the process by which the transaction information distributed within the Bitcoin network is validated and stored on the blockchain. Mining also ensures the proper operation of the system by rewarding nodes that participate in the validation process. The block reward is an incentive given to the miner of a block. This incentive helps to motivate miners to add new blocks to the blockchain. Bitcoin Miners also receive transaction fees.
The block reward was 50 BTC per block, but was halved every 210,000 blocks, or roughly every four years.
Bitcoin mining is competitive and the goal is for the miner to be able to solve a complex mathematical puzzle to discover a new block, which is added to the blockchain, and then be rewarded with transaction fees and newly minted Bitcoins.
To keep mining profitable, miners have to spend an increasing amount of money on electricity and hardware. As Bitcoin gained popularity, the difficulty of mining increased. The mining difficulty is the measure of how difficult it is to find a new block compared to the easiest it can ever be.
Why Bitcoin needs miners ?
Bitcoin “mining” is a metaphor used to describe the computational process which secures the Bitcoin network. The computational difficulty of the mining process adjusts itself every 2016 blocks (approximately 14 days at roughly 10 minutes per block) to keep the rate of block creation steady. As more computational power is invested in the Bitcoin network, more the computational difficulty rises. In order to generate a new block of transactions, miners must solve a hash function with a certain cryptographic difficulty. The computational difficulty of the hash function adjusts every 2016 blocks (approximately 14 days at roughly 10 minutes per block) to keep the rate of block creation steady. Computational difficulty avoids a situation where a single miner or mining pool has so much computational power that they can force the rest of the network to accept their version of the truth. A miner is a piece of software that performs the computations required to find a valid block. The computational requirements are so demanding that the average desktop computer cannot compete. Miners are rewarded for their efforts with transaction fees and newly created bitcoins. The reward is halved every 210,000 blocks. Currently the reward is 6.25 bitcoins.
How do you mine bitcoin ?
Mining is a lot like a giant lottery where you compete with your mining hardware with everyone on the network to earn bitcoins. Faster Bitcoin mining hardware is able to attempt more tries per second to win this lottery while the Bitcoin network itself adjusts roughly every two weeks to keep the rate of finding a winning block hash to every ten minutes. In the simplest terms, mining is letting your computer do the work for the Bitcoin network to confirm transactions and build the blockchain.
Mining difficulty determines how hard it is to find a new block compared to the easiest it can ever be. The rate is recalculated every 2,016 blocks to a value such that the previous 2,016 blocks would have been generated in exactly two weeks had everyone been mining at this difficulty. This will yield, on average, one block every ten minutes.
The block reward is the number of coins generated per block. The block reward was 50 bitcoins in 2009, is now 6.25 bitcoins per block, and will be halved over the next 210,000 blocks. This reward will decrease every year after 2016. This way, the reward will incentivize miners to add new blocks to the blockchain.
What you need to mine Bitcoin ?
To start mining bitcoin you need a bitcoin wallet, miner software, and mining hardware.
Bitcoin mining hardware:
Bitcoin mining hardware, or mining rigs, are computers designed specifically for mining bitcoin. Mining hardware for bitcoin mining is more complex than other hardware. Bitcoin mining hardware not only has to mine bitcoins, but must do so faster as possible. Bitcoin mining hardware is now highly specialized, and most bitcoin miners use ASIC chips.
|Antminer S19||95.0 TH/s||$10k-12k|
|Antminer S19 Pro||110.0 TH/s||$15k-17k|
|WhatsMiner M30S+||100.0 TH/s||$8,500|
|Antminer T17||42 TH/s||$1,900|
Bitcoin mining software:
Bitcoin mining software, or simply mining software, is a computer program that mines for bitcoins. Mining software tells hardware what to do and how to do it. Bitcoin mining software implements a cryptographic hashing function on the mined data. Mining software has different versions, and mining software only works with certain types of mining hardware. Bitcoin mining software needs to be compatible with mining hardware.
Bitcoin mining software comparison:
|Braiins OS+||0% if connected to Slushpool||Stratum V2|
|MSK Miner||0% if connected to Hiveon Pool.||Amazing mobile app|
|Vnish||Free||Wide hardware support|
Bitcoin mining pool:
A Bitcoin mining pool is a group of bitcoin miners who combine their computing power to increase their chances of solving a block and earning the payout reward.
Bitcoin mining pools exist because the computational power required to mine Bitcoins on a regular basis is so massive that it makes most mining efforts futile. To solve this issue, mining pools are used to increase the probability for the small miners to earn rewards for mining Bitcoin. Bitcoin miners work together to solve a block, otherwise is very difficult and the miner could be left empty-handed.
Slush Pool is a Bitcoin mining pool which was founded in 2010. Slush Pool was the first Bitcoin mining pool in the world, and still remains the largest Bitcoin mining pool today. Slush Pool remains reliable, stable, affordable and efficient to mine Bitcoin.
Bitcoin mining pool comparison:
|Antpool||1.5-4%||PPLNS and PPS|
How to mine Bitcoin ?
Step 1 – Buy the best bitcoin mining hardware
In some cases, certain mining hardware can be purchased with bitcoins. Today, there are also other mining hardware resellers that sell mining hardware on Amazon.
Step 2 – Download free Bitcoin mining software
After receiving and installing your Bitcoin mining hardware, it is necessary to install software that will allow you to operate your mining hardware. For this you need to download a bitcoin mining software. The two mining software most used by bitcoin miners are CGminer and BFGminer which are command line programs. You can also see our comparison of the best mining software.
If you don’t like command line programs and prefer GUI for ease of use, you can try EasyMiner software which is compatible program on different operating system like Windows/Linux/Android and this launches easily with a few clicks.
Step 3 – Join a Bitcoin mining pool
Once you have installed your mining hardware and software, we recommend that you mine in a Bitcoin mining pool.
Mining pools allow the Bitcoin miner to join their computing power together, increase the probability of solving a block and share its rewards with all contributors to the mining pool. Bitcoin mining is getting harder and harder. Without a mining pool, you could mine bitcoins for years without earning bitcoins.
Step 4 – Set Up A Bitcoin Wallet
Creating or using an existing bitcoin wallet is important to receive the bitcoins you mine.
Mined Bitcoins are sent to your Bitcoin wallet using a unique address. It is important to protect it from threats by enabling two-factor authentication or keeping your wallet on an offline computer. Some bitcoin wallets can be obtained by downloading client software to your computer.