bitcoin mining in india

What exactly does the term “Bitcoin Mining” mean?

When you first heard the word “Bitcoin Mining”, you might have thought that you can generate free bitcoin from your computer. But, that’s not the case. Bitcoin Mining is the process of creating bitcoin by solving a complex computational puzzle.

What exactly does the term “Bitcoin Mining” mean?

When you first heard the word “Bitcoin Mining”, you might have thought that you can generate free bitcoin from your computer. But, that’s not the case. Bitcoin Mining is the process of creating bitcoin by solving a complex computational puzzle.

The process of Bitcoin Mining is performed by super computers that are used to solve complex mathematical problems. These mathematical problems are so hard as they cannot be solved by humans and cannot be solved by the computers that we generally use.

How to mine bitcoins?

Bitcoin was created as a decentralized alternative to the banking system. Basically, this means that the system can operate and transfer the funds from one account to another without any central authority(Banks). With a central authority, transferring money is easy.

All you do is, just inform the bank that you want some money to be added to your friend’s account by crediting that particular amount from your account. In this case, the bank has all the power since the bank is the only one who is allowed to update the ledger.

But in the case of bitcoin system, it has some rules which are called as protocols, solves this in a creative way. Here, anyone can participate in updating the ledger of bitcoin transactions which is known as blockchain. All you need to do is, guess a random number that solves an equation generated by the system. If you have more powerful computer, it allows you to make more guesses per second which increases the chances of mining, thereby generating bitcoin.

Nodes

The ‘Nodes’ will maintain the records in the blockchain so that they can be verified in the future if necessary.  The block you have created is sent to the entire networks so the other computers can validate it. Each computer that validates your block updates its copy of the bitcoin transaction ledger with the transactions that you chose to include in the next block.

In a simple way, we can call mining as some sort of guessing game. Each miner will guess the number and be granted the right to update the blockchain. The miners with more powerful super computers will succeed more often.

Rules For Bitcoin Mining (Mining Difficulty)

Satoshi Nakamoto invented bitcoin. He made the rules for mining in such a way that if the network has more mining power, it becomes even harder to guess the answer to the mining problem. If more miners join, it gets harder to solve the problem.

If many of the miners drop, it becomes easier to solve the problem which eventually leads to more mining. This phenomenon is called as “the mining difficulty”. On an average, a new block will be added for every 10 minutes.

Bitcoin Mining Evolution

What led to the evolution of bitcoin mining ?

1.GPU MINING

GPU Mining is a special component that is added to computers to carry out complex calculations. The original use of GPU is to allow gamers to run computer games with huge graphic requirements.

2.FPGA

FPGA is a hardware component that is used to connect to a computer in order to run a set of calculations.

3.ASIC MINING

Unlike CPU, GPU and FPGA’S they couldn’t be used to do anything else. ASIC Miners are the current mining standards.

When bitcoin first started out, there weren’t a lot of miners to mine. Satoshi Nakamoto and his friend Hal Finney were some of the few people who were mining bitcoin at the beginning with their personal computers. Back in 2009, your regular CPU was enough for mining bitcoin since the mining difficulty was low as there weren’t any miners to mine. As bitcoin started to catch on, people looked for more powerful mining solutions.

1.GPU Mining

Eventually, people moved to GPU Mining. GPU Mining is a special component that is added to computers to carry out complex calculations. The original use of GPU is to allow gamers to run computer games with huge graphic requirements.

People started using them in 2011 for mining bitcoins. The mining power of 1 GPU equals to almost 30 CPU’s.

2.FPGA Mining

This stands for Field Programmable Gate Arrays. FPGA is a hardware component that we use to connect to a computer in order to run a set of calculations.

They are way more faster than GPU’s. The disadvantage is that they are very hard to configure which is why they are not really used more often than GPU’s.

3.ASIC Mining

ASIC Mining stands for Application Specific Integrated Circuit which is a hardware component that is built for the sole purpose of bitcoin mining. Unlike CPU, GPU and FPGA’S they couldn’t be used to do anything else. ASIC Miners are the current mining standards.

Some early ASIC Miners have appeared in the form of USB since they are out of date and they are no longer produced.

Mining Pools

Miners group together to form a “pool”. It means that they combine their mining power to compete with more efficiency. If the pool manages to win the competition, the reward is distributed between the miners in that particular pool depends on the mining power contributed by each of the miners.

Small miners can join the mining pools and have a chance to earn bitcoin depending on their contribution.

Is Bitcoin Mining profitable today?

Is Bitcoin Mining waste of Electricity?

Is Bitcoin Mining waste of Electricity?

If you take the current monetary system into the account, there are banks, servers, ATM’s and credit card companies that consume way more electricity than that of bitcoin mining. It’s even clear that it takes more electricity for printing money and causes pollution.

There has been a lot of criticism regarding the energy consumption of bitcoin mining. There are many arguments that oppose this statement as well. That’s because bitcoin mining takes less energy resources than the current banking system.

If you take the current monetary system into the account, there are banks, servers, ATM’s and credit card companies that consume way more electricity than that of bitcoin mining. It’s even clear that it takes more electricity for printing money and causes pollution.

In the other words, we can say that bitcoin mining is optimizing power consumption around the world. Many companies are moving their mining operations to countries that have excess amount of electricity. This means that the use of electricity is actually becoming more efficient.

Should I mine Bitcoin?

Depending on bitcoin price it is more profitable to buy bitcoins instead of mining them. However, it is illegal in some countries to mine bitcoin as it threatens the currencies and the government’s control over financial markets. Recently, china has banned the use of cryptocurrencies. Countries like Pakistan, Algeria, Nepal, Egypt, Morocco and Bolivia have banned Bitcoin Mining.  

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