Over the last couple of years, the popularity of Bitcoin has increased significantly, with more and more people learning about it. As an avid learner or an enthusiast, if you want to know more about the cryptocurrency from what it is to how it is mined, whether or not it is profitable, and more, keep reading on. In this article, we have explained everything you need to know about Bitcoin, including what is crypto mining.
What is Bitcoin?
Bitcoin is a digital currency, the first of its type, created in 2009. It is a decentralized currency, meaning it is regulated without a central bank where transactions take place on the peer-to-peer blockchain network without requiring any intermediaries. The decentralized system allows you to control your funds, eliminate the middleman, make transactions transparent, cancel interest fees, and hack corruption.
What is Bitcoin worth today?
As of March 27, 2020, 1 Bitcoin equals $6,660. There are several factors that influence the price of Bitcoin, and it is subject to change based on market fluctuations.
How to mine Bitcoin?
How does Bitcoin mining work and why is it necessary? Well, Bitcoin mining is critical for two different reasons:
- To create new Bitcoin
- To confirm the transactional information
With that said, if you don’t want to buy Bitcoin considering the current price, you can earn it through mining.
While mining Bitcoin may sound like a physical act of digging, however, it is not. Prospective Bitcoin miners take the help of different mining software and often join a Bitcoin mining pool of other crypto miners doing the same thing. The Bitcoin mining software compiles recent crypto transactions into blocks and verifies their legitimacy by calculating PoW (proof of work).
The Bitcoin mining software solves cryptographical mathematical equations for verifying each block of transactions. It is like a race among the miners as they all are trying to solve the problem at the same time. However, the miner who solves the problem first is the one rewarded with the new Bitcoin.
Miners keep a database of old transactions of Bitcoin that have ever happened. This helps them in the verification process.
So simply put, bitcoin mining works in a way that if you solve the equations, you have to tell the rest of the miners about the same. The other miners will then check to see whether your solution to the problem is correct. When 51% of the other miners agree to your solution, your Bitcoin is verified and sent.
How to start mining Bitcoin?
Before you assemble your Bitcoin mining rig, it is very important to understand several terminologies so that you can make an informed decision.
#1 Hash Rate
Hash rate is the very crucial parameter of Bitcoin mining. It is defined as the number of calculations your hardware can perform per second. The larger the hash rate, the higher are your chances of solving the problem. Therefore, choosing a hardware with a high hash rate is extremely vital for successful mining.
The hash rate of specifically designed mining hardware can range from 336 MH/s (megahashes per second) to 14,000,000 MH/s.
Blocks are transaction data recorded in files. They are organized in chronological order in a chain — hence blockchain. New transactions confirmed by the miners go into new blocks, which are added to the end of the chain.
#3 Block Rewards
Block reward is the number of Bitcoins you get after successfully mining a block of the cryptocurrency. The amount of the block reward is halved every four years or every 210,000 blocks.
Bitcoin mining is an expensive venture since it is specialized and done in large warehouses. It is simply too expensive.
However, for getting started as hobby mining, there are some easy and inexpensive ways to mine Bitcoin.
Step 1: Get a Bitcoin Wallet
Bitcoin mining is impossible without a Bitcoin wallet. The Bitcoins you earn will directly go into your wallet. There are two types of wallets — hardware wallets and hot wallets.
Hardware wallets are physical, electronic devices designed to secure crypto coins. The two most popular Bitcoin Hardware Wallets are — Ledger Nano X and Trezor T.
Software wallets are internet-based wallets that allow you to store small amounts of cryptocurrency. Some popular software wallets include — BRD and Electrum.
Step 2: Setup Bitcoin Mining Hardware
You need an ASIC miner to get started. ASIC or Application-Specific Integrated Circuit is a microchip designed to help miners perform Bitcoin mining at breakneck speed. It can increase the hashing power 100 times higher while reducing electricity consumption.
So, before starting to mine Bitcoin, you need to purchase the hardware first. Choosing the right one is critical for the success of mining. You will need an ASIC if you want to win the race.
Step 3: Select a Bitcoin Mining Pool
Once you have your wallet and set up the hardware, you need to choose a mining pool. If you go with solo mining, you will have to find blocks on your own, which is quite tricky. However, with a mining pool, there will be other miners looking for the block. If a block is found, everyone gets a payout based on the percentage of the hash rate they have contributed to the pool.
That’s it! This is how you can get started with Bitcoin mining.
Best Bitcoin Mining Hardware
The following are the best Bitcoin mining machines currently available in the market.
- Avalon6 — best for beginners, can produce 3.5 trillion hashes per second
- Pangolin Miner M3X — can produce 13 trillion H/s
- Dragonmint T16 — can produce 16 trillion H/s
- BitMain AntMiner D3 — can produce 15 billion H/s
- AntMIner L3+ — can produce 504 million H/s
- AvalonMiner 741 — can produce 7.3 trillion H/s
- AntMIner T9 — can produce 11.5 trillion H/s
Best Bitcoin Mining Pools
As said, joining a Bitcoin mining pool is a great way to increase your chances of rewards. Here is a list of some of the popular Bitcoin mining pools that you can consider joining.
- AntPool — largest Bitcoin pool in terms of hash power
- Slush Pool — easy to use interface with a slick of unique features
- F2pool — allows mining of other cryptocurrencies apart from Bitcoin like Litecoin and Zcash
- BTCC Pool — known for its transparent fees and payment options
- Eligius — no registration required, best for beginners who want to learn to mine (it is a free bitcoin mining pool that works on 0% fee)
Information in this article is a basis you need to know to navigate in the world of mining. Having it in mind, you can continue your research in Bitcoin mining software and hardware to achieve results in the field.
In our other articles, you can learn more about Bitcoin, BTC price prediction, and where to buy Bitcoin in 2020.