What exactly is involved in mining bitcoin? Can anyone do bitcoin mining at home? How expensive is it? Is bitcoin mining profitable?
👀 In this article, we’ll take a closer look at Bitcoin mining, how it is achieved, its implications for the environment and energy usage, as well as its viability for the future.
⛏️ BITCOIN MINING
₿ Bitcoin mining is the energy-intensive process used to unlock and extract new bitcoin into circulation. It involves a process where a 🌐 global network of computers 🖧 running the Bitcoin code work together to ensure that transactions are legitimate and added correctly to the cryptocurrency’s blockchain.
❓ HOW DOES BITCOIN MINING WORK?
As we covered in our Crypto 101 article, cryptocurrency mining is the highly competitive method where crypto miners use specialized high-power computer hardware systems 🖥️ to conduct complex, mathematical cryptography which confirms each transaction on a blockchain.
This particular process is called “proof of work” (PoW), and requires bitcoin miners to complete billions of calculations in order to verify a block of transactions.
🎁 Once a miner has completed a certain number of calculations to verify a block of transactions on the bitcoin platform, they may be rewarded with new bitcoin 🪙 — if they are the first to verify the block.
💰 Miners are paid transaction fees and 6.25 BTC per block for their efforts (if they solve the block correctly).
⚒️ BITCOIN MINING REQUIREMENTS
📃In the early days of bitcoin mining, the resources needed were quite low. Anyone could mine bitcoin using a simple processor and basic software on their laptop 💻.
Eventually, bitcoin mining algorithms became more complex. People mining Bitcoin from home, as well as professional bitcoin mining companies with dedicated mining sites, were required to build dedicated bitcoin mining rigs to keep their operations viable. These rigs are purpose-built crypto mining machines that operate faster than most standard computers.
Bitcoin miners usually select the following tools for set up:
- 🖥️ Hardware GPU (graphics processing unit), SSD for crypto mining, or ASIC (application-specific integrated circuit)
- 💽 Bitcoin mining software
- 👛 A crypto wallet
- 🖧 Preferred mining pool (if one chooses pool mining option instead of solo mining)
Once set up, the rig performs the mining process autonomously. Any other human involvement comes in the event of system or network failure, power outages, or regular system maintenance.
💡 ENERGY USAGE CONCERNS
🔌📈 PoW crypto mining is very energy intensive. There are concerns that bitcoin mining – which relies heavily on this method, may be harmful to the environment 🌎. This is due to the increasing amount of energy needed to operate these machines, the growling limited supply of energy in the current global economic climate, as well as the heat generated from the mining process.
Consequently, another consensus mechanism which many cryptos are beginning to adopt (such as Ethereum) is “proof of stake” (PoS). It is a greener, less energy-intensive option that requires validators to simply hold and stake tokens. We intend to take a closer look at Ethereum and Proof of Stake in future articles.
📲 THE BLOOM APP — AN EASIER WAY TO EARN BITCOIN
👉 An even more passive method and easier way to earn bitcoin than mining is the Bloom shopper rewards app 📲. It allows you to earn Bitcoin and other crypto with every purchase make on your Visa card 💳.
🦉 All you need to do is download the Bloom app, register an account, link your Visa card and shop anywhere using your credit or debit card.
🎁 You will earn Bloom Coins by simply using your Visa card 💳. The more you use your card, the more Bloom Coins you will earn.
💰 The Bloom Coins you earn can be spent within the app 🎁 and converted into Bitcoin!
The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website's content as such. Bloom does not recommend that any cryptocurrency or NFTs should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.