Today, I will discuss everything there is to know about Bitcoin mining. Mining could be a potential passive income if you know how to do it.
First, we need to know what you are getting into. Bitcoin mining can be fun if you are into tech and gadgets.
Bitcoin mining is the process of solving a problem
known as hashing because the miner processes hashes
to complete transactions and add them to the Blockchain.
The winner, that is, the miner that solves the problem
first gets rewarded. First,with transaction fees and also with new bitcoins. Just like real life mining for gold you only win if you struck gold, oil, and other mined resources.
The reason that miners gets rewarded is due to the sheer amount of work or processing power required to solve the hashes is extremely processor-intensive, considering that there are hundreds of thousands of transactions being processed each day.
Mining requires a great deal of computing power,
not the kind of processing power you would find in the average desktop computer. Before when cryptocurrency mining was still new, you can mine Bitcoin using a desktop computer with a good graphic card, those used for gaming. To generate a block can be hours.
Before when Bitcoin mining was still new, you can mine Bitcoin using a desktop computer with a good graphic card, those typically used for gaming.
So let’s talk about proof-of-work.
There’s a difficulty to solving the hashing problem because
hashes have to be validated and every transaction in
a block has a hash. The concept of difficulty is intentional
in Blockchain processing to make transaction processing
computationally difficult and easily verify though.
Blockchain technology itself is ahead of its time. Imagine transacting money or data that can easily be verified but hard to alter. It can change the way we handle data. Blockchain is the technology behind Bitcoin. All transaction in Blockchain hold different values that can only be deciphered by machine. Even if it can be altered it will take longer than what’s it worth, so it has protection from hackers. No computer can alter a transaction within minutes.
Because you’re not processing the entire set of transactions, just the
cryptographic hash attached to them.
Hash targets create the difficulty. These are expectations for
hashes that are routinely set by the Blockchain network.
And the reason difficulty is necessary is that it discourages
malicious activity like distributed denial service
attacks and spam. But because hashing is so processor-intensive,
it costs money to process the information. You need some
serious computing power, the difficulty is routinely adjusted about every two weeks by the Blockchain network. That’s why the days mining for Bitcoins using computer graphic cards ended. Today, you need a specialized ASIC miner to mine Bitcoin, but it is still possible to mine for Bitcoins using your graphic cards with pooled mining like Nicehash and Minersgate.
Pooled mining is when multiple miners contribute to the mining process.
the reason that pooled mining is attractive is because miners can
combine their hardware resources and spread out the processing
power. They work collaboratively to solve problems and generate new blocks, and block rewards are divided among the miners based on how processing power they have contributed to solve the problem. This is tremendously beneficial for smaller miners that can’t afford expensive hardware, so they team up to add to the mining process, but since this is pooled mining it will require internet connection to coordinate with other miners.
Electricity cost, internet connection, mining rigs, Bitcoin volatile market and cool temperature, are some of the factors that must be considered to profit from your Bitcoin mining venture.
Electricity cost, internet connection, mining rigs, Bitcoin volatile market and maintaining cool temperature of hardware, are some of the factors that must be considered in your Bitcoin mining venture. These are the expenses you must overcome to profit. For example: If you have free or cheap electricity and cool climate you’re in for a profit. You won’t be spending much on cooling system and processing power.
Bitcoin mining sounds like a profitable venture if you are geeky about this stuff. You are more likely to succeed in this business. You might to consider other cryptocurrency like Ethereum, Ripple and Litecoins. But whatever cryptocurrency you mine. In the end, the technology behind will change the way we handle business. Blockchain technology is the future.
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