Bitcoin Mining Explained
About Bitcoin Mining
In its simplest form, Bitcoin mining is a process of generating Bitcoins by solving complex mathematical/cryptography problems. That may sound scary and complicated- and it is under the hood- but luckily the technology has advanced enough so that you- the average PC user- can also mine Bitcoin and make some money.
The Bitcoin mining software has gone through a hell of a lot of ups and downs, making some people a fortune and running others out of business. In 2010, you could make a fortune by mining with your laptop, while nowadays there is specialized hardware needed to mine Bitcoin effectively.
However, this guide(and the website as a whole) does not focus on that kind of mining. Instead, I am focused on mining for average users, who want to mine with the hardware they already have.
How Mining Works?
As we already said- Bitcoin mining is a process of solving mathematical problems for which you get rewarded in Bitcoin. If you can imagine those problems as puzzles- everyone is trying to solve a puzzle, and whoever solves it first gets 1 Bitcoin. In the beginning, this was easy as not many miners were out there, so the puzzles were simple.
But in 2021(and a few years back), there are so many miners and the puzzles got so advanced that the average user simply can’t compete.
Still, not everything is lost for you, my friend. After several years of Bitcoin, many new altcoins joined the crypto revolution. Since most of those altcoins can still be mined with average hardware, there is now a specialized mining software that mines the most profitable altcoins and then pays you in Bitcoin.
And this is what this website is all about- mine the cryptocurrency with the tools we feature on our website and get paid in Bitcoin!
What Is The Purpose of Mining?
So, you turn on your PC, install and run Bitcoin mining software and start making money- too good to be true?
Well, not necessarily. You see, Bitcoin mining has its purpose- and it’s a big one- security.
Remember those cryptography puzzles we mentioned above? Well, cryptography is a cornerstone of IT security, making our programs and protocols more secure, by encrypting all of the sensitive data. And Bitcoin is no exception- it even went one step ahead, making a financial system where people from all over the world are securing the network with the power of their hardware.
And that’s the purpose of Bitcoin mining and us- the Bitcoin Miners. To use our hardware to protect the financial network, making some money along the way.
Bitcoin Mining Difficulty
As an average user, you don’t even need to care about the mining difficulty as there is nothing you can do about it, however, I’m going to explain it in case you are interested in learning more.
The mining reward is fixed- and it gets delivered after solving a defined amount of problems. And in the beginning, it was easy to earn Bitcoin because there were not as many people. However, over time more and more people started mining Bitcoin, and allowing them all to keep earning Bitcoin at the same rate would devaluate Bitcoin and turn its price to nothing. And that’s why the mining difficulty was introduced.
In a nutshell, mining difficulty is a variable that changes with time and adapts to the number of people mining Bitcoin- the more people are mining, the higher the difficulty, meaning you need to solve more problems to get a reward. The fewer people are mining, the lower the difficulty, meaning you need to solve fewer problems to get a reward.
And the good news is, the Bitcoin mining difficulty saw its biggest drop in seven years, so this could be a good time to enter the mining business.