Cryptocurrency has been getting into the news more and more in the past year. This makes sense, because the largest cryptocurrency in the world, bitcoin, reached an all-time high price in the last year. If you had invested $200 in bitcoin back in 2013, that investment would’ve later been worth more than $120,000!
If you ever wondered how so many people became millionaires and even billionaires by investing in cryptocurrency, there is your answer.
Of course, rather than just investing in bitcoin, you can mine it. Once you understand how to start bitcoin mining, you will realize why many people who know more about the cryptocurrency game are more interested in mining than they are in investing.
So, how exactly does bitcoin mining work? What might be able to do for you? Read on to learn all about the most important things to understand about how to start bitcoin mining!
What Is Bitcoin Mining?
Some people wonder if bitcoin mining is legal. It can seem too good to be true to imagine that you can generate money simply by using your extra computing power to calculate equations.
However, one very simple way to answer this question is to point out that all bitcoin that exists is the result of bitcoin mining.
Bitcoin mining is completely legal. And although it may seem too good to be true, you’ll understand a little bit more about how it works soon.
Bitcoin mining is basically the process of figuring out the answers to extremely complicated mathematical equations. In order to get a bitcoin, you have to prove that you have the answer to one of the math questions generated by the bitcoin system.
So how can you find the answers to these math questions? Can a brilliant mathematician figure them out just by using their brain? The answer is no.
You really have to use a computer to figure out these kinds of math questions. Genius mathematicians might be able to multiply two numbers that are each 12 digits long. But nobody can do that if the numbers are 1000 digits long.
That is the kind of math question that requires no insight. All it requires is brute force calculation. That is why you need a computer to do it.
How Does Bitcoin Mining Work?
But, why did the creators of bitcoin set it up so that you could earn bitcoin by answering these kinds of math questions? The answer is that these math questions are important in proving that bitcoin transactions are secure.
Bitcoin does not rely on any single authority to say whether a transaction happens or not. This system is unlike the system used by banks. Banks do rely on a single authority to approve transactions.
Bitcoin provides people with the opportunity to make transactions without being subject to the decisions of any centralized authority. But in order to do this, it must find a way to prove which transactions are legitimate and which ones are not. In order to do that, it is necessary to solve extremely complicated math problems.
That creates the bitcoin mining system. People provide their computing power to help answer these important math questions. In return, the bitcoin currency system provides people with units of their currency as a reward for their help.
The end result is that anybody can make at least a little bit of bitcoin simply by using their computer to run calculations. The bitcoin that you earn today by using your computer for mining could be worth many times more in the future.
Advantages of Mining Bitcoin
One of the advantages of mining bitcoin is completely obvious. You can get money from doing so. However, there is more to it than that.
For one thing, it will cost you electricity to run your computer to mine bitcoins. In most cases, mining only makes a tiny profit when you account for the cost of electricity. You can even lose money if you are using a computer that will wear down and lose its value as you use it to make these calculations.
What is the point of bitcoin mining, then? How are people supposed to make money off of it? The answer is at electricity costs different amounts of money around the world.
If you can find a cheap source of electricity, then you can perform bitcoin mining while incurring only small electrical costs. This has amazing implications for the distribution of the world’s electrical resources.
This means that you can find untapped energy resources in any spot on the planet and use them to run electrical computations. That will then make it so that we do not need to spend electricity in places where it is more expensive to mine bitcoin.
The end result is a worldwide upgrade in energy efficiency. The places in the world that generate electricity the cheapest can mine bitcoin. Meanwhile, the rest of the world’s energy can be spent on things that are location-dependent, like providing your house with electricity.
That is why many people are interested in taking advantage of natural gas or waterfall power to create electricity in remote locations to mine bitcoin.
The more that you understand when asking “what is bitcoin mining” and determining exactly how bitcoin mining sites work, the more you might be interested in bitcoin mining stocks.
Some people start with the question of “Is bitcoin mining profitable?”, and end up with a question of “How can I start investing in bitcoin mining immediately?” This is especially true when it comes to options like natural gas bitcoin mining.
Now that you understand how it works, are you ready to start mining, too?
Understand How to Start Bitcoin Mining
We hope that some of the ideas in this brief article about how to start bitcoin mining have been helpful for you. More and more people are hearing more about bitcoin as cryptocurrency becomes a bigger part of the financial world.
Many people are getting into investing in cryptocurrency, but fewer people are working on mining bitcoin and other currencies.
Learning a little bit more about how to mine bitcoin can help you secure your financial future. To keep up-to-date on the latest developments in business, technology, and more, take a look through our other articles!