Since the mining of the first Bitcoin block by Satoshi Nakamoto on January 3, 2009, Bitcoin mining has become a very popular cryptocurrency endeavour. In the early days of mining, it was possible to set up a PC and start mining. However, things have become much more complex and expensive over time.
It takes roughly 10 minutes to mine 1 Bitcoin. However, each miner does not mine one Bitcoin in that time frame. The miner earns 6.25 BTC for every block mined. Nakamoto set the system up so that it takes 10 minutes to mine a whole Bitcoin.
A brief history of Bitcoin
Bitcoin was the first cryptocurrency, created in 2008 by Satoshi Nakamoto. This person or group published a white paper titled ‘Bitcoin: APeer-to-Peer Electronic Cash System‘. The paper described a decentralized payment system that was based on cryptographic proof instead of trust. They proposed using a distributed database called a Blockchain, to record each transaction and its history. One of the central concepts of this system is that there is no third party that controls it. Therefore, there is no bank or government involved in the currency.
What is Bitcoin mining?
The process of Bitcoin mining is necessary to maintain the database of transactions and to find new Bitcoins. There are only 21 million Bitcoins that can ever exist and to date, there are 19,085,837.5 in existence. The total left to mine is 1,914,162.5.
Miners use special computers for mining. The process of mining in real terms means that a computer or network of computers needs to solve a mathematical puzzle to find the Bitcoin or block. The network will reward the first miner to solve the puzzle with the block or coin.
The process of solving the puzzle results in the transactions being verified and made trustworthy. Therefore, Bitcoin mining is an essential part of validating and committing transactions to the blockchain.
What affects the mining speed?
Mining 1 Bitcoin takes approximately 10 minutes. It is not always exactly 10 minutes, as several factors can affect the time. A lack of miners or slow hardware will slow the process down. However, overall the system modifies itself to conform to the 10-minute guide.
It does this by using the hashing difficulty algorithm. The algorithm will make the puzzles easier or harder to solve depending on how many miners are in the system. If there are a lot of miners, the puzzle will become harder. The algorithm calculates that with more participants, the puzzle becomes more likely to be solved. It evens out the fluctuations in miners and hardware, to keep the turnover time consistent.
Equipment needed for mining
There was a brief period in Bitcoin mining, right at the beginning, where it was possible to mine on a PC. However, those computers are far too slow for present-day mining. It is still possible to use a PC to mine, but it is not very profitable, and it takes a long time.
Miners designed new machines called Application-specific integrated circuit (ASIC) miners. They use specialized hardware that makes them more efficient when mining cryptocurrencies.
These machines are often linked together via cloud computing. They form what is known as a ‘mining pool’. Therefore, these pools use the combined power of the computers to solve the puzzles. If they do solve any puzzles, they split the rewards between all the computers in the pool.
The future of mining
There will always be a need for Bitcoin mining, even when all the Bitcoins are in circulation. This is because it is the method used to validate transactions on the blockchain. Without this validation function, transactions cannot be processed. Therefore, there is a long future ahead for mining.