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Bitcoin is a cryptocurrency that has gained a lot of limelight in a short period. Every day the news of the financial market is full of bitcoin ups and downs. However, there are still many investors who are unable to understand this novel concept of bitcoin and cryptocurrencies. People consider cryptocurrency as an asset or digital gold. There are different terms and concepts related to these virtual currencies. One of the terminologies is Bitcoin Mining. In this article, we have shed light on bitcoin mining and how it works. You can check the bitcoin revolution software .
Meaning of Bitcoin Mining
Generally, mining is done to extract something from a place. It is the same way for Bitcoin Mining as well. Bitcoin Mining involves generating new bitcoins through the computation of some arithmetic algos like puzzles. In this process, the computer systems are used, which are equipped with specialized chips. These chips are programmed for computation puzzles, and a miner has to solve them to mine a bitcoin. The other work of bitcoin mining is to confirm a transaction. When a bitcoin mining process confirms a transaction, it becomes reliable and trustworthy for an investor.
However, in many countries, bitcoin mining is considered as harming the environment. It is so because, for bitcoin mining, large computer systems are required, and for that, electricity is required. Therefore, it acts like a problem to the natural resources and the environment. But to tackle this problem, many miners have shifted to places where renewable resources are available. This will help to reduce the impact on climate and environment as such.
How is Bitcoin Mining Done?
As mentioned above, bitcoin mining is done by solving computation puzzles from a complicated and large pool. The whole thing of bitcoin mining is related to mathematical puzzles. This is known as proof of work (POW). In the process of mining, a minor tries to come up with a hash. Hash is a 64-digit hexadecimal number that is less than or equal to the target hash. This target hash is generally SHA256, which is Bitcoin’s POW algorithm.
To mine a bitcoin, a miner uses multiple processing units which are stacked together. These units work as a brutal force for mining bitcoin. Now, with this force, the hash gets spit out at different rates. These rates can be megahashes per second, gigahashes per second, or terahashes per second. But a bitcoin is rewarded only to the system that guesses a number less than or equal to the target hash. This is how bitcoin mining is done.
Why is Bitcoin Mining done?
The bitcoin mining process is done for two main reasons that include:
- The process of mining confirms a transaction in the bitcoin network that gives reliability to the transaction. This is very important from the point of view of investors.
- In Double spending, the owner of the bitcoin can spend the single bitcoin two times. This can lead to loss. But, with the bitcoin mining process, this problem is easily avoided as no owner can transact a single bitcoin twice.
What is the scope of Bitcoin Mining?
In this bitcoin age, the scope of bitcoin and miners has increased. The first mining process was carried out in 2009, and at that time, a miner could get 50 BTC. But in 2012, it got reduced to 25 BTC, and in 2016, it was reduced to 12.5 BTC. This was further reduced to 6.5 BTC.
However, there is an incentive to the miners. The miners are offered the transaction fees for carrying out the mining process. But the miners are rewarded with this transaction fee when the bitcoin reaches 21 million.
Conclusion
Bitcoin is a digital currency that is expanding its wings over time. Many investors are interested in this investment even after the risk involved in it. This has increased the scope of the mining process as well. However, the earnings of bitcoin miners have been reduced in recent years but, the transaction fee can generate interest among them.
