Bitcoin Mining Explained: How People Make Money Using Their Own Computers
Bitcoin and cryptocurrency have seen a massive surge in interest this year for a number of reasons.
Celebrities like Elon Musk have been instrumental in the rise of cryptocurrency with the hope that people might get richer in the future.
On top of that, new material has been released that allows people to mine for Bitcoin which has been called “the new gold rush”.
But how the hell is Bitcoin mined and how do people do it? Is it expensive and can you do it?
It’s a bit trickier than you might expect, but there is a way for almost anyone, as long as they have the right hardware, to make money using Bitcoin.
Don’t expect to become a millionaire overnight, as it could take awhile.
How does Bitcoin mining work?
Miners do not search for Bitcoin on the internet, but rather get paid for their work as listeners. They do the job of verifying the legitimacy of Bitcoin transactions.
Investopedia explains that double spending is a scenario in which a bitcoin owner illicitly spends the same bitcoin twice. With physical currency, that’s no problem: once you hand someone a $ 20 bill to buy a bottle of vodka, you don’t have it anymore, so there’s no danger of you can use the same $ 20 ticket to buy lotto tickets next door.
While it is possible for counterfeit to be made, it is not exactly the same as literally spending the same dollar twice. With digital currency, however, as the Investopedia Dictionary explains, “there is a risk that the holder will make a copy of the digital token and send it to a merchant or other party while retaining the original.”
When Bitcoin miners verify a certain number of transactions, called a “block”, they are rewarded for their efforts.
This means that you could get absolutely nothing for your labor, but to get paid you have to be the first miner to resolve the “block”.
Miners try to be the first to come up with a 64-digit hexadecimal number, or “hash,” that is less than or equal to the target hash.
So, to be the most efficient, you must have a high “hash rate”, measured in terms of megahashes per second (MH / s), gigahashes per second (GH / s), and terahashes per second (TH / s).
But don’t expect to be paid a huge amount as the payouts are usually very low.
The rewards for mining bitcoin are halved every four years. When bitcoin was first mined in 2009, mining a block was earning you 50 BTC. In 2012, this was halved to 25 BTC. In 2016, that was halved to 12.5 BTC. On May 11, 2020, the reward was halved again to 6.25 BTC.
So, how do you mine Bitcoins and get a high hash rate?
Because computer components differ so much, they all have their own hash rates.
Graphics cards in computers tend to be the best for a high hash rate and the newer graphics cards tend to be the perfect fit for Bitcoin miners.
However, this and other factors have led to a massive shortage of graphics cards which is why gamers cannot get the card they want.
People are creating mining computers that can range from £ 500 to tens of thousands of pounds, which sit idle and allow them to earn Bitcoin over time.
There are factories in China that have been built secretly to continuously mine Bitcoin which uses substantial amounts of energy.