The world of cryptocurrency is growing by leaps and bounds every day. Unlike regular currencies that are printed, these digital assets, including Bitcoin — the world's largest and oldest cryptocurrency — are mined. It's the process of gaining a cryptocurrency by solving cryptographic equations using a massive computing system, electricity, and expensive software. So, if you want to know more about cryptocurrency and Bitcoin mining, read on.
What is Bitcoin mining?
If you have only heard of buying or selling Bitcoins, the term ‘mining' may be a new one for you. But it is true that you can make your own Bitcoin if you have the required machinery. The cryptocurrency is created with the help of a complex and highly technical process. Post mining, new Bitcoins are introduced for circulation. However, crypto mining is not just about creating new coins. It also includes validating the cryptocurrency transactions on the blockchain.
How to mine Bitcoins?
Mining Bitcoins is a complicated process due to its intricate nature. To make it simple, let's take an example of precious metals and the way they are mined. For gold and silver, the person mining them extracts them through excavation. However, a person mining cryptocurrency will have to add new coins into circulation. For this, complex mathematical equations need to be solved.
How does it work?
To mine Bitcoins and other cryptocurrencies, you'd require huge processing power. The higher the processing power of your computer, the higher will be the mining speed and profit. You need computers that have software specially designed to solve complex mathematical equations. Mining Bitcoins constantly needs an active internet connection.
To mine Bitcoins, you need a GPU (Graphics Processing Unit) or Application-Specific Integrated Circuits (ASICs). These are the two methods of mining cryptocurrencies. As far as the GPU method is concerned, the computational power is increased with many GPUs that work together. However, talking about ASICs, they can produce more coins as compared to GPU but they are very expensive.
Bitcoin mining pools
If you cannot opt for your individual mining devices, you can go ahead and join a mining pool where your resources are clubbed with other people mining the coins. This will ensure enhanced processing power and improved results. This sounds good and better, right? However, you have to distribute the final output among all the miners involved in the mining pool. You wouldn't be able to earn the rewards solely as you could have done while mining individually.