What is Bitcoin Mining?
Bitcoin mining is a similar concept to real mining (like gold mining) except it is virtual and not physical. The Bitcoin mining process occurs for every Bitcoin transaction. This basically consists of a number of computers trying to solving a complex mathematical problem all at the same time. The first computer to solve the problem “wins” the Bitcoin.
The transaction is verified and added to onto the block of chains called blockchain. Anyone can participate in bitcoin mining if they access to the internet and have powerful enough hardware. The amount of Bitcoin you receive for every mined block is called the block reward. The number of BTC released for each block reward (taking about 10 minutes on average to mine) does half every 4 years starting at 50 BTC in 2009 but now it is 12.5 in 2018 and decreasing until all of the Bitcoins have been mined (calculated to run out sometime in 2140).
Are the puzzles really difficult in Bitcoin mining? Well, yes and no, it depends on a few factors and computing power being placed on mining across the network. Since the difficulty of mining can be modified and it is done by a protocol of every 2016 blocks or an estimate of every 2 weeks. To keep the rate of block discovery continual, the difficulty will modify itself. Therefore, if many very high-powered computers are directed to mining then the difficult will modify so it makes mining harder. Of course, if there less high-powered computers on the network then the reverse will occur meaning that the difficulty will be modified to make mining easier.
Bitcoin Mining and Blockchain
When a new bitcoin is being “generated” it gets placed a new block on the blockchain, acting as a public ledger of every validated transaction ever made. Blockchain is an absolutely necessary and essential function for the entire Bitcoin ecosystem as it allows digital currencies to securely verify transactions without a third party.
Bitcoin Mining Hardware
When it started Bitcoin mining was mainly done on desktop computers with a normal CPU (Central Processing Unit). However, the emergence of GPUs (Graphics Process Unit) which are more efficient at mining than CPUs therefore are able to generate more Bitcoin. A newer hardware called ASIC (Application-Specific Integrated Circuit) was specifically created for mining Bitcoin. It was first released in 2013, since then it has been improved massively with many more effective designs being released to the markets. One thing is for sure, is that we will see more and more mining hardware emerge with the increasing computer power every year (with Moore's law expected to end by around 2025).
Read More on Crypto News Australia
The world of cryptocurrency is constantly changing. You can stay up to date with the latest Australian Crypto news here. Or, if you would like to learn more about digital currencies, then please visit our Guides section for more tips, advice, and information.