Bitcoin Mining: What Is It And How Does It Work?
Bitcoin mining has been around since the beginning of this crypto. In fact, without mining, new Bitcoin would not enter circulation and this whole concept would have been over before it even took off.
Having said that, mining has been increasingly popular in the last five years or so. The more attention and interest Bitcoin gets, the more people join the mining community.
However, while there are millions of people around the world already involved, there are thousands or millions of others who want to become a Bitcoin miner but don’t know where to begin. Nor understand enough about the process in the first place.
If that sounds like you, don’t worry. We’re here to give you the rundown on what Bitcoin mining is, what you need to start, and how you can join the largest mining syndicate in Texas no matter where in the world you are so you, too, can experience being part of the Bitcoin community.
The Inside Scoop
For new bitcoin to enter into circulation, they must be mined. Mining also enables new transactions to be confirmed by the network, as well as being a key part of the development and maintenance of the blockchain ledger.
The action of mining is carried out via means of the miner (you) using sophisticated and powerful hardware which can solve incredibly complicated math problems. The first computer to solve the problem validates the block and collects the reward - the bitcoin.
This process then repeats itself over and over again. Roughly 900 bitcoin are currently mined each day, although this will become less as the years go by.
Mining for BTC is slow, expensive, and it isn’t guaranteed to be rewarding for you. For example, if you mine alone rather than as part of a mining pool and you use less powerful hardware, it could take years and years for you to mine just one block. It could even take years and you mine zero blocks.
What Do You Need to Start Mining?
Years ago, when Bitcoin was far less popular than it is now, people would use their computer’s CPU to do the mining work. All it took was an ordinary computer to run the right program and nothing more.
However, as we mentioned earlier, mining is so popular now that a computer’s CPU is no longer good enough. Instead, to mine Bitcoin, users need to purchase mining rigs that have enough computer power to have a chance at finding new blocks. These rigs don’t come cheap as they are specialized hardware.
If someone is looking to keep their costs down, then joining a mining pool is the best solution. Mining pools allow investors to be part of the mining community, reap the rewards, and stick to a budget.
What Are Mining Pools?
So, as you know, the miner who finds the solution to the mathematical puzzle first gets the reward. And the probability of you being the one to find the solution first is equal to the amount of the mining power that is on the network in total.
Therefore, anyone who is mining but has a small percentage of mining power has only a little chance of being able to solve the puzzle and mine the block.
For example, you could buy a mining card for, let’s say, a couple of thousand dollars but this would actually represent less than 0.001% of the total mining power on the network. Meaning you’ve paid a relatively high amount of money ($2,000 isn’t small change, after all), and stand very little chance of ever mining a single block. It could take years.
And what’s more, as time goes on, the algorithm difficulty increases rendering the mining power even weaker. The money you invest could end up going to waste altogether.
The answer to this problem is mining pools.
Mining pools are owned and operated by a third party. They essentially allow miners to buy into a syndicate. The third party will own vast amounts of rigs and have huge amounts of mining power on the network. Plus, the more people in the group or the more money that the members of the group invest, the more mining power there will be on the network still.
Think of it like a lottery syndicate at work. If you buy ten scratch cards, you’ll most likely go home empty-handed.
However, if you and your colleagues pool your resources, you can buy hundreds or thousands of scratch cards and have a high chance of winning. You have to share the prizes but having a greater chance of winning as a team is a worthwhile trade.
In the same way, mining pools put their resources together, and the pool’s host will keep everything coordinated and organized while also offering the space for the rigs and the rigs themselves.
As well as having a better chance of success (and more frequent success) as part of a mining pool, you’ll also not have to worry so much about money. You don’t have to be a millionaire to join or have some kind of degree. You just need enough to pay your share of the rig and whatever the small transaction or hosting fee the third party has in place.
Mining pools are the perfect option for the inexperienced and the experienced. You’ll take out relative to what you put in so everyone is happy. Mining pools are a safer option for all.
Does Mining Waste Energy?
One negative that comes up often when people talk about mining is the energy needed. While it is true that mining requires a lot of energy to constantly run the miners and provide high computing power, there are companies constantly working on a solution.
Unfortunately, the reality is that mining takes up more electricity than some countries use in a year. Mining can also produce excessive electronic waste, and this sharp increase has been the direct result of tens of thousands of new people joining the community each year.
Using renewable energy to run operations is possible though. And the good news is, this along with plans of finding a way to mine without the waste in the future for everyone means that, hopefully, this waste should be a temporary problem.
What to Remember
- If you mine BTC, you don’t have to pay for it like you would if you purchased the crypto from another investor - although you do have the pay for the hardware involved
- Blocks of bitcoin are added to the blockchain. The miner receives the bitcoin inside the block once the block has been validated
- The block is validated once the complex mathematical puzzle has been solved by your computer. The first with the solution then wins. The more mining power you have on your network, the more likely you are to be the winner.
- To be able to mine, you’ll need to set up a mining rig of your own - ASIC (application-specific integrated circuit) or a GPU (graphics processing unit)
- If you can’t get access to your own mining rig or prefer to not mine alone, paying a small fee to join a mining pool where you can reap rewards along with the others in your pool is the best option
Become a Bitcoin Miner with Mining Syndicate
If you would like any more information about starting or expanding your Bitcoin horizon; reach out to us at Mining Syndicate. Our mission is simple: Strengthen the Bitcoin network by enabling small-scale miners to affordably purchase and reliably host miners.
As a small miner, Chris became frustrated by the lack of hosting options available for miners with under 100 units. As luck would have it, he found a 2.5MW mining facility for sale right down the road, and thus, Mining Syndicate was born. Facilities #2 and #3 are already in the works.
Why is Mining Syndicate so successful? Because we have a team of people who are just like you, eager to be a part of the future of mining. If you would like more information about how you can be a part of Mining Syndicate, how our facility works, or the products we sell, you can reach out to us here.
You can also check out our list of miners we currently have in our catalog, as well as our list of best sellers.
We look forward to hearing from you - together we are stronger!