Before coming to the topic, I want to tell you a story. Yesterday I went to a nearby famous electronics market to buy a laptop. I saw a great hustle bustle of people there and they all were purchasing computers. Shocking news for me was that they were looking for high graphic cards. First I thought they are video game lovers, that's why they need high graphic cards but after some time I realized they all are buying high performance computers to mine Bitcoin. Because of that experience I thought I should write an article about mining of bitcoin because this concept is rapidly getting popular in the whole world.
As we all know that bitcoin price is skyrocketing and it is predicted that in the coming years prices will double. According to today’s exchange rate, one bitcoin is equal to $57138.90. So, just imagine if you mine only one bitcoin, you will have a decent amount in your wallet. That’s why every second person is trying to mine bitcoin.
Let us first take a look at bitcoin and then I will tell you in simple words how you can mine it. Bitcoin is a decentralized currency that’s why no government regulates it. In our daily transaction, mostly banks are involved and banks play a mediator role between sender and beneficiary. Moreover, it is a little bit time consuming process as the bank verifies each and every thing then after satisfaction money is transferred. On the contrary, if you have some bitcoins and you have to send these coins to your friend. In bitcoin transactions, no bank is involved due to its decentralization nature. A question might come to your mind: who will check and verify this transaction. Answer of your question is that thousands of computers are involved in this transaction. There is a block chain of computers as every computer is connected to another. These computers maintain a ledger of all transactions. These computers are actually mining machines.
Some of you might misinterpret bitcoin mining that we have to dig soil in order to extract bitcoin just like gold or coal but in reality this is not the case. Bitcoin mining is completely different because it is a computer based program. Now let us understand mining in detail. When a transaction of bitcoin is done from one corner of the world to the other, a lot of computers verify this transaction. When any single computer verifies this transaction, a difficult algorithm is given to that computer and that computer solves this algorithm. As a reward some fraction of bitcoin is awarded to that computer as that computer has verified a transaction.
Let us talk about the difficulty level. Total quantity of bitcoin is 21 million and 18.77 million have been mined so far. Only 2.33 M are remaining to be mined. A decade ago, it was so easy to mine bitcoin and your normal computer was enough to mine it. As only a limited quantity is left, that’s why its difficulty level is getting higher day by day. Now it is no more possible to mine a decent quantity of bitcoin with a normal computer. You need high performance computers that have heavy graphic cards in order to generate a good amount of bitcoin. In simple words, first you need to invest in mining machines then you will get some profit. Now in many countries, people are investing billions on mining machines as they are building mining farms. These farms have a plethora of high speed computers and they have strong configuration.
Now many of you might thinking that how mining is actually done. Go to your browser and type “bitcoin mining software’s”. A list of software’s will be in front of you. Just download any software and install it on your computer. Moreover, you can mine bitcoin on your mobile and many apps are available on play store or iCloud. These software’s will use hardware of the computer or mobile and your device might be heated up. That’s why heavy CPU devices are recommended for mining.
In the last section, let us understand the factors that are involved in mining. There are three major factor that every newbie should consider before jumping into mining
1: Hardware
This factor is really important because a major portion of your budget will go into procurement of machines. So think wisely before purchasing hardware.
2: Price
This is really an important factor because your whole investment depends on the price of bitcoin. In the future, if the price goes down then your whole investment and effort would be futile. On the other hand, if the price goes up, you will earn a lot of profit.
3: Electricity
Obviously your heavy computer farms will consume a decent amount of electricity. In other words, it is not a onetime investment to buy hardware, you will have to pay electricity bills and maintenance charges. Your machine will run twenty four hours continuously.
In conclusion, don’t rush to invest in bitcoin mining. First do some research and learn about mining then calculate how much you can earn by inviting how much money because it is too risky. Good luck.
I hope you have liked my article.
Thank you
Lead Image link:
https://pixabay.com/vectors/bitcoin-digital-currency-4130299/