If you’ve ever found yourself curious about Bitcoin mining and how it works, you’re not alone. Bitcoin mining is an exciting field but, unfortunately, it can seem intimidating with lots of industry jargon. So what exactly is it?
Bitcoin mining is the process of creating more Bitcoin to enter circulation. Additionally, Bitcoin mining confirms new transactions and develops the Bitcoin blockchain ledger that supports the cryptocurrency.
In this guide, we’ll break down what you need to know about how the process works, what’s needed for mining, potential mining rewards, and more.
What is Bitcoin Mining?
For those who are new to crypto, we’re going to give a rundown of the mining process. But first, let’s begin by clarifying some terms.
Bitcoin is a cryptocurrency, or decentralized, peer-to-peer, digital currency. People are drawn to Bitcoin for good reason. For starters, it is encrypted and private. Furthermore, anyone with a computer and the Internet can join the Bitcoin network.
Bitcoin exists on a peer-to-peer technology network called a blockchain. You can think of blockchain as a public spreadsheet that records digital asset transactions. This blockchain “spreadsheet” is made up of strings of blocks that hold verified data. Data on these blocks are held together by hashes.
In order to create a blockchain, Bitcoin miners verify this data by solving complex hash puzzles. This type of system is called a “proof of work” mechanism. In exchange for this work, miners have the potential to earn rewards. We’ll cover these potential rewards and how you can calculate them later in this guide.
How to Mine Bitcoin
Now that we’ve established the basics of what Bitcoin mining is, this section will explain the details of how to mine Bitcoin. Let’s look at the process of Bitcoin mining step-by-step.
Step 1: Find your Bitcoin mining hardware
To mine Bitcoin, you’ll need specific hardware, called your mining rig. Most miners use hardware called ASIC, or application-specific integrated circuit, chips. This hardware is built to solve Bitcoin’s algorithm. To complete your rig, you’ll also need a GPU, or graphics processing unit.
Step 2: Download your Bitcoin mining software
In addition to hardware, you will need certain software to get your mining rig connected to the Bitcoin blockchain. This software will do two things: add new blocks to the blockchain and distribute mining work to miners. Fortunately, there are free software programs on the market that you can use on your Bitcoin mining journey.
Step 3: Join a Bitcoin mining pool
Next, you should research a mining pool to join. Due to how mining works, individual miners are hard-pressed to compete with large mining farms. Instead, you can join a pool and combine computing power to work together. This maximizes the chances of earning rewards.
Step 4: Begin Bitcoin mining
After completing these three steps, you can start mining Bitcoin. You’ll want to make sure your mining rig is plugged into your power outlet. Connect to the blockchain with software, fill in the information about your Bitcoin wallet and mining pool, and voilà! You’re ready to officially join the world of Bitcoin mining.
Required Environment to Mine BTC
To successfully mine Bitcoin, there are a few specific things you’ll need to make sure you have in your mining environment. Let’s look in more depth at the four basic requirements for a proper mining operation.
Potential Mining Rewards
Let’s talk about the potential mining rewards available to you as a Bitcoin miner. As you’re considering mining, you’ll, of course, want to weigh the costs of the equipment, electricity, taxes, and time against the potential rewards. These mining rewards include funds from transaction fees as well as freshly-minted Bitcoins.
Depending on the price of Bitcoin, the value of rewards earned will shift along with the market. To calculate potential rewards, some fans of Bitcoin have created tools that can help. Mining rewards also follow a trend of halving roughly every four years. A Bitcoin Clock can help you track these halvings to estimate overall trends.
Mining City
Mining City is a global platform that offers its members hash power to mine cryptocurrencies. Hash power is the electrical and computing power needed to mine crypto assets and generate cryptocurrencies. Hash power provided by Mining City is used to mine Bitcoin (BTC) and other cryptocurrencies.
Mining City members do not have to worry about buying or maintaining expensive mining equipment, nor do they have to worry about high electricity bills that they would need to pay if they were mining on their own.
Is Mining City Legit?
Mining City is an initiative that unites people through mining cryptocurrency. Using a “mining plan” structure it gives its users the opportunity to obtain hash power needed for mining.
Whether you are looking for a platform that provides mining plans or software to secure your Bitcoin, how can you tell if a cryptocurrency player is legit?
Here are 5 things to look for:
1. Does the business provide a real product or service?
2. Does the business leave markets when crypto products or services are outlawed?
3. Does the business keep up with new regulations and legal compliance?
4. Is the business transparent in their communications about what they are doing?
5. Is the business making efforts to suppress real scams?
Mining City provides real hash power for users. Mining City also leaves banned markets and takes a compliant approach to new laws and regulations, adjusting to global markets.
When considering a mining plan or mining services company, customers should make compliance and security a top priority. A good example of Mining City’s commitment to compliance is its recent implementation of KYC, AML and other compliance check processes.