How Does Bitcoin Mining Work?
What Is Bitcoin Mining?
When the talk of mining comes up, the mind quickly paints a scenario of miners digging deep through the ground in search of gold or some other valuables. However, Bitcoin mining takes a lot of effort then big luck thereafter to achieve success. Plagued with a high level of uncertainty, Bitcoin mining involves powerful computers working out complex computational math problems. The whole process is a far cry from the work of traditional miners; this time around, it takes constant computational power and a myriad of wild guesses. Millions of people are mining on the Bitcoin blockchain by the minute, and the constant presence of any miner increases his chances.
The Effects Of Mining
Bitcoin mining is largely divided into two aspects.
The solving of math problems by multiple computers producing fresh Bitcoins, similar to striking a gold heap. On another hand, the securities of the Bitcoin blockchain are improved. This is possible due to the verification of transactions on the platform.
Double spending is one hurdle that is overcome. Many transactions are funded with fake Bitcoins while individuals hold on to the original ones. This worry is non-existent with the physical currencies. Once somebody spends a dollar bill, it is gone. You can't eat your cake and have it. Although, there is one hitch— printing of counterfeit money. Anyways, a careful examination could easily foil an attempt to spend such bills by identifying the same numbering each note would bear. A Bitcoin miner, in a way, ensures Bitcoin isn't spent twice.
Mining is a win-win situation for the blockchain and its customers(current and imminent). It makes the system void of fraudulence and gifts lucky ones with valuable Bitcoin tokens. Although, means of obtaining cryptocurrencies vary on different platforms. Mining is not the sole way to make more cryptocurrencies. There are the purchase of cryptocurrencies with fiat currencies, and the exchange of cryptocurrencies for one another. Some other platforms reward customers for watching videos or putting up blog posts like Steemit.
What Do Bitcoin Miners Actually Do?
They sustain the Bitcoin's integrity. Bitcoin's founder, Satoshi Nakamoto, desires transparency on the blockchain and has put these miners to the work. They peruse through past transactions to find and tie up the loose ends by means of the math problems being solved.
Miners stand a chance to get Bitcoin rewards after verifying 1MB worth of transactions known as blocks. Controversially, those on the blockchain have called for an increase in block size to contain more data and ensure the efficiency of transactions. And yes—completing the expected verification quota only makes a miner eligible to get rewarded; garnering some extra Bitcoin is not assured.
There are two conditions for successful mining:
1. Verification of transactions worth a megabyte, the rather easy half.
2. Fulfilling a process called proof of work. The lucky miner must be the first person to arrive at the solution of a numeric problem.
A Numeric Problem?
In contrast to the beliefs of many that one must have mathematical prowess or the ability to code, it is more about guesswork. Miners jostle to derive a suitable "hash" first. This "hash" is a 64- digits hexadecimal number that imitates or is the same with a model hash.
As easy as it may sound, a successful expedition is intensive of computational power and requires a miner to work at a top hash rate. The rates are measurable in mega-hashes, giga-hashes, and tera-hashes over seconds(MH/s, GH/s, and TH/s respectively). This is a huge demand for hashes from a Bitcoin mining rig—computer— at every point in time.
Bitcoin mining calculators are available for miners to always know their speed, point out hash rate, get notified about fan speed, and keep up with their mining rigs' temperature. Applications primarily for providing statistics are numerous, for instance, Cryptocompare. However, mining software(MultiMiner) has a calculator feature.
The Needful For Bitcoin Mining
The evolution of mining started with the use of regular computers. These kinds of computers were sufficient when the difficulty of creating hashes was at its lowest. With time, the complexity of the blockchain has risen by trillions and so special computers are needed to step up to the task.
A GPU(Graphics Processing Unit), FPGA, or ASIC(Application-Specific Integrated Circuit) is needed to build a mining rig. If over a million rigs are deriving solutions to block hashes in fewer minutes then the difficulty has to go up a notch, every time. After a threshold of around 2,000 hashes is smashed(possible within two weeks), the difficulty is turned up. The increased difficulty also matches with the ever-rising computing strength to maintain blockchain stability. Unique cards are purchased to work in sync with these machines. Miners spend as much as tens of thousands in dollars to keep kicking. The zeal to rake in tokens is as alluring as the quest and uncertainty.
Just like personal computers, mining rigs are run on software programs. Bitcoin mining software helps to control mining activities. Usually written in C+ language, mining software can run on Mac, Windows, and Linux operating systems. Asides from interface management, some programs help to detect new blocks to mine, increase hash rate, and regulate the cooling fans. The icing on the cake is the ability of certain software programs to mine various cryptocurrencies like Ethereum, Ripple, and the likes. Examples of notable Bitcoin mining software are CGMiner and BFGMiner.
The Process And The Bounty
The target hash is rather metaphorical, unknown— in simpler terms. The big units earlier mentioned serve one major purpose; they dish out "nonces". A nonce, actually, stands for "number only used once". So no same set of numbers is repeated in the process. Besides, these pieces of equipment do so quickly and randomly. The nonce is a key to the hexadecimal number comprising of alphabets and numbers(since the hexadecimal works on 16 figures in contrast to decimal, letters fill up for six "figures"); the nonce is only 32 bits out of 256 bits(the size of the model hash). Anyone with the "golden" nonce lands 12.5 BTC, eventually. The reward has been halved since the inception of mining; 50BTC was the starting amount as of 2009. Remember, a miner only needs to post a set of numbers less or equal to the target hash. On the payment receipt, information about the block mined, target hash, transactions verified are made available.
Bitcoin mining rewards are definitely worth the efforts with the huge prize in view. The process also serves a greater good for the blockchain as a whole, miners, or not. Both time and money intensive, bitcoin mining requires that participants are well armed and accustomed to necessary machines and software. In the end, it boils down to consistent mining and, most importantly, the odds of luck.
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