Bitcoin Mining – Everything There Is To Know On Mining

Bitcoin mining is the process of verifying transactions on the blockchain, which results in creating new Bitcoin tokens. Instead of printing new Bitcoin like a fiat currency, it is mined through dedicated equipment that solves algorithmic puzzles.

This is how Bitcoin is mined and what entering the mining industry entails.

What is Bitcoin Mining?

Bitcoin mining refers to validating the transactions that users are adding to the Bitcoin blockchain. If the transaction is correct and verified, it is added to the Bitcoin and the transaction goes through. As this happens, the process also creates new Bitcoin ($BTC)– which is the process of “mining” new tokens.

It is called “mining” because there is a finite number of Bitcoin available. Bitcoin is capped at 21 million tokens that will be able to be created. This makes it similar to mining other resources limited in supply, like gold.

To mine Bitcoin, miners use powerful computers to solve cryptographically encoded puzzles. A number of different miners will be working to solve the puzzle, competing to get the reward for mining the Bitcoin. Once the puzzle solution has been correctly found, the transaction will be added to the blockchain and the miner will receive their reward. The more powerful the mining computer, the better the odds of finding the solution first.

What is Bitcoin?

Bitcoin is a decentralised, digital currency. It was created in 2009 as an alternative to cash and fiat as part of the traditional finance system. It can be used to buy goods and services and to make payments to other people across the world without delays and bank fees.

Bitcoin is not regulated by any central authority – which is what makes a decentralised currency. As a result, no government or ruling entity is set to control or oversee its value and no one can adjust the rate of inflation or issue any Bitcoin.
What is a Bitcoin mining rig?
Personal Bitcoin mining equipment, or a Bitcoin mining rig, is a computer that has all the standard components you’d find in a personal computer, but instead of a central processing unit (CPU), it contains a graphical processing unit (GPU).

Bitcoin Mining and its legality

Bitcoin is both legal and banned – depending on where you live.

In many countries, Bitcoin regulation – which includes trading, mining, owning, and trading – is still contested with the national authorities and central banks. For some, such as those living in Finland, Germany, France, the United States, Canada and Australia, Bitcoin mining is encouraged with moves to make it as green and environmentally friendly as possible.

For others, such as citizens in China, Russia, Egypt, and Algeria, Bitcoin is restricted or completely banned. This makes mining in the region illegal.

Can You Mine Bitcoin Without a Rig?

You can mine Bitcoin without a dedicated rig; however, the reward might not be as likely.

Mining Bitcoin without dedicated hardware is known as cloud hashing, which allows miners to use a remote data centre to mine without equipment. Cloud mining centres have third-party facilities that manage the equipment and lease virtual servers to remote miners to install mining software.

Alternatively, miners can also purchase contracts or share mining equipment through mining pools. These pools often offer packages for different budgets and locations and have a daily fee for remote miners to conduct their mining.

Bitcoin Mining At Home

Today, mining Bitcoin at home isn’t a feasible option. When it first launched, a person could mine Bitcoin with a GPU using a personal computer. However, now the process to mine Bitcoin requires too much power for a personal computer to handle it.

Mining Bitcoin by one’s self requires dedicated equipment, cooling systems, and storage facilities.

Bitcoin Mining – Can you use your phone?

Yes, you can mine Bitcoin on your phone. You can mine through authentic apps through the app store that are designed to allow remote mining.

However, it is not widely recommended. This is because it would be rare for a smartphone to solve one of the algorithmic puzzles to mine Bitcoin before a dedicated mining rig gets the reward. It also puts an incredible amount of stress on your phone, which shortens its life-span and can ruin the hardware components. So even though it is possible to mine Bitcoin, it would be very unlikely that mining Bitcoin on a smartphone would be profitable.

How long does it take to mine one Bitcoin?

It can take anywhere between 10 minutes and 30 days to mine one Bitcoin depending on various factors.

The time it takes to mine Bitcoin depends on a few things:

1. The quality of the mining hardware.
2. Whether a miner is mining by themselves or as part of a mining pool.
3. The difficulty of the algorithmic network at the time (this varies).

Bitcoin Mining Profitability

Yes, Bitcoin mining is still profitable. However, there are variables that would make the process either costly or profitable.

When calculating the cost to mine Bitcoin, one needs to consider more than just the energy use. Bitcoin mining requires an investment in the machinery and equipment – which includes the rig, the cooling systems and the storage units – as well as rental space for the mining set up. From there, the cost of mining Bitcoin can be higher than the reward when the difficulty of mining is high.

Once you’ve mined your first bit of bitcoin, you’ll need to find the trade rate of it through an exchange or peer-to-peer sale facility. The price is a largely determining factor in the profitability of mining bitcoin.

Bitcoin Mining Rewards

Currently, you are awarded with 6.25 Bitcoin for mining.

This reward is halved every 210,000 blocks (approximately every four years) as part of the “Bitcoin halving”. The last Bitcoin halving was in 2020, which means it is predicted that the reward will be reduced to 3.125 BTC sometime in 2024.

The dollar value of the reward varies depending on the volatility of Bitcoin. In November 2021, Bitcoin was at its peak of $69,044.77, the reward for mining was around $431529.00. In January 2022, the mining reward was around $132899.56 (with Bitcoin valued at around $21,263.00).

Can Anyone mine Bitcoin?

Yes, any person can mine Bitcoin. However, one needs to live in a region where it is not illegal to mine Bitcoin. Many miners in China were forced to shut down their operations and move to a Bitcoin-friendly region when China slapped a county-wide ban on Bitcoin.

It is also important to have the mining equipment to make the process worthwhile.

Frequently Asked Questions Regarding Mining of Bitcoin