You must have heard stories of BTC mining and earning dollars without doing any actual work. Then the question that came into your mind was- Why am I not starting the same?
There are so many things to understand before starting to mine Bitcoins. In this article, I am going to tell you the basics of how to start mining.
What Is BTC Mining?
What is mining? There are coals in the mine. And through the mining process, we collect the coals, which have a proper value. Now we calculate the coal price and mining price. The subtract is the profit. Right?
The same thing happens in cryptocurrency mining also. There are Bitcoins in the system, and the miners get the BTC through a complicated process.
Through this process, new Bitcoins are entering into the circulation. But in this mining, there is a need for high-tech hardware and computers to solve mathematical puzzles. And solving a puzzle can give you a few Satoshis. There are 100 million Satoshis in a single Bitcoin.
Before starting to mine BTC, you should read and understand the factors.
How Does It Work?
BTC mining is a very complex thing to understand. I will try to tell you in a simple way. The miners download the history of the blockchain, which consists of all transactions. Then they try to put all the transactions into a block. The block needs to be verified by the other miner. Solve. The miner gets a reward.
There were a total of 21 million Bitcoins ever existed. And out of that, there are around 2 million left. The block reward gets half every four years. In 2009 the reward was 50. In 2013 the reward became 25. Also in 2017 it was 12.5, and right now, the reward per block is 6.25.
BTC Mining Factors
There are so many factors that work behind the profit of mining. The cost of electricity, the mining machines, the prices of the machines, the availability, and the difficulty level of mining.
There is a term called Hashrate, which is the mining speed and the transaction process on every blockchain. Recently, so many miners have come to the mining f bitcoin. Because of this reason, the difficulty level is increasing. The Hashrate calculates the rate of speed.
Each time a news hash creates, it gets impossible to predict. It takes a million guesses to fill the next block. And after guessing the right hash, the winner gets coins.
ASIC
In early 2010, the miners used their personal computers for mining. And as a matter of fact, they successfully generated a considerable profit. The equipment they used was not expensive. So the profit margin was high.
At this time, if somebody wants to start BTC mining, they need an expensive system to compete with other miners. So in 2013, a Chinese hardware company released a system named Application Specific Integrated Circuits or ASIC. This machine is for mining Bitcoin.
At this time, mining is expensive because of these metrics.
- The number of miners is increasing.
- The electricity cost is vast.
- Computer Equipment is not easily accessible.
- The mining is getting difficult every day.
Difficulty Rate
New bitcoin blocks discover every 10 minutes. The system automatically puts the difficulty level on the basis of the miner’s number. The difficulty rate is increasing with the increase of the miner’s number. A miner can get a reward by guessing the perfect hash is getting tough every day.
The BTC mining difficulty rate is variable and changing in every two weeks. Therefore, the process is automated to maintain the stable manufacturing of the blocks.
In 2007, the difficulty level was 1. And in august 2022, the difficulty rate is more than 30 trillion. So you can imagine how many miners have come to this business through the numbers. There are a total of 21 million Bitcoins, and over 18 million have already been mined.
Profitability
Before understanding the profitability, you need to understand a simple thing. Computerized machines do the work and need enormous electricity to run them. Suppose you mine for 24 hours, then the profit you will earn is subtracting the reward and electricity cost.
Now everyone is using ASICs. It can cost between a few hundred dollars to thousands of dollars. Few machines allow you to lower the energy requirements, and ultimately it will give you huge profits.
Before BTC mining, you should do a cost-benefit analysis to understand your profit. There are a few factors you should consider.
- Cost of power
- Time
- Efficiency
- Bitcoin value
There are profitability calculators in the market that can help you in the cost-benefit equation. The calculator can differ from each other based on their work. You can check CryptoCompare.
Mining Pools
The competition is becoming challenging every day. So there is a solution that the miners come up with. Individual miners join a mining pool to participate together. This way, the speed can be increased, and the difficulty can be decreased. And ultimately, they share the reward.
The BTC mining reward decreases, this is the only disadvantage of the mining pool. But the good side of a mining pool is that, in this case, the chances are high to complete a hash and get a reward.
There are two kinds of payout methods. The first one is the proportional payout method and the second one is the pay-per-share method. The proportional method is suitable when the Bitcoin price is high, and the pay-per-share method is suitable when the Bitcoin price is low.
How Much Can You Earn
There was so much information about BTC mining, now coming to the statistical part.
As I told you earlier, the reward becomes half after every four years. Right now, you will get 6.25 BTC per block. Right now, the price of a Bitcoin is $21,500. That means you will get $134,000 per block. The reward was $245,000 in march.
You should check the BitcoinClock or CryptoCompare for the calculation.
Is It Reliable?
Simple answer, Yes, it is reliable, and you can profit from BTC mining. But at first, you need to invest.
You need to buy ASICs, which may cost you hundreds to thousands of dollars. In addition, some miners buy separate graphics cards for mining.
Frequently Asked Questions (FAQs)!
There are a few answers. You can find these interesting.
Ans: Recent research showed that Bitcoin mining is a concentrated business. There are only 10% of miners who are controlling 90% of mining. Another study showed that only 0.1% of miners capture 50% of the mining capacity.
Ans: The Bitcoin network is safe for the miners. It is difficult to attack, and the network can not be altered or stopped. In simple words, more miners mean more security.
Ans: It takes only 10 minutes to mine a Bitcoin. Theoretically, a single block takes 10 minutes to be transcripted. The total reward for 10 minutes of mining is 6.25 BTC. Don’t get excited after hearing this. There are thousands of miners for the reward.
Ans: It takes only 10 minutes to mine a Bitcoin. Theoretically, a single block takes 10 minutes to be transcripted. The total reward for 10 minutes of mining is 6.25 BTC. Don’t get excited after hearing this. There are thousands of miners for the reward.
To Conclude
I guess now you have enough knowledge regarding BTC mining. So, stop doubting the reliability, and start mining.
Please don’t forget to leave your genuine feedback. I will come up with other topics. The cryptocurrency world is upgrading every day.
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