An Introduction to Bitcoin Mining


  • administrators

    0_1520950626976_bitcoin-mining.png

    Bitcoin mining refers to the computational process of verifying bitcoin transactions (e.g. user A transfers 1 bitcoin to user B ) in a bitcoin network. It involves writing pages or blocks of transactions into the Bitcoin Blockchain. The blockchain is a public database, list or ledger where all bitcoin transactions are recorded and stored.

    How It Works

    All transactions that happen in a specified period are referred to as a block. When several blocks are arranged together in order, it becomes a Blockchain. The Blockchain increases in length whenever a new block is added. You put a block in a process that alters its information. You also apply a mathematical logic or formula to the data to convert it into a random sequence of numbers, and letters called hash which is often stored together with the block.

    As a miner of bitcoin, you compete with miners from different parts of the world. This is why bitcoin mining has become a very competitive undertaking. The difficulty of adding a new block is increased automatically by the network and the required time to add a new block is 10 minutes. Each new block that is added features a cryptographic hash of the preceding block.

    Block Rewards

    The SHA-256 hashing algorithm is used to link blocks into the Blockchain. Despite how overwhelming it is to add a new block, the entire venture remains a very lucrative business due to the rich rewards that come with it. Every time a miner wins the race to compute the right hash, they win the reward of bitcoins - the block reward. This reward is given as an encouragement to keep independent groups (the miners) verifying the blockchain and keeping the system secure.

    When a miner wins the race to find the correct hash for a new block, he/she is then rewarded with bitcoins. At first this was 25 bitcoins but currently its 12.5 and will continue to decline as mining gets easier through developments in hardware and power efficiency.

    Mining Pools

    When you verify a transaction quickly in a bitcoin network, you get paid, and you receive a transaction fee from the client alongside the 12.5 BTC reward. For you to be competitive in Bitcoin mining these days, you need to get armed with some hardware (ASICS) and join a pool of people (mining pool). In practise, miners form groups called mining pools to combine their processing power. If you win a block, you then share the reward.

    Conclusion

    Bitcoin mining is a buzz. Though it is very competitive, amateurs can still benefit from it by co-operating with others in mining pools. Initially, people could do the mining right from the laptops and home computers by using their CPUs to do the computations. However, due to the increasing competition, you now need dedicated hardware with cheap electricity to hope to earn money. How they operate and how they are mined are quite different from tradtitional fiat currencies. Bear in mind, though, that there are plenty of other cryptocurrencies which you can mine too - which don't require specialised hardware.

    Also Read

    Cryptocurrency Mining Basics
    An Overview of Bitcoin
    Everything You Need to Know About The Blockchain


  • Supremo

    Great explanation. I think I might join a mining pool. I would think now would be a good time since Bitcoin has dropped a little and hopefully will work its way back up over the next year or two.



  • A great explanation. however, you might want to mention that bitcoin mining itself is actually impossible now. Not only do you need powerful machines that cost thousands of dollars to put money into (parts that increased Graphics Card prices by nearly 40%) but competition is FIERCE and often not worth it.

    Now, mining in other currency isn't as bad. But with how Bitcoin currently is, you're liable to not make enough to justify the price of the mining rig, nor the price in electrical power. You're better off investing in other coins, waiting for them to rise in price, and then trading it off. Or, mining newer, lower cost coins.

    Still, if you ARE interested in mining, here's a video that you could use to help get you started. Keep in mind that this is rather expensive, and is considered an investment itself.

    https://www.youtube.com/watch?v=cxBYbAAtXWA


  • administrators

    @Wisecrypto - you are totally right, I know a guy in London who spent £10k on Bitcoin mining ASICs devices and was making good money when the price went up to 20k per bitcoin. But now that its halved, he can't make any money due to high electricity costs.


  • administrators

    @wisecrypto said in An introduction to Bitcoin mining:

    Still, if you ARE interested in mining, here's a video that you could use to help get you started. Keep in mind that this is rather expensive, and is considered an investment itself.

    https://www.youtube.com/watch?v=cxBYbAAtXWA

    I think this guy is building an Ethereum mining rig. Super interesting anyhow.

    Although when Ethereum moves to a proof of stake algorithm this rig would be redundant..


  • administrators

    @anthobayun Please read this article for info on Bitcoin mining.


  • Commando

    The process of mining is carried out by specialized programs that are run on computers
    is there any link to get block from bitcoin mining
    sir


  • administrators

    Hi @anthobayun - the simplest way to mine Bitcoin is to visit a bitcoin faucet with your web browser - see this thread for more info.

    The other way is to buy specialised hardware like the S9 Antminer and join a mining pool - see here for more info.

    However, Bitcoin mining is very competitive these days - you might be better off trying to mine Ethereum - it has a better return, so I believe. This is generally done on GPU rigs - see this video https://www.youtube.com/watch?v=cxBYbAAtXWA posted by @Wisecrypto.


  • Supremo

    @anthobayun I use bitcoin faucets myself. I make around 5 cents a day in BTC from two faucets and I do not enable their "mining in browser" function.


  • administrators

    @lucky777 oh really - which BTC faucet do you use?


  • Supremo

    How much you make depends on a few factors (mainly how often you 'claim' per day) but you can easily make 2 to 5 cents a day using these two faucets:

    MoonBitcoin
    FreeBitcoin

    I used to use a couple more but that was a long time ago I can't remember the names.
    A lot of the old faucets that were good are obsolete now. I might make a thread about faucets.


  • Legend

    you can go Whattomine.com if you want mining Some Cryptocurrency, checking algorithm and hash Currency, mostly User in my region Mining Cryptocurrency like ITNS, TurtleCoin, ETN/Electroneum, BBS Coins


  • Supremo

    @joes this is a cool brief lessons for beginers like me,that are interested in bitcoin and altcoin mining. A continuous lessons like this will motivate people to go into mining business. Thank you


  • Supremo

    @joes i am still using moonbitcoin sometime, some fuacets are not reliable when it comes to payments, but moombitcoin has proved otherwise, and pays promptly.


  • Supremo

    @joes said in An Introduction to Bitcoin Mining:

    @Wisecrypto - you are totally right, I know a guy in London who spent £10k on Bitcoin mining ASICs devices and was making good money when the price went up to 20k per bitcoin. But now that its halved, he can't make any money due to high electricity costs.
    I think he will definitely manage both situations, " price rise and fall" to continue in mining. I think every business has these factors which are linked to demand and supply principles.


  • administrators

    @waluyokimak nice mining info site - thanks for the post. I hear Ethereum mining is still profitable (just about) with gpu rigs.


  • Legend

    @joes yes, mining Etherium with Rigs is Profitable cause the Slogan Etherium Friendly for GPU, but now days replacing with ASIC miners, i don't think so anymore.... :(


  • Supremo

    @waluyokimak i think things are changing day in and day out ,you just have to embrace the new changes to keep going.


  • Legend

    @citycrypto yes, so nowdays i just searching some Coins that has POS/ Proof Of Stake algorithm, its don't available to mine absolutely.... :)


  • Supremo

    @waluyokimak said in An Introduction to Bitcoin Mining:

    @citycrypto yes, so nowdays i just searching some Coins that has POS/ Proof Of Stake algorithm, its don't available to mine absolutely.... :)

    I just think you will actually get what you are looking for as mining business is concerned.


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