If you’re not living under a rock, you’ve probably heard about Bitcoin and other cryptocurrencies. They have taken the world by storm in recent years and you probably are either invested, or at least know someone who is investing in crypto.
You might have an idea about what cryptocurrency and Bitcoin is, but you might be asking yourself “where does Bitcoin come from?” The answer to this question is that Bitcoin is found through an elaborate process called Bitcoin mining.
Still have some questions? We’ll take care of that. In this article, we are going to touch on everything that you need to know about Bitcoin mining. Read along to find out!
How Is Bitcoin Mined?
Bitcoin is mined by users called “miners” who use super computers to do their work. The process is quite painstaking, but we will drill it down into the nuts and bolts.
Essentially, Bitcoin is mined through solving complicated and complex digital puzzles. Miners are competing against one another to solve the mathematical problem faster than anyone else. This requires heavy-duty computing power, which we will touch on later.
Once the puzzle is solved, it is shared amongst the other users mining for that Bitcoin and verified to be correct. Once verified, the user will post the block on to the public ledger or block chain, and they are rewarded with Bitcoins in return.
Who Can Mine Bitcoin?
Bitcoin can be mined by anyone who is computer savvy and might have the proper equipment to do so. The process is somewhat difficult to start and can be costly due to the amount of equipment you need to successfully mine for Bitcoin.
Once a user has the resources to mine, they can set up their operation and get started. Some things that expert miners pay attention to the costs to mine. Energy consumption is high when running the hardware needed to successfully mine Bitcoin, so living in a region with low electricity costs is beneficial to a miner’s profitability.
If you decide you want to give it a try, make sure to do your research into the equipment needed along with the costs associated with running a Bitcoin mining operation.
What Kind of Hardware is Required to Mine Bitcoin?
As we touched on earlier, Bitcoin mining requires a very powerful computer system to be successful. In the early days of Bitcoin mining, anyone with a fairly reliable computer and a good connection could mine for Bitcoin—something that is just not the case anymore.
In order to successfully mine for Bitcoin these days, speed and processing power is of the utmost importance. A traditional computer just cannot process the puzzles quickly enough to successfully solve any puzzles. This is due to the sheer number of miners, as well as the speed in which these puzzles are solved.
A good mining operation will have a computer with a high-quality and powerful graphics processing unit or GPU, multiple processors, and even more common, an ASIC or an application-specific integrated circuit.
The cost of the hardware can run as high as the 10s of thousands of dollars, so starting up a successful mining operation does come with a hefty price tag.
How Many Bitcoins are There?
Part of what gives Bitcoin its value is the fact that there is a limited supply. The reason that the value of Bitcoin has skyrocketed in recent years is due to basic economics like supply and demand.
The demand of Bitcoin is far outpacing the supply, which has been driving the price up from about $0.09 per Bitcoin in 2010 to nearly $50,000 in 2022.
When Bitcoin was created in 2009, it was determined that there would only ever be 21 million Bitcoins to be found by mining. As of 2022, there have been about 19 million Bitcoins found, leaving about 2 million left to be mined.
It is speculated that the last Bitcoin will be mined in 2140. If that seems like longer than you’d expect, there is a reason for that. As Bitcoin is mined, the puzzles not only become more difficult to solve, the reward for solving the puzzle also diminishes by half every 4 years.
In 2012, when you successfully posted to the blockchain, you were rewarded with 25 Bitcoin, in 2016, it was halved to 12.5 Bitcoins, and most recently in 2020 you receive 6.25 Bitcoins for successfully mining a Bitcoin.
This results in longevity of the cryptocurrency, as well as maintains the speed of the blockchain.
There you have it, a very high-level look at the Bitcoin mining process. If you are considering starting up a mining operation, we hope that this sheds a little light on the process and what is required to mine a Bitcoin.