Crypto Mining for Noobs
– by Tanish Mittal
No, this article is not for Minecraft lovers.
The process through which Bitcoin and several other cryptocurrencies produce new coins and validate new transactions is known as mining. It includes the use of huge, decentralized networks of computers all over the world to verify and safeguard blockchains, which are virtual ledgers that record bitcoin transactions. In return for providing their processing power, computers in the network are rewarded with new currencies. A never-ending cycle: miners protect and maintain the blockchain, the blockchain rewards coins, and the coins incentivize miners to keep the network safe.
But how does it work?
Bitcoin, Ethereum, and other cryptocurrencies may be obtained in one of three ways. You may get them as payment for products or services, trade or buy them on exchanges like Wazirx or Binance, or ‘mine’ them online. But how does ‘mining’ actually work?
• Mining process is similar to managing a large data center. Companies buy mining equipment and pay for the power that keeps it functioning (and cool). The value of the mined coins must be greater than the cost of mining those coins for this to be viable.
• Dedicated computers carry out the computations necessary to validate and record each new bitcoin transaction, as well as to maintain the blockchain’s security. Verifying the blockchain necessitates a significant amount of processing power, which is provided willingly by miners.
How much does a miner make?
According to Investopedia.com, “The rewards for Bitcoin mining are reduced by half roughly every four years.1 When bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. By 2016, this was halved again to 12.5 BTC. On May 11, 2020, the reward halved again to 6.25 BTC.”
Bitcoin was worth roughly $39,000 per bitcoin in March 2022, therefore finishing a block would have netted you around $243,750. It may not appear to be a poor reason to solve the above-mentioned complicated hash problem.