What You Need to Know About Bitcoin Mining
When most people hear the word mining, the first thing that comes to mind is coal mining, gold mining, or other mineral mining. Most people are familiar with these types of mining, and even if their knowledge of mineral mining is limited, they most likely have heard about it.
When we talk about mineral mining, for example, coal and gold mining, we are talking about the process of obtaining or extracting coal or gold from the earth.
What is Mining?
According to Wikipedia, mining is the extraction of valuable minerals or other geological materials from the earth.
What does all of this have to do with bitcoin mining?
We are strictly focusing on bitcoin “mining” in this article to help you understand the bitcoin mining process.
After reading this article, you can explain to anyone what bitcoin mining is and what it involves.
The purpose of mining a mineral, for example, coal, gold, silver, etc., is to acquire that mineral for some economic purpose because it has monetary value. Similarly, with bitcoin, it is mined for its economic value. People buy and sell gold and iron; they also buy and sell bitcoins. It has monetary value.
What Is Bitcoin Mining?
Bitcoin mining is the process by which new bitcoins enter into circulation. This is accomplished by using sophisticated hardware that solves a highly complex computational math problem. When this complex problem is solved, a block of bitcoins is awarded to the successful computer, and the process is repeated. Therefore, like physical mining that extracts the gold from the ore, bitcoin mining extracts the bitcoin from the code.
How Many Bitcoins Are In A Block?
You may wonder how many coins are in a block and how long it takes to mine a bitcoin block? At present, a bitcoin block contains 6.25 bitcoins. I say at present because this changes every 210,000 blocks. Initially, when Bitcoin started in 2009, a block had 50 bitcoins. In 2013 a bitcoin block was halved to 25 bitcoins. Then in 2018, a block was halved to 12.5 bitcoins, and in May of 2020, it was halved again to its present amount of 6.25 bitcoins.
How long does it take to make a block of bitcoins?
Now you are really interested in bitcoin. The process of mining is very sophisticated, and you will like to be a part of it. Even mining minerals take lots of time and use lots of resources. Now you are wondering how long does it take to mine a bitcoin? You may be surprised to know that you cannot mine just one bitcoin. Bitcoin miners have to mine bitcoins in blocks. The process takes approximately ten minutes and yields 6.25 bitcoins at present.
It’s important to know that for each block, there are thousands of bitcoin miners competing for the reward. As mentioned before, the computer that solves the mathematical problem first gets the prize. There are many competitors trying to be the first person or group of persons to solve that problem and get that reward. If you think you have what it takes to be a successful bitcoin miner, then, by all means, give it a try. You just might be able to afford that helicopter in the near future.
Mining Pools
There are thousands of bitcoin miners, and the probability of a single person being the first to solve the mathematical problem is very low. Due to the low probability of mining a single block by a lone miner, many bitcoin miners join a mining pool. Mining pools are the collective computing power of a group of miners. As a result of joining forces, the probability of solving the mathematical problem first increases. The members of the pool will split the profits based on the proportion of power each miner contributes.
Since each bitcoin block takes 10 minutes to mine, then one hundred and forty-four blocks are mined each day. Therefore, at the current rate, using the latest bitcoin halving, nine hundred bitcoins are available for rewards each day.
Why are bitcoin blocks halved?
I mentioned earlier that part of the process of mining bitcoins is halving. Halving is applied every 210,000 blocks, and this process reduces the number of bitcoins in a block. A bitcoin halving event is when the reward for mining bitcoin transactions is cut in half.
Two fundamental reasons for bitcoin’s halving; it cuts bitcoin’s inflation rate in half and controls the rate at which new bitcoins enter circulation.
It also reduces the rate at which bitcoins are produced.
Halving will also increase the value of Bitcoins.
Interestingly enough, as the halving reduces the reward to the miners, it could reduce their desire to be bitcoin miners. The value of the bitcoin increases, and this keeps the miners’ interest in producing more bitcoins. So if you are interested in becoming a bitcoin miner and are technologically savvy, there is still room for you.
