It is amazing how cryptocurrency has grown from what it was about 10 years ago when it made its debut with the introduction of Bitcoin, to what it has become at the moment. At first, Bitcoin faced a lot of resistance, and a lot of financial analysts were of the opinion that it was just a bubble that was going to burst anytime soon. Interestingly, Bitcoin did not only grow stronger, it also paved the way for the exploration of the underlying blockchain technology, as well as the creation of other cryptocurrencies. Even some of the critics that predicted doom for Bitcoin have turned round to invest in the cryptocurrency.
There are different ways to get Bitcoin, including via a crypto exchange, as a merchant, etc. However, there’s one unique way to get Bitcoin, and that is through mining.
How it Works
Bitcoin mining involves the verification of Bitcoin transactions on Bitcoin networks. The verification process comes before the data gets sent to the blockchain network, which is a decentralized distributed ledger. It invariably means that mining Bitcoin is about getting the cryptocurrency from the blockchain structure via the use of special and powerful computers called miners.
There are some important parameters to take into consideration before venturing into Bitcoin mining, because they are determinants about the profitability of the process. These parameters include:
It may interest you to know that the function of your crypto mining hardware is dependent on the rate at which it solves complex mathematical problems per second. This means that the hash rate is the frequency at which the calculations take place every second, and the unit of measurement is Megahashes/sec (MH/Sec), Gigahashes/sec (GH/Sec), and Terahashes/sec (TH/Sec)
Using Bitcoin mining hardware involves using a lot of power, and that means paying more for electricity. This is why you need to check the power consumption rate of the intended hardware before going into Bitcoin mining.
You need to know how long it would take before you start getting ROIs, and thus know whether it is a profitable venture or not. One way to get this is via profitability calculators that are available online. The calculator works with the hash rate, current price of bitcoin, and power consumption.
Bitcoin mining rigs come in 3 main types:
Field Programmable Gate Array (FPGA)
Graphics Processing Unit / Central Processing Unit (GPU / CPU)
Application Specific Integrated Circuit (ASIC)
Your Bitcoin mining process is not complete if you do not have the following:
A mining pool membership
A well ventilated area for your mining hardware, because they generate a lot of heat
Reliable internet connection
A software application designed for the facilitation of bitcoin mining
A wallet for the storage of bitcoins
A reliable bitcoin exchange platform
Bitcoin mining is an expensive venture, and requires some patience before getting returns on investments, however, it has proven profitable for a lot of people.