Bitcoin Mining: The 2008 recession saw people struggling to make their ends meet. But this recession also saw the emergence of digital currency, namely, bitcoin!
Developed by an unknown creator called Satoshi Nakamoto, Bitcoin was first released in 2009. The main aim was to decentralize the transactions and give people more power rather than central banks.
And since then, bitcoin kept gaining popularity and now has a market capitalization of $800 billion. However, there are several things that most people don’t know or are confused about.
One of the concepts that beginner investors struggle to understand is Bitcoin-mining. Hence, in this blog post, let’s answer a few frequently asked questions regarding bitcoins mining.
Bitcoin Mining: What Is It?
In simpler terms, bitcoin mining can be defined as the process to earn bitcoins in a digital wallet. To earn bitcoins, miners need to solve a mathematical puzzle. These puzzles are solved using large computer systems with large computing powers.
Earlier, bitcoin mining was done using regular desktops with central processing units (CPUs). However, due to the larger volume, bitcoins mining is done using large mining pools.
What Is The Benefit of Bitcoin Mining?
As mentioned above, bitcoin mining helps miners earn bitcoins. Apart from this, bitcoin mining also records transactions on the blockchain. This makes the transactions more trustworthy.
Are There Any Costs Involved With Bitcoins Mining?
Yes, there are some costs associated with bitcoins mining. The three larger costs associated with bitcoin include:
- Electricity: To run systems with large computing systems, miners will need electrical input. Hence, major costs come from electricity consumption.
- Network Infrastructure: To mine bitcoins, you constantly need an active Internet connection with minimal latency.
- Mining Infrastructure: To mine bitcoins, you will need computer systems with higher computing power. Regular desktops are not a great fit. What miners need areApplication-specific integrated chip (ASIC) systems. These systems are highly specialized and thus cost a minimum of $4,000 and range up to $12,000. This will add to the overall costs of bitcoins-mining.
Bitcoin Mining: Should You Do It?
As mentioned above, there are huge costs associated with bitcoins-mining. So, taking it up just as a hobby might not be a good idea. Also, there is no guarantee that you will always generate bitcoin. If you can’t solve the puzzle, you can’t generate bitcoin. This can drain your monetary resources over time with no guaranteed results.
However, if you have unlimited wealth (which is highly unlikely), you can go for bitcoins-mining.
Is Bitcoin Mining Environmentally Friendly?
As mentioned above, Bitcoins mining requires a lot of electricity. This means huge consumption of electricity made from non-renewable resources. Hence, bitcoin-mining is currently not so environmentally friendly. The energy consumption of bitcoin-mining can be compared to the energy used by entire countries.
Bottom Line
Bitcoins mining is an expensive task. If you want to become a miner, you need to have enough funds and time on your hands. Also, the brains and expertise to solve mathematical puzzles to earn bitcoins.
For more frequently asked questions answered, keep reading Coin Informer!
