Bitcoin or cryptocurrency mining is the primary means of earning new cryptocurrencies. The process of mining Bitcoin (BTC) started in 2009, which is both the year when Bitcoin was introduced and when it was mined for the first time.
Bitcoin mining is still profitable, provided you can get a hang of it and understand the trends in the market. Currently, new cryptocurrency earning methods, including Staking (introduced by Ethereum) are becoming rampant. But none of these stops the Bitcoin mining process, because it will still be relevant for many years to come.
What Do You Need to Know About Bitcoin Mining?
Are you interested in mining Bitcoin? Read this CoinList article to the end to understand all you need to know.
1. Miners are Auditors
You may have heard that Bitcoin miners are “solving a complex mathematical problem.” This might be confusing to you, so let us make it easier for you to understand.
Simply put, the work of a Bitcoin miner is to audit or confirm the authenticity of a Bitcoin transaction. This is done to prevent the risks of double-spending attacks, whereby a Bitcoin holder or spender uses the same Bitcoin twice.
As an auditor, the Bitcoin miner looks into the transaction history of that Bitcoin to be sure it has not been used before then.
2. Bitcoin Mining is a Game of Numbers and Guesswork
Now to the mathematical aspect of Bitcoin mining. Mining Bitcoin or any cryptocurrency at all is not an easy task. The process is not only stressful but takes a lot of time.
Bitcoin mining is both a game of numbers and guesswork in the sense that the miners are expected to come up with limited random numbers.
The first part of the mining process is to verify or confirm the Bitcoin transaction. This is one of the easiest.
However, the tough part is to get the random number that aligns with the numeric problem presented during the Bitcoin confirmation process. The mining rewards are only given to the first miner that made an accurate guess of the numeric problem.
Considering that there are thousands of Bitcoin miners, the chances of being the first miner to get this correctly is limited.
3. Bitcoin Mining is Expensive
The process of mining or verifying Bitcoin transactions is expensive. As of 2009, miners could conveniently use their home computers to verify and validate transactions on the Bitcoin network.
However, the process has changed in recent times, because of the complexity or difficulty in mining the coin.
There are different perspectives to this. When the first Bitcoin was mined, the difficulty level was just one. Today, the difficulty level is well over 13 trillion.
Also, there is always a balance or readjustment in the block production cycle. This is done to keep the mining process at a stable rate. Aside from that, the difficulty level of mining Bitcoin increases with the number of miners or mining rigs but decreases when there are only a few miners. For example, it will be less difficult to mine Bitcoin if there were only 1 million mining rigs. But the difficulty level will increase when more than a million mining rigs are mining or trying to validate the coin in the block.
Third and most important, miners now need to invest in costly and more advanced mining equipment to stand a chance to validate transactions. The trend has since shifted from the use of regular at-home computers for mining operations to Graphics Processing Unit (GPU)-powered computer equipment. The more financially buoyant miners invest their resources in powerful computer equipment that uses the Application-Specific Integrated Circuit (ASIC).
How Can I Become a Bitcoin Miner in 2021?
As earlier explained, mining or verifying Bitcoin transactions and at the same time, “minting” new Bitcoins is a matter of being the first.
Ideally, a Bitcoin mining operation involves solving or uncovering a 64-digit hexadecimal number. Let’s assume that the number of Bitcoins to be confirmed is 19, but none of the miners is aware of this.
Miner A guesses that the number is 20. Miner B guesses that the number is 25. Miner C guesses that the number is 17, while Miner D guesses it to be 15. In this case, Miner C becomes the first miner to get a close guess of the hexadecimal number to be mined. He then becomes the miner to receive the reward.
So, ensure that you have enough computational tools and you are ready to be committed to the mining operation even if it doesn’t favor you at the onset.
Alternative Ways to Mine Bitcoin
Have you gone through the Bitcoin mining processes and you think they are quite complex? Here are some alternatives to consider.
1. Join a Bitcoin Mining Pool
You are better off joining a group of miners who combine their intellect and computational tools to verify Bitcoin transactions faster.
2. Buy and Stake Your Bitcoin
Another way to earn additional Bitcoins is to buy BTC from an exchange and “stake” (invest it in a liquidity pool) so you will earn interests (passive income). This is usually payable in Bitcoin (BTC) or some other crypto asset.
Concluding Thoughts: Bitcoin Mining is Still Profitable in 2021
Mining Bitcoin takes time, requires committed effort, and can be frustrating. But it is worth the time and effort. With a chance to earn up to 6.25 BTC (until the next halving) as a reward, you should consider it.