What is bitcoin mining? As the name implies, bitcoin mining can be interpreted as a bitcoin mining process. Maybe, for those of you who are still new to the world of bitcoin, you will imagine mining as well as mining products, in the form of gold, coal, and other minerals.
However, the bitcoin mining here is meant to get the most famous digital currency in the world today, namely bitcoin. In addition, bitcoin mining must use computers with very high computing power.
Bitcoin mining does not use heavy equipment such as those used in the process of mining coal, oil, or other minerals. People who do bitcoin mining are usually called miners.
In this insightful article, we will explain to you a little about what bitcoin mining is and how it works. Here are some reviews for you.
What is Bitcoin Mining?
Bitcoin mining process is an activity to get bitcoins using a computer system. This bitcoin mining process is not like mineral mining imagined, but uses a computer with very high computing power.
However, before knowing about bitcoin mining, you need to first know about blockchain. In short, blockchain is a collection of block chains that contain cryptographic components.
These cryptographic components must be faced by a miner in the bitcoin mining process. When the cryptographic component is successfully solved by the miner, the miner will get the desired bitcoin.
Because the cryptographic components in the blockchain are very difficult, a computer with high computing power is needed. In addition, the electrical power to power this computer must also be high because of the high performance to solve very difficult cryptographic components.
Bitcoin mining aims to make it possible for bitcoin nodes to reach consensus that is secure and tamper-resistant. In addition, bitcoin mining can be regarded as the process of introducing bitcoin into the system that is being created.
Bitcoin mining process is indeed very difficult. Therefore, not just anyone can do bitcoin mining. What’s more, the bitcoin mining process requires high fees. That’s because bitcoin mining requires very expensive equipment and electrical power.
Therefore, those of you who do not have the expertise and capital in bitcoin mining, it is better to use the services of a miner or what is called a miner. Miners who are experts in bitcoin mining will usually receive a fee in the form of transaction fees and commissions from the number of bitcoins being mined.
How Does Bitcoin Mining Work?
Before going into the process or how bitcoin mining works, let’s try to find out first about the results of this activity. The bitcoin mining process can produce two very important things in today’s crypto world.
The first result of this activity process is of course the new bitcoin itself which can be used in transactions or as investments. Meanwhile, the second result of the this activity process is a trustworthy and secure bitcoin payment network.
These two results will only be realized if the miners can solve the puzzle of the cryptographic components that exist in the blockchain network itself.
For the bitcoin mining flow itself, it starts from the transaction verification process that will be carried out whether it is valid or not. If the transaction is valid, the process will continue at the stage of collecting the existing transactions into one block.
The blocks that have been filled by the various transactions will be equipped with the hash of the block headers that previously existed. If so, miners will solve a problem called proof-of-work
Proof of work itself is actually a complex computational process before entering a block of transactions into the blockchain. Miners will then try to generate a 64-digit hexadecimal number called a hash with an amount less than or equal to the target hash.
The level of difficulty to solve the ‘problem’ in this proof of work is currently more than 13 trillion. That means that an ordinary computer can only produce a hash below the target with a 1 in 13 trillion chance.
Therefore, it takes a high computer system to mine bitcoins so that the chances of realizing a hash under the target can be higher. However, it is not impossible, the more advanced the times the higher the level of difficulty that will occur.
This increasingly competitive bitcoin mining can finally only be done optimally using the latest ASIC. When miners use desktop computers, GPUs, or legacy ASIC models, the revenue earned can be lower than the energy consumption used.
When the proof of work completion process is complete, the transaction block that we created will be automatically added to the blockchain and distributed to the network. This complicated process is what makes the price of bitcoin so high.
Bitcoin Cloud Mining
Currently, there are also bitcoin cloud mining technologies or systems. Miners who choose to use bitcoin cloud mining will buy CPU power from data centers that use equipment to carry out bitcoin mining activities.
So, miners don’t need to have deep knowledge about mining hardware and don’t need to bother working closely with bitcoin mining machines directly. Miners only need to rent hash power to produce bitcoins.
Usually, miners like this will choose data centers in Iceland and China. This is because the two countries have cheaper electricity costs which can save capital and increase income.