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What Exactly Goes into Bitcoin Mining?

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Bitcoin mining cryptocurrency

Although miners already extracted over 17 million Bitcoin (BTC), it’s not too late to get in the game and make a daily income. And while having the most advanced mining hardware is an advantage, the average person can work with much less and still profit.

Mining is the original way to profit from cryptocurrency. Before it’s officially added to the blockchain, every transaction in proof-of-work is just a “block”. Miners help add the block to the blockchain by doing work, or using “hashpower” to solve the encryption.

Miners will only add the block after verification of the encrypted hash. Many miners compete to solve the hash first, and the winner receives portions of a new coin as a reward. Miners use this method to “mint” coins and release it into the network.

Bitcoin (BTC) is difficult enough to mine so that it’s not feasible for the average person to mine alone

However, there are many altcoins you can choose from, or you could join a mining pool. If you’re interested in attempting to mine cryptocurrencies but don’t want to make an investment up front, all you really need is a computer and a reliable Internet connection.

A mining pool connects you to a community of other miners, who combine their hashpower and share the block rewards. Typically, the pool will collect a fee or 1 or 2%, and will divide it into shares of the reward based on the hashpower contributions.

Mining directly through your PC is the least powerful method, but it’s an easy, free way to start

If you have a gaming PC or are willing to upgrade your graphics card, GPUs actually enhance hashpower. But also, many who do mine CPU use a separate computer, since the process can slow down other applications.

For this reason, mining on your main PC is a great entry-point only.  However, you could also pay a fee for a cloud service to mine crypto.

Otherwise, the next step would be purchasing mining hardware

ASIC miners are built for one job: mining for crypto. These are much more powerful and CPUs, the most expensive having as much as 1,000 times the hashpower. The only drawback is the cost of hundreds or thousands of dollars. Additionally, developers configure these units to mine only one coin.

Mining is hardly just for tech-heads anymore

Many of the software and mining pool interfaces are user-friendly and automated.  Many will ask, “But what about when all the Bitcoin (BTC) are mined?”  Well, miners would still receive transaction fees, and many altcoins are left to mine.

 

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