No, you won’t need a pickax, bucket or even a helmet with a headlight.
When you hear the phrase “Bitcoin Mining” does that conjure up images of a time in the old West where miners were frantically staking their claims and digging and panning for Gold?
Forget the tools of old IF you want to be a Bitcoin Miner you will need to obtain the NEW tools of the trade: Lots of electricity, high powered computers and of course a secure and robust internet connection. These computers will do FAST calculations and compete with other miners to be first to solve problems that will earn them Bitcoin. This process of verification makes Bitcoin transactions trustworthy and secure.
When you make purchases on or offline and use a credit or debit card, those transactions are generally verified by VISA or MasterCard.
However, Bitcoin uses no central authority for verification but instead uses NODES scattered around the world where information from transactions is stored. So when a transaction takes place, prior transactions can be checked on other Nodes for authenticity. The most significant difference here is that all information is stored on a blockchain. once it is verified and can be accessed at any time by anyone, including you!
To mine Bitcoin, one must realize it is expensive to set up with the kind of mining farm or Rig that would make it profitable. One computer alone would not be able to compete very well with some of the “farms” or “rigs” that some set up. More computing power equals more significant chances of solving the complex hashing puzzle first, so that means to be competitive, you would probably want a warehouse full of expensive GPUs or ASICs. (GPU’s = Graphics Processing Units and ASIC’s = Application-Specific Integrated Circuits. Not to mention the electricity to run such a Rig and a well air-conditioned place to house such machinery. (think of the heat they would generate!)
This is not to say mining cannot be rewarding, as it certainly CAN be. Just like the draw of early Gold mining, Bitcoin miners seem to be magnetically drawn to the thrill of the “find.”
Miners serve to keep Bitcoin decentralized as verifying the transactions come from no central area but are done all over the world before the final verified result adds to the Blockchain.
Investopia at https://www.investopedia.com/tech/how-does-bitcoin-mining-work/ has this to say: “The bitcoin reward that miners receive is an incentive which motivates people to assist in the primary purpose of mining: to support, legitimize and monitor the Bitcoin network and its blockchain. Because these responsibilities are spread among many users all over the world, Bitcoin is said to be a “decentralized” cryptocurrency or one that does not rely on a central bank or government to oversee its regulation.“
This verification’s also preventing “double spending” of the Bitcoin. What would prevent a user from presenting the Bitcoin again on another transaction and, in essence, “double-spending” that Bitcoin? This process of verifying numbers against other Blocks of information makes Bitcoin miners Auditors of the precious Bitcoin transactions. This issue was seen by the founder of Bitcoin, Satoshi Nakamato, and THIS auditing or verifying is the fix.
Depending on the amount of data in a transaction, a “block” can be one transaction (rare) to many. The size block is 1 MB to make a miner eligible for a bitcoin payout but does not guarantee it as not everyone who verifies transactions gets a payout.
Why is this, you ask?
To be the winner of the Bitcoin, you must verify 1 MB of transactions, which is the easiest part, but then you also must be FIRST in doing so. A process which is known as Proof of Work.
Would Bitcoin Mining be Profitable to you?
I suppose only you can answer that given all the variables of the cost of mining. The prices of the powerful computers/hardware, the cost of electricity to run them 24/7’s, power to keep the “farm” cool where the computers are housed, and the difficulty of solving the complicated transactions in a block should be looked at as well. As the number of Bitcoin miners increases, so will the challenge because Bitcoin mining only produces a certain amount of Bitcoin every 10 minutes. You are ensuring that it remains at a static level. Given this information, if you still feel like you can make Bitcoin through “Proof of Work,” then, by all means, go for it!
Always remember you can purchase Bitcoin by direct buy from an exchange, by trade, and even Peer to Peer (from another person).
According to Investopia at https://www.investopedia.com/articles/forex/051115/bitcoin-mining-still-profitable.asp these are some KEY takeaways:
- Bitcoin is mined using computing rigs, which include expensive hardware.
- Miners are rewarded with bitcoin for verifying blocks of transactions to the blockchain network.
- As more miners compete for bitcoin rewards, the process becomes more difficult.
- To determine whether bitcoin mining is profitable for you, consider the costs of equipment and electricity as well as the difficulty associated with mining and how the price of bitcoin will impact potential rewards.
Knowledge is power, and once you know all the ins and outs of Mining, you can decide if it’s for you.