Given the right hardware, you can mine bitcoin from the comfort of your home. However, mining bitcoin has become more of a cooperate affair than an individual one. In the not-so-distant past, individuals could sit at home and mine the digital asset. If thing had stayed the same, given the power of the smartphone, it would have been possible to do so on mobile devices.
Well, things did not stay the same and the game has changed so much. To understand this, let us start from the basics and talk about what it means to mine bitcoin.
What is bitcoin mining
Mining means exactly what you think it does, except that where some miners actually dig the earth for gold, silver, and minerals, bitcoin miners have to do heavy computational work to add new chains to the block, thus growing the blockchain.
Bitcoin mining is the way that new bitcoins are introduced into the system and is also the way that transactions are verified and added to the blockchain. The first miner to find the solution to the problem gets the reward and then everyone moves to the next problem.
If you have been wondering how to mine cryptocurrency, the good news is that it is not so much as complicated as it is expensive. Mining requires complex hardware and a lot of electricity, which is why some countries (like China) have banned bitcoin mining in their country, citing high electricity use.
Although the process of mining is considered painstaking and only mildly rewarding, the eventual payoff (if it ever comes) is rewarding for many miners, and after earning only one such reward, some miners can stop mining altogether and use their reward to focus on a different passion. So, how much do miners really earn by embarking on this endeavor?
How much does a miner earn
Bitcoin miners are paid in tokens, but as the value of bitcoin has risen, the reward given to bitcoin miners has reduced, thanks to the need to ensure uniformity and prevent overcompensation. The rewards that are paid to miners are reduced by half every four years.
When bitcoin was first mined in 2009, mining a single block of bitcoin could earn you up to 50 BTC. If you were one of the early miners and you held on to the coins, you would be a millionaire now in 2021.
Related article: Everything you need to know about bitcoin automated trading systems.
However, as the value of bitcoin continued to rise, the value of the reward continued to reduce. Three years later, in 2012, the value of the reward was halved to 25 BTC. In 2016, the value was halved to 12.5 BTC. In 2020, the reward was again halved to 6.25 BTC. It is expected that in 2024, the reward will be halved again to 2.125 BTC, which is still quite a substantial amount considering that the value of BTC now, in November 2021 is over 60 thousand dollars.
What do you need to mine bitcoin?
Now that you know exactly what you will get in return for adding blocks to the chain, you are probably curious about how to get started with bitcoin mining. In the past, bitcoin miners were able to mine coins with only their personal computers. However, this is no longer the case as it is no longer possible.
One reason for this is that the system itself makes the process harder to complete every two weeks or so or after 2016 blocks. To accurately estimate the time, bitcoin aims to mine a new block every 10 minutes.
When there are a lot of miners hard at work to mine new coins for the blockchain, the difficulty is increased in order to stabilize the rate at which coins are produced. To keep up with the demands of the system, many miners usually have to invest hundreds of dollars into a graphics processing unit (GPU) or an application-specific integrated circuit (ASIC). Bitcoin is not the only cryptocurrency that requires miners, however, and Ethereum miners have found a way around roadblocks by individual graphics cards as a cheaper alternative to the requisite equipment.
One thing to note when mining bitcoin is that if multiple miners present solutions to the system, hoping for reward, the system will only pick the miner that has done the most work. The other answers will be discarded and will become orphan blocks. The orphan blocks are not added to the blockchain and they do not receive a reward.
Also read: 8 tips used by successful bitcoin traders in 2021.
Risks associated with bitcoin mining
With everything in the world, there is always some level of risk associated with it. With bitcoin mining, the problems are financial and regulatory. These have been mentioned briefly in this article, but they will be expanded in this section.
As previously mentioned, countries like China have banned mining, purportedly due to the amount of electricity that mining consumes. Bitcoin mining consumes so much energy because there are so
Conclusion
Cryptocurrency mining is one of the most lucrative endeavors that you can undertake right now, especially considering the great reward and the high value of bitcoin currently. In fact, the value has of bitcoin has been predicted to be on the rise, so there’s a lot of potential in that industry.
However, there are a number of concerns that have been raised about the climate change concerns and the risks associated with bitcoin. If this is something that you are willing to (and can do) then bitcoin mining is one of the most rewarding things you can do, excluding the financial rewards.
You may also like to read our latest article, How much can you make from bitcoin mining in 2021?
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