What is Bitcoin Mining? How does it work?

1. What is Bitcoin Mining? How does itwork? Bitcoin mining is relatively simpler than it appears. But generating good profit, in the long run, is challenging enough. Since its inception in January 2009, it has been the world’s largest decentralised digital currency by market capitalisation. Bitcoin allows peer to peer transfers without the involvement of intermediaries like banks, other financial institutions orbrokers. All bitcoin transfers occur using the underlying technology ofblockchain. What is bitcoin mining? Bitcoin miningis the process of creating new bitcoins and verifying bitcoin transactions to maintain and develop the blockchain ledger upon which bitcoin is based. Anyone can become a miner if he has mining hardware and internet access with a sophisticated ability to solve extremely complex computational math problems. Blockchain is the underlying technology of Bitcoin. Transactions are placed in chronological order in a public distributed blockchain ledger. The good thing about blockchain is that once the transaction or record is added to the blockchain, it cannot be modified or altered neither. Transactions are safe from hacking in the blockchainledger. The smallest unit of blockchain is a block. Block is a container that has all the details of the transaction. There are four fields of the block including data, nonce, previous hash and hash. Before bitcoin mining, you have to understand the concept ofblockchain. What do you need for bitcoinmining? The first thing you need for bitcoin mining is a bitcoin wallet. The wallet you use should be secure for transactions. As your mining proceeds, depending on your mining setup, it could be of a very large amount. People use hardware wallets as far as security is concerned but they are very difficult to use. So, for convenience, many miners use software walletslike

2. Electrum. Now you need mining hardware. Mining hardware is basically a machine that you will use for the mining process. At last, you want a mining software that will assist you to check if your mining hardware is working properly or not. And it programs the performance of your mininghardware. There are certain factors like what kind of algorithm for mining it should use, when to operate or which mining address is required to send the mining rewards. To process all these, a good mining software is required. So you have to choose your software wisely as it can affect your miningyield. How to choose mininghardware In 2009, when bitcoin mining was started, it was so easy that people were using their low power devices using CPU resources. But as the concept of bitcoin mining became popular, many miners stepped into the market. If you consider the difficulty level of bitcoin mining as one in 2009, then the difficulty level is more than 13 trillion in 2021. To get the edge on the competition, they started using Graphic Processing Units (GPUs) to mine bitcoin. GPU yields six times more efficiency than CPUmining. But as the competition and technology keep growing, a special hardware was introduced for bitcoin mining which is field-programmable gate arrays (FPGAs), which was followed by application-specific integrated circuit (ASIC). ASIC is dominating even today. In 2021, if you want to generate revenue through bitcoin mining, you should necessarily use an ASIC miner, even if your electricity costs arelow. The total limit for bitcoins that can be mined is 21 million, 17 to 18 bitcoins have already been mined. So for the remaining bitcoins, miners would be rewarded with 12.5 bitcoins after successful verification of thetransaction. How to choose miningsoftware? Before running your mining machine or hardware for mining, you have to keep your software ready to control your miner. Several softwares are available with varyingefficiency. ContinueReading……..