It sounds funny when we refer to “mining bitcoins”. Will we go to a mine with a pick and shovel and start to extract gold coins with the symbol? No, none of that. In this case, the obtaining process is done through computers and the payment for the process. But how is the mining process?
We take the previous example of the mines to put ourselves in context. To extract gold we need heavy machinery to remove dirt and dig deep to find the gold metal. To that we must add the operating costs and others.
With bitcoin we don’t need any of that, just a computer that performs computational calculations with which we get new bitcoins and the reward or commission for it. Come on, any child of a neighbor can do it from his room without any problem in theory.
What is the bitcoin mining process?
Following a broad explanation, we explain the process in more detail below:
- Miners receive a new math problem every ten minutes
- The one who solves it faster gets the new coins in circulation
- These calculations are random , thereby finding the solution and validating the block
- The miner who deciphers it gets the reward, as long as the rest of the members of the network confirm that the answer is correct
In this way, each new operation must be validated to avoid counterfeiting of coins in the market. Which also offers us transparency, one of the main criticisms around cryptocurrencies.
The mission of mining is to certify the veracity of each coin put into circulation and that there are no duplicates.
The block, which we referred to earlier, is like a kind of accounting ledger where all transactions are recorded.
How can you mine bitcoin?
After all the above, you will surely be interested in becoming bitcoin miners. Although it sounds promising as it only requires a computer, doing it alone is not the proper method. Therefore, the best way to enter the universe of bitcoin miners is to join a mining cooperative or pool.
In it you will carry out the work together with other miners, increasing the potential to perform the calculations and keep the reward of each block ongoing. Remember that we are talking about computational calculations and the more computers involved in the process, the more chances of revenue you will have .
The reward, unsurprisingly, is paid in bitcoin. To put a historical reference data, after the third bitcoin halving on May 11 of last year, 6.25 bitcoins were paid for each confirmed block.
What do I need to mine bitcoins?
In the beginning, for mining we only need the processor or CPU of any computer since very few people aredoing the work. As they were increased the difficulty will be increased. GPU or graphics processors best for mining because of their computing power.
On December 16, 2009 version 0.2 of the software was released which allowed the use of more processors, thus utilizing the process of calculating and obtaining the reward. This led to the development of ASICs, a special computer that has many processors to facilitate bitcoin mining and is much more agile than just with a graphics card.
What about the entry of new miners?
The addition of new miners increases processing capacity and therefore more competition for rewards. This would increase the complexity of the calculations, but the block creation frequency should be maintained every 10 minutes . In this way, with the income of each new miner, the difficulty of the calculation must be readjusted.
What are the expenses to mine bitcoin?
The main expense that you will have will basically be the electrical cost, so everything will depend on the power of your ASIC and the pool in which we are working . Which will affect the chances of mining as much bitcoins as possible. We must also take into account the cooling of the equipment, since they are powerful computers that could overheat if they are not in the appropriate conditions.
The cost of acquiring the equipment and that of the competition from the same pool is another important expense, as new members are constantly being added to the network.
Large mining farms are found in countries where electricity is cheap. Most of the pools look for sites where the production of energy is renewable, mainly hydroelectric. With that you would save a few euros or bitcoins.
This will make the difference between whether or not it is feasible to mine bitcoins.
However, new systems are under development that could replace the ASIC over time that could render the current system obsolete. So save a few euros so that, when necessary, you can update your equipment.
Mining is a very competitive business
We consulted to experts about some aspects to take into account to transform ourselves into bitcoin miners.
What happens if a calculation is not approved by the entire network? Does the person who is rejected receive any sanction?
PoW (proof of work) is necessary to ensure security, prevent fraud, and thus build trust. This security prevents miners from entering bogus operations.
Once the output solution (hash) for a block has been found by a specific miner, it is transmitted together with the signature to the rest of the nodes for validation. This must be confirmed by all miners independently and following the same rules, which prevents the possibility of manipulating or including false information. It is the so-called consensus mechanism.
No, in PoW there is no mechanism that penalizes malicious behavior by the miner except for the cost it must incur.
How much does an ASIC processor cost?
Mining is a very competitive business. The cost of electricity and the need for the most efficient processors make it complex for the average user. The AntMiner S19 Pro can cost around $ 3,800.
I see it complicated to establish a new Pool at the current moment. Everything will depend on the cryptoasset you want to mine and the network’s Hash Rate.