“Mom, where do Bitcoins come from?” Well, you see, when a great young Bitcoin catches the eye of an ambitious miner, and because they love each other very much …
Wait, it’s obviously too hard to handle here. Besides, my whole goal is to make things simple. In any case, bitcoins are made by solving complex mathematical problems. This is done by a powerful machine that is made to solve these mathematical problems. This process is called mining. People who own these machines to make money by mining Bitcoin are called miners. When a group of problems is solved, it becomes known as a block. Blocks are verified by other users and after they are verified, they are added to what is called a chain of blocks. This chain continues to grow with a new block being added to it approximately every 10 minutes. This chain is really just a general ledger that will continue to grow and will never end.
Very powerful machines that consume a lot of energy and increase the monthly bill for miners’ utilities. The reason why so much power is needed is the genius of the mathematics involved. This requires the mining machine to perform complex cryptographic algorithms. Once a machine solves a mathematical problem, a coin block is born. Each time 210,000 blocks are created, the miner’s reward is halved. It takes 4 years. So it’s like the Bitcoin Olympics. Currently, the prize for the block is 12 bitcoins (on June 23, 2020, the prize will be only 6 coins). These coins go to a miner whose machine was the lucky winner of the lottery at the time. There is a winner every 10 minutes. Many miners also compete here. The said miner now has something of value. Dig up enough coins and pay the electricity bill, and then something.
There is another way to mine. This is called cloud mining. With this type of mining, you pay to use someone else’s network and this significantly reduces your profits. The advantages of this method are that it does not require the use of electricity, or even the purchase of a machine.
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Sounds good to me. I want to start mining now. Is it a good idea and can I earn passive income on a regular basis? Possible. Hold on for now and you can make that call later.
Let’s try to explain this.
Going back to the original way of machine mining, you should start by buying a quality mining machine. That would cost you about $ 2,000. Here is a picture of a good machine (Antminer S9 from Bitmain) that is capable of creating a high hashing rate of 14 TH / s. 1 TH / s is 1,000,000,000,000 hashes per second. This machine works 14 times more. That’s a lot of hashing. Hash is just a really long number that a machine creates every time it tries to solve an algorithm. Again, to use my lottery analogy, all of these machines are out there hoping to be the next winner.
Then, your chances of winning become more difficult with more competition. This question is further complicated by the fact that every time a mathematical problem is solved, the next problem becomes more and more difficult to solve. The difficulty of the Bitcoin network changes approximately every two weeks or 2,016 blocks. The number of bitcoins that will ever be created is final. That number is 21,000,000. Once we reach that number, there will never be more unearthed Bitcoin. However, the blockchain itself will continue to expand as it is used to verify every transaction or purchase.
Remember that pseudonym Satoshi Nakamoto I also wrote about? Did you know that today’s mathematical problems are more than 70,000 times harder to solve machines than it was when the first Bitcoin was mined in 2009 ?! It is estimated that the final coin will be excavated in 2140, because the system is halved every four years (210,000 blocks). 16,400,000 coins (78%) have already been excavated and each coin will be excavated much more slowly from now on. Yes, you read that right. Basically, 80% was excavated in the first 8 years and it will take more than 100 years to excavate the last 20%. If any of my great-grandchildren, great-grandchildren are reading this, I hope you are having a good time with our family’s Bitcoins which are now estimated at 220,000 per Bitcoin. We can all dream well!
Buying a mining machine or buying a cloud mining contract is risky. While there are some great success stories, be sure to research them thoroughly before deciding if mining is right for you. For every person who makes money, there are many people who lose money.
By the way, a great place to see all the cryptocurrencies that exist and their total coins and market capitalization, Coin Market Cap is a great resource. There you can see all 700 plus altcoins moving at night. Altcoin is just another way to tell any cryptocurrency coin that is not Bitcoin. By now you probably know that Bitcoin is like Rose Bowl, the grandfather of them all! I would really try to limit my focus and research to the top 10 for now. It’s not that there won’t be a success story of one of the almost worthless now. Finding one is like choosing the right stock. Sticking to established companies recognized by top analysts is a much safer game. The same goes for the exchanges you use to buy, sell and trade. That’s why I use Coinbase to trade because it is the most reliable, secure and convenient exchange. They also have the most thorough vetting process when it comes to adding altcoin.
Here is a summary of the key points from this article:
-Bitcoins are created by mining
-Mining is performed by powerful machines that solve complex mathematical problems. You can also buy contracts called cloud mining if you don’t want to buy a machine.
-The problems are getting worse as coins are mined and the rate of production slows down
-Since May 2017, only 72 bitcoins per hour have been mined (12 every 10 minutes)
– On June 23, 2020, this will be halved again to only 6 created every 10 minutes
– Almost 80% of the final number of Bitcoin of 21,000,000 coins has already been mined
-Competition among miners and increasingly complex mathematical problems make it difficult to achieve profitable mining
-It is estimated that the final coin will be excavated in 2140