A major characteristic of cryptocurrency—like Bitcoin—is that it is distributed. All crypto transactions are recorded in a ledger, a copy of which is available to all servers within the blockchain. So, if there is no one overseeing the operations, how do you avoid counterfeiting and double-spending?

That’s where Bitcoin mining comes in. Instead of relying on one entity, like a bank, Bitcoin has tons and tons of people keeping track of transactions and making more Bitcoin. So, <a href="https://bitcoinsv.com/en/bitcoin-mining/what-is-bitcoin-mining">what is Bitcoin mining</a>?
<h2>Defining Bitcoin Mining</h2>
Coin Geek defines Bitcoin mining as “the sophisticated peer-to-peer process used by nodes to add transactions to the publicly available ledger and mint new Bitcoins.” Now, this can sound a bit technical and jargony, so it helps to break it down bit-by-bit.

Bitcoin uses a blockchain, a database that serves as a digital public ledger for Bitcoin transactions. The data for every Bitcoin transaction is stored in blocks. These blocks create a chain by creating a link with the other blocks. Hence, the name blockchain came to be.

Miners have a crucial role in this process, as no new transaction can be stored in a block without confirmation from miners. They do this peer-to-peer process by using nodes. In the basic sense, nodes are powerful computers that process the transactions and contain the blockchain.

Another function of mining is the creation of new Bitcoins. The role of miners is so crucial that without them, new Bitcoin will not be introduced into circulation. New Bitcoins are minted from the <a href="https://www.investopedia.com/terms/g/genesis-block.asp" target="_blank" rel="noopener">Genesis Block or Block 0</a>.
<h2>What Happens in Bitcoin Mining?</h2>
Bitcoin mining is a competition of beating others in solving a mathematical equation. The first miner who solves the equation needs to check with other miners if he got the right solution. Upon confirmation, the miner can <a href="https://www.investopedia.com/tech/how-does-bitcoin-mining-work/" target="_blank" rel="noopener">verify transactions</a> into the blockchain and add a new block.

The algorithm that allows this distributed system is called “proof-of-work” (PoW). Here, the mathematical equations are so complex, and the system consistently recalibrates the difficulty. The more miners enter and the more computational power increases, the more difficult the equations become.

The solutions are called the “target hash,” a 64-digit hexadecimal number. Miners arrive at the target hash by churning random numbers, also called “<a href="https://www.cryptoknowmics.com/glossary#nonce-">nonces</a>” or “numbers only used once.”  Miners keep generating these numbers until they get a nonce that is less than or equal to the target hash.

The rate that computers churn these nonces depends on how powerful their computers are. Hence, the more powerful the computer, the bigger the mining power. And the bigger the mining power, the faster a miner can beat everyone to the race.
<h2>So, If It’s a Competition, What Do Miners Get from It?</h2>
Bitcoin. Miners who solve the equations first get compensation. According to The Balance, the reward as of 2021 is <a href="https://www.cryptoknowmics.com/news/bittersweet-taste-of-mining-with-bitcoin-halving-price/">6.25 Bitcoins per block</a>. If one Bitcoin converts to $30,000, this would mean a miner can earn up to $312,000 per block. However, their profit depends on various factors:
<ul>
 	<li style="font-weight: 400">The cost of electricity in operating powerful rigs, especially because prices vary across states and countries;</li>
 	<li style="font-weight: 400">The volatility of the value of Bitcoin;</li>
 	<li style="font-weight: 400">Other factors such as facility, rentals, and capital for the machines needed for mining.</li>
</ul>
The solution to the big price tag is mining pools. In mining pools, miners gather their mining power to find the target hash together. Because of this, a miner doesn’t need to purchase several mining cards to increase their chances of finding the target hash.

If one of the miners in the pool is successful, all the miners in the pool divide the reward among each other. The individual payout can reach 0.00000001 BTC. While this is worlds away from 6.25 BTC, it can be more profitable because the pool has more chances of winning with the bigger mining power they have.
<h2>How Do You Start Bitcoin Mining?</h2>
You might need a significant amount of capital to start Bitcoin mining, especially if you’re planning to become a solo miner. Going back to profitability, factors such as mining tools, electricity, facility, rent, maintenance, reliable internet connection, etc. affect the costs of becoming a miner. Nevertheless, if you’re planning to become a Bitcoin miner, here are things to help you get started:
<ul>
 	<li style="font-weight: 400">Bitcoin wallet. Like the physical wallet, a Bitcoin wallet lets you store the Bitcoin you earn.</li>
 	<li style="font-weight: 400">Online mining pool. It will increase your chances of making a profit out of mining while decreasing the capital you put out for your rig. Take note that pools are third parties. Before joining one, it’s best to conduct some research to make sure that the pool your join is trustworthy.</li>
 	<li style="font-weight: 400">Online currency exchange platform. A currency exchange platform will allow you to convert Bitcoin to the conventional currency.</li>
 	<li style="font-weight: 400">A desktop. To start, you will need a desktop as your primary equipment in mining, as laptops or mobile devices may not be able to handle mining.</li>
 	<li style="font-weight: 400">A powerful CPU, GPU, or ASIC. You could use the usual CPU and GPU for mining, but they will need to be the best in the game. Miners use Application-Specific Integrated Circuits (ASICs), a piece of equipment that’s specially designed for crypto mining. This technology is so powerful that miners who don’t have it are in danger of falling behind, as it significantly reduces the chances of them finding the target hash.</li>
 	<li style="font-weight: 400">Mining software. The mining software relays the output to other miners, the network, and the blockchain. It also includes features that show miners their specs, hash rate, and other statistics while they do their job.</li>
</ul>
<h2>The Key Takeaways</h2>
Bitcoin mining is the process of adding new transactions into the blockchain and minting new Bitcoins. This process involves solving complex mathematical problems. Whoever gets the solution first gets a reward in the form of Bitcoins.

While it can be good money, miners may have to shed a good amount of money to start this new venture. For example, they need to invest in powerful mining rigs and pay for the electricity they consume. 

Even then, this issue of money can be minimized by joining mining pools. By sharing mining power and distributing the reward among each other, miners may earn more while increasing their chances of finding the target hash.

How to Get Started with Bitcoin Mining

You might need a significant amount of capital to start Bitcoin mining, especially if you’re planning to become a solo miner.

As a keen observer of every latest development in the crypto world, Guest has formed a sound understanding of how the blockchain and cryptocurrency works. Guest likes to keep a tab on all the trends within the crypto industry and treats our readers with insightful content.

How to Get Started with Bitcoin Mining

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