What is Bitcoin Mining Actually Doing?
What is the point of Bitcoin mining? This is something we’re asked everyday! asic miners for sale
There are many aspects and functions of Bitcoin mining and we’ll go over them here. They are:
Issuance of new bitcoins
Security. where to buy mining rig
Mining Is Used to Issue new Bitcoins
Traditional currencies–like the dollar or euro–are issued by central banks. The central bank can issue new units of money at any time based on what they think will improve the economy.
Bitcoin is different.
With Bitcoin, miners are rewarded new bitcoins every 10 minutes.
The issuance rate is set in the code, so miners cannot cheat the system or create bitcoins out of thin air. They have to use their computing power to generate the new bitcoins.
Miners Confirm Transactions
Miners include transactions sent on the Bitcoin network in their blocks. buy hashrate
A transaction can only be considered secure and complete once it is included in a block.
Because only a when a transaction has been included in a block is it officially embedded into Bitcoin’s blockchain.
More confirmations are better for larger payments. Here is a visual so you have a better idea:0Payments with 0 confirmations can still be reversed! Wait for at least one.1One confirmation is enough for small Bitcoin payments less than $1,000.3Enough for payments $1,000 – $10,000. Most exchanges require 3 confirmations for deposits.6Enough for large payments between $10,000 – $1,000,000. Six is standard for most transactions to be considered secure. mine microbitcoin
Why Does Bitcoin Need Miners?
In short, miners secure the Bitcoin network.
They do this by making it difficult to attack, alter or stop the network.
The more miners that mine, the more secure the network. complete mining rig for sale
The only way to reverse Bitcoin transactions is to have more than 51% of the network hash power. Distributed hash power spread among many different miners keeps Bitcoin secure and safe.
Step #1: Get Bitcoin Wallet
When earning bitcoins from mining, they go directly into a Bitcoin wallet.
You can’t mine without a wallet. where to buy mining rigs
Step #2: Find a Bitcoin Exchange
When earning bitcoins from mining, you may need to sell the coins to pay for power costs. You may also need to buy coins on exchanges.
Step #3: Get Bitcoin Mining Hardware
You won’t be able to mine without an ASIC miner. where to buy a mining rig
ASIC miners are specialized computers that were built for the sole purpose of mining bitcoins.
Don’t even try mining bitcoins on your home desktop or laptop computer! You will earn less than one penny per year and will waste money on electricity. complete mining rig for sale
Step #4: Select a Mining Pool
Once you get your mining hardware, you need to select a mining pool. complete mining rig for sale
We recommend Slush Pool, as it is the oldest and has the best User Interface to make it easy to use. Check it out:
Without a mining pool, you would only receive a mining payout if you found a block on your own. This is called solo mining.
We don’t recommend this because your hardware’s hash rate is very unlikely to be anywhere near enough to find a block solo mining.
How do mining pools help?
By joining a mining pool you share your hash rate with the pool. Once the pool finds a block you get a payout based on the percent of hash rate contributed to the pool.
If you contributed 1% of the pools hashrate, you’d get .125 bitcoins out of the current 12.5 bitcoin block reward. complete mining rigs for sale
Step #5: Get Bitcoin Mining Software
Bitcoin mining software is how you actually hook your mining hardware into your desired mining pool.
You need to use the software to point your hash rate at the pool. where to buy mining rigs
Also in the software you tell the pool which Bitcoin address payouts should be sent to.
If you don’t have a Bitcoin wallet or address learn how to get one here. complete mining rig for sale
There is mining software available for Mac, Windows, and Linux.
Step #6: Is Bitcoin Mining Legal in your Country? Make Sure!
This won’t be much of an issue in MOST countries.
Consult local counsel for further assistance in determining whether Bitcoin mining is legal and the tax implications of doing the activity. cheap mining rig for sale
Like other business, you can usually write off your expenses that made your operation profitable, like electricity and hardware costs.
Step #7: Is Bitcoin Mining Profitable for You?
Do you understand what you need to do to start?
You should run some calculations and see if Bitcoin mining will actually be profitable for you.
You can use a Bitcoin mining calculator to get a rough idea. complete mining rig for sale
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How much a mining farm makes depends on many factors:
- The price it pays for electricity
- How old its mining hardware is
- The scale of its operation
- The price of Bitcoin when the miner sells it
- The level of difficulty when the Bitcoin is mined
By far, the biggest factor affecting how much money a mining farm makes is how much it pays for electricity. Nearly all mining farms are using the same hardware. mining hosting miningstore
Since the reward for finding a block is fixed, and the difficulty is adjusted based on total processing power working on finding blocks at any given time, then electricity is the only cost that is variable. If you can find cheaper power than other miners, you can afford to either increase the size of your mining operation, or spend less on your mining for the same output. shark mining
As previously mentioned, mining farms use a lot of electricity. How much they consume depends on how big their operation is. However the latest Bitmain ASIC miner consumes about 1350 watts. where to buy mining rigs
In total, it is estimated that all mining farms will use about 127 Terawatt hours of electricity in the year 2021. That is roughly the equivalent to the yearly energy consumption of Norway.
How Does the Colocation Company Make Money?
The colocation management company makes money in several ways. Each management company is different, but they all make money using one or more of the following ways:
- They charge you a monthly hosting fee for maintaining the miners and keeping them safe in their mine. single gpu mining rig
- They make a commission for arranging the sale of the ASICs to you. complete mining rig for sale
- They take a cut of the mining profits from all the miners in the mine.
- They add a surcharge onto the electricity that your ASICs consume in their mine.
- ASIC repair services in case your miners ever needs to be repaired.
So to summarize: in a colocation mining operation, you own, control, and monitor your own ASICs. The colocation mine custodies them and lets you know if there are any issues with them. They also keep them safe by securing and maintaining the mining site. antminer s7 profitability
So now you may be wondering, how is this different from cloud mining?
First, we need to define what Cloud Mining is.
What is Cloud Mining?
Cloud mining is a business arrangement where a miner owns all of the ASICs in his mine.
He offers to sell some of his hashing power to you, the customer and you get any bitcoin mined using that hashing power. shark mini mining rig
In a cloud mining arrangement, you do not own anything.
You are effectively renting the hashing power from the miner in exchange for potential profits in bitcoin.
The Big Problem with Cloud Mining
There’s just one problem with this arrangement. compass hardware
Since you do not own the ASICs, you have no control over what they mine, when they mine, how they mine, etc. s19j pro