Bitcoin mining is the term used for the procedure which involves the verification of the transaction, storage of the bitcoins, and safeguarding of the bitcoins.
When you make the transaction or the payment through bitcoins, the transaction is verified by the bitcoin miners. The purpose of bitcoin mining is to generate or produce new bitcoins. So if, we combine all the concepts.
Bitcoin mining is the complex process in which the verification of the bitcoin transaction occurs & the new bitcoins are created.
In simple words, bitcoin mining means the procedure through which the new bitcoins are created.
How does Bitcoin Mining Works
Bitcoin mining is executed by the group of people who verify the transactions made by the bitcoins and also secure the network through which you store, & make the bitcoin transactions.
The group of people who perform bitcoin mining is known as miners. The miners get rewards for providing their services, and these rewards are new bitcoins.
The basic function of bitcoin mining are as follows:
- Production of new Bitcoins: New bitcoins are produced in the form of rewards. These rewards are given to the miners for providing their services. This is the only method for generating or creating new bitcoins in the system. It is the system based generation, no fraudulent activity can be attempted for the production of bitcoins.
- Verify transactions: Miners add the transactions to their blogs which are made on the bitcoin network. The transaction is complete and safeguarded only when it is added into the block of any miner. Once it is added in the block of the miner, then it is added to the bitcoin blockchain.
- To protect and secure the bitcoin network: Miners work to make the bitcoin network more complicated and difficult for hackers.
How to Start Bitcoin Mining
To understand better how bitcoin works, we can learn more about how the mining of bitcoin can be started. This will help you in understanding bitcoin mining bit better, and also if you want to be a miner. There are a few steps for the same. Let’s dive into them. These are as follows:
- Get the Bitcoin Mining Hardware: Before starting with the mining of the bitcoins, you need to purchase the bitcoin mining hardware. These days’ miners use Application Specific Integrated Circuits for bitcoin mining as one of the specialized bitcoin mining hardware.
- To decide which one is the best bitcoin mining hardware, you need to go through 3 checkpoints to make the decision. The checkpoints are:
- The first and most important checkpoint is the price of the hardware.
- Check the hash rate of the hardware. Hash rate is directly proportional to the speed of the hardware.
- Electricity demand.
- Join Bitcoin Mining Pool: If you want to start bitcoin mining, there are 2 ways for the same. The first one is that you start it on your own which will be termed as Solo mining. The other way to start with bitcoin mining is that you join the group of other bitcoin miners. The group of bitcoin miners is termed as a mining pool. There are several mining pools available which you can join easily.
Bitcoin mining pool is the result of the power of several bitcoin miners. They combine the capacity of the bitcoin miners to resolve the puzzles and enhance the speed of their calculation which helps them to acquire more newly generated bitcoins.
- Download Bitcoin Mining Software: As the body is nothing without heart. In the same way, the bitcoin mining hardware is of no use without the mining software. Mining software offers you access to the complete database and the bitcoin network. It is of more importance when you want to join the mining pool.
If you want to download the bitcoin mining software then first you need to determine the best one according to your operating system. There are different types of the bitcoin mining software in the market.
- Initiate your Bitcoin Wallet: The last and the most important step to follow is that you need to create the bitcoin wallet for yourself. After the purchase of bitcoin mining hardware, downloading the software, and joining of the mining pool.
You need to create the Bitcoin wallet for yourself so that you can start mining and storing the new bitcoins which you generated from mining.
Is Bitcoin Mining Legal
The answer to this question is variable. As it depends on the country or location of your residence. However, most of the countries consider it legal. So if we talk about the majority of the places, then yes Bitcoin mining is legal.
Yes, you heard it right! Bitcoin mining is legal in most of the countries. But if you are planning to commence bitcoin mining then it is always useful to first make it sure with the help of a local counselor or the local government of your residential area.
Some of the countries have marked it as illegal. Like China, it has announced bitcoin mining as illegal and has already banned the use of cryptocurrencies and also mining is banned in China.
Earning from Bitcoin Mining
Bitcoin mining is one of the most competitive fields. The more competent you are, the more you can earn from it. Earning from bitcoin mining also depends upon the rates of the bitcoin. The more efficient & competent you and your network is, the more you can earn from it.
Future in Bitcoin Mining
If you are planning to get rich and wealthier with the help of Bitcoin mining, then I guess it is quite difficult. If you are practicing bitcoin mining on a large scale, then yes it is possible. If you want to earn a handsome amount from bitcoin mining, then you need to improvise your set-up and you need to add thousands of mining units in your mining network.