Bitcoin mining: What it is and how it works

What does Bitcoin Mining mean?

Bitcoin mining is creating, or rather discovering, bitcoin currency.

Unlike real-world money printed when more is needed, bitcoin cannot simply be willed into existence but has to be mined through mathematical processes.

Mining ensures the continuous reissue of Bitcoins like central banks does with paper currency.

In general, to mine bitcoins, you need either a GPU (graphics processing unit) or an application-specific integrated circuit (ASIC) to set up a mining rig.

Bitcoin mining: pros and cons

However, it may not be that simple.

First of all, you need a special computer to mine this cryptocurrency. Mining bitcoin concerns solving a computational problem. This problem is basically a set equation linked to the actual transactions.

It allows them to chain together blocks of transactions (hence Bitcoin’s famous “blockchain”). By chaining them together, miners verify the transactions themselves.

When Bitcoin was first invented, mathematical equations were relatively easy to solve. With each block added to the chain, the equations get more difficult.

It is nearly impossible for people to solve equations quickly without using machinery. For this service, miners earn newly-created Bitcoins and transaction fees.

On the other hand, the bitcoin system encourages mining. It secures the Bitcoin network. By building a blockchain of cryptocurrency transactions, you certify their authenticity.

In short, this means the more mining, the more secure system.

Does it worth the game?

How much money can someone make as a Bitcoin miner, then?

It depends on many factors, but those essential are basically two: overhead expenses and revenue.

First, like in any enterprise or business, you should consider the expenses you are liable to in bitcoin mining.

As you need a sophisticated pool of computers, you have to figure out electricity costs. To work properly, they need a significant amount of power.

Moreover,  not all computers and machines can mine Bitcoin. Some can mine various types of cryptocurrency. Others not. You should consider the cost of this machinery when finishing these calculations.

Therefore, Bitcoin miners have to consider the cost of technology and equipment and weigh this against the money they are making.

Conclusion

In conclusion, it seems that bitcoin mining does not seem a job for all.

Indeed, you should own sophisticated equipment.

Nowadays, you may need a whole pool of machinery to earn something from this activity.

Moreover, the high cost of equipment and power means you would need sophisticated managerial skills.

Alternatively, you may join a shared mining pool, but you would unlikely make a living from this activity.