When dealing with cryptocurrencies, we hear about crypto mining or bitcoin mining on a regular basis. For many, it sounds like an underground, despotic phenomenon that’s accessible only to hackers and dark market lords. In reality, mining is far more glamorous than that but equally uncertain.

In order to mine bitcoin, miners need a powerful computer that will solve complicated computational math problems (complex that cannot be solved by hand). The process is so complex that the effort required for a computer to solve these problems is equivalent to a miner reaching gold in the ground. Through mining, you can earn cryptocurrency without actually buying it.

What is mining?

Once a computer solves a complex mathematical problem, new coins are produced and are rewarded to the miner. By solving the mathematical problem, miners also verify their transactions and make the Bitcoin payment network reliable and secure. The BTC reward is an incentive to motivate people to participate in supporting, legitimizing, and monitoring the Bitcoin network as well as its blockchain. Essentially, mining is what makes Bitcoin, or any cryptocurrency that follows the same procedure, decentralized. Obtaining and holding bitcoins is spread among many people across the world, and the cryptocurrency does not rely on a certain government or central bank.

Crypto miners work as auditors since a part of their work is verifying a previous bitcoin transaction. This process was set up by BTC’s creator, Satoshi Nakamoto, to ensure that Bitcoin’s users keep the cryptocurrency honest and to prevent double-spending.

Mining helps prevent fraud – but how easy is it to mine Bitcoin?

In simple terms, double spending refers to using the same bitcoin twice, which is perhaps the biggest worry of regulators and users. While with physical currencies, this is impossible, with digital currency, “there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original.”

This is where mining comes in: Bitcoin miners verify transactions to ensure that users have not illicitly tried to use the same bitcoin twice.  A miner is eligible to be rewarded with a certain quantity of bitcoin once they have verified 1 block or 1-megabyte worth of bitcoin. This limit was set back in 2009 by Bitcoin’s creator by is often a matter of controversy as many miners believe that the block size should be bigger. Essentially, this would improve the Bitcoin network and help transaction verification to happen faster.

However, just because you’ve verified these transactions doesn’t mean you will be rewarded BTC. In order to receive the coins, you must fulfill the following criteria:

  • 1 block of verified transactions at hand
  • You need to the first miner to solve the numeric problem

This means that the miner who is rewarded BTC must be the first one to invent a 64-digit hexadecimal number (also known as a ‘hash’) that is less than or equal to the target hash. A hash is defined as a “function that converts an input of letters and numbers into an encrypted output of a fixed length.” It is created using an algorithm and is vital to blockchain management in cryptocurrency. Because the length of a hash is fixed, it’s nearly impossible to guess the length of the hash when trying to solve the blockchain.

Why is mining important for Bitcoin?

Apart from verifying transactions and earning cryptocurrency, miners have another important purpose – without them; it is impossible to release new cryptocurrencies into the ecosystem. Currently, there are over 18 million bitcoins in circulation, and aside from the very first block that was released by Satoshi Nakamoto, every other BTC in existence was mined. The Bitcoin network would still exist, but Without miners, but the value and market capitalization of the cryptocurrency would be very different.

As per the Bitcoin Protocol, the total number of bitcoin that can ever be mined is capped at 21 million. However, the rate at which BTC is mined is decreased over time due to processes like halving. This is why the final bitcoin will not be circulated until the year 2140.

Apart from being a lucrative procedure, being a crypto coin miner gives you voting power when modifications are suggested in the Bitcoin network protocol. A successful miner will have an influence on important decision-making processes in the life of cryptocurrency.

What kind of equipment needed to mine bitcoin?

When bitcoin was born, it was quite simple to mine coins in the comfort of your own home with a regular at-home computer, but this is no longer the case.  Over time, it has become evidently harder to mine coins. This is because currently, there are many strong mining rigs that are racing to solve a hash problem. A new block is produced approximately every ten minutes, and every two weeks, the difficulty of mining increases. More collective computing power is needed as the difficulty level increases.

To be successful in mining, BTC miners must invest in powerful computer equipment such as GPU (graphics processing unit) or an application-specific integrated circuit (ASIC). This kind of hardware can cost thousands of dollars. 

Is mining Bitcoin sustainable?

Despite the fact that there is a huge network of users verifying transactions, major scaling difficulties, and unfriendly odds (1 in 13 trillion), 1 block of transactions is verified approximately every 10 minutes.

Seven transactions can be processed every second on the Bitcoin network, while in comparison, VISA can process 24,000 transactions per second. However, as the network of BTC users continues to grow, the number of transactions processed with eventually increase. Mining Bitcoin is not an easy process, nor is it an inexpensive process, but if you are invested in the idea, consider joining a mining ring where you can combine your computing power with other bitcoin miners to achieve better results.