In April last year, bitcoin was worth a little over $30. Here’s what you need to know about Mining Bitcoin
The process of mining bitcoin is rooted in mathematics. It cost about $45 in electricity to mine one bitcoin. When the block of transactions is created through the mining process, miners apply the hash algorithm (as mentioned) to the block. Looking at it now however, it would have been extremely profitable. These can be costly, but as mentioned if the price of bitcoin increases further it may prove profitable in the long run. However, at present, it is much more efficient to join the mining pools.
What is Mining Bitcoin? Back in 2009-2010, an individual could be mining bitcoin relatively simply on their own. If you are determined for mining bitcoin yourself, you will be able to find mining rigs online, which are hardware that massively increases computer power.
At that time it was obviously a profitable to spend money on electricity to mine. When the block (which can be arbitrary – meaning it can be of any length and composition) is inserted into the hash algorithm the algorithm converts it into a standard length output called, in the world of cryptography, a digest.
If the hash algorithm you calculate produces the right digests, you receive bitcoin. This, however, is not all. Mining pools combine the computing power of a large network of computers and then split the rewards. Through this process, it validates the block that came before it in the chain, and in turn, the transaction.
If you want to join a mining pool simply enter the term “bitcoin mining pool” is your favorite search engine and pick the one that appeals to you the most.
So how can start mining bitcoin for yourself? When miners identify the block, it is relatively useless in its current form. In order to understand fully what happens, it is necessary to get a little bit technical. The often used jargon in Bitcoin Industry – ‘mining bitcoin’ refers to the central processing concept on which the bitcoin infrastructure rests.
However, when the bitcoin hash algorithm is applied to a particular block, and it matches, the miner receives a particular number of bitcoin. When mining bitcoin, you are also validating bitcoin transactions. Miners use computing power to identify a sequence of data called a “block”. It is easy to think of mining as just a form of digging in the Internet to find bitcoin, but in reality, it is a little more complicated than that and has wider implications than simply accruing wealth.
Think of the hash algorithm as a sort of converter. This is a key part of the mining process and one that allows the bitcoin ecosystem to effectively regulate itself and avoid the need for external regulators such as central banks. Without getting too technical, the key part of this process is that the hash of any block is created using the hash of the block before it in the block chain. The computer power required to generate a hash was far less than it is now, and so the cost of the electricity necessary to produce one bitcoin made it a profitable exchange.