Bitcoin is generated through a process called mining, which is performed using computational power and the process is completely decentralized. Let’s understand the process of mining in detail and its significance.
Bitcoin Mining Farm
Source: Digital Trends | Tech News, Reviews, Deals, and How-To's
BitcoinMining
Mining is the most crucial aspect in the Bitcoin blockchain, as it helps in the creation of new coins and facilitates the processing of transactions.
Currently, a little over 18.5 million BTC have already been mined and only 2.5 million is left to be mined which is expected to be completed by the year 2140.
Mining is done through a programmable mining software, installed in computers, which performs the complex mathematical calculations to verify transactions.
Also, known as “proof-of-work”, it is a 64-digit hexadecimal number called ‘hash’, i.e. less than or equal to the target hash.
Miners using computational processing power try to find all the possible 64-digit numbers until they arrive at the closest value.
The miner who solves the complex mathematical calculations first thus creates the new block and is added to the blockchain. The miner is rewarded with Bitcoins, known as block rewards.
The difficulty rate to create a block or mine Bitcoin, as on date, 4th Jan 2021 has reached 18.6 trillion. This means the chance of a computer producing the hash below the target hash is 1 in 18.6 trillion.
Therefore, it requires huge computational power and a massive amount of energy to mine Bitcoin and secure the Bitcoin blockchain.
How to mine Bitcoin?
In earlier days of Bitcoin mining, mining was feasible using personal computers, but as the network grew larger, it increased the level of competitiveness by using specialized hardware devices (ASIC) to increase the rate of profitability.
Bitcoin ASIC Mining Unit
ASIC or application-specific integrated chips are powerful processor units specially designed for Bitcoin mining and are energy-intensive hardware.
Importance of Mining
The role of miners in Bitcoin is not limited to verification of transactions and the creation of blocks. Miners all over the world are responsible for keeping the Bitcoin network secure and avoid the chances of double-spending.
Mining is key to keep the entire Bitcoin blockchain network decentralized and free from the influence of external factors.
However, mining is not everybody’s cup of tea and requires dedicated infrastructure. That’s where we step in to help people who want to invest in Bitcoin without getting into the hassles of mining. On CoinSwitch Kuber, you can easily buy and sell BTC starting from as little as ₹100.
Picture Source Digital Trends | Tech News, Reviews, Deals, and How-To's
Thanks for Reading
0 Comments