Bitcoin mining
Halt | January 20, 2020 | 0 Comments

What is Bitcoin mining? Explanation from meaning to type

Mining is the first word that beginners may find questionable in Bitcoin (BTC) news. Below you can get detail about mining.

Validation and confirmation of transaction records is mining

Mining means “mining” and has the image of mining coal and ore from underground. So why is Bitcoin (BTC) related to mining?

Bitcoin (BTC) uses “blockchain” technology to record transaction information. A blockchain is a block that combines several pieces of transaction information and connects them like a chain. Of course, it’s on the data, so it’s not visible.

Each block contains information on transactions made in Bitcoin (BTC) and is encrypted using a special calculation method called “hash function.” If you can break this code and confirm that the transaction is correct, you can add information about the previous block and connect.

Reward paid for successful mining

Since the hash function cannot be solved theoretically, the only way to decipher it is to insert appropriate numerical values. It’s like trying a 4-digit password as “0001, 0002, 0003 …”.

Therefore, the ability to process huge amounts of data at high speed is required, and a high-performance computer and the power to operate it for a long time are indispensable for efficient mining. In other words, mining operations are quite expensive.

Still, people who are passionate about mining are constantly getting bitcoin (BTC) issued and rewarded for those who break the code and link the blocks.  To earn this reward, people around the world, called “miners,” are eagerly mining.

Bitcoin / BTC mining also has several styles

Mining requires a high-performance machine and sufficient time and power. However, not everyone can set up such an environment. Several styles have been created for mining to clear it. Let’s first consider which method is better to start mining.

1. Solo mining

Solo mining is a method of mining by arranging all the equipment, location, and power on your own. While all costs are yours, you can monopolize your rewards.

However, the rewards for mining are those who connect new blocks to the chain, so mining is not always successful. There are days when you can get a good reward and others when you do not. Given that, it would be difficult to stabilize income.

Also, it is customary to use a high-speed graphics board for a computer dedicated to mining. A graphics board is a graphics processing unit (GPU) used when high computation processing capacity is required, such as in online games, 3DCG, and 3D CAD production, and is also used for virtual currency mining.

The higher the spec, the higher the price. But in recent years, the demand from miners is high, and it seems that there are cases where the price soars or the product runs out.

2. Pool mining

Pool mining is a style in which miners are performing solo mining gather and mining in groups.

There are small differences in the method of each team. Such as when each carries a machine and money and works as a team. When buying and mining machines jointly, but it is still mining that requires teamwork.

The mining success rate is higher because it has more computational power than solo mining. Rewards will be distributed according to the computing power provided by the team members, thus stabilizing the income.

On the other hand, even if individuals have a good track record of mining, the disadvantage is that it is difficult to get large rewards because the rewards are distributed among the members.

3. Cloud mining

Cloud mining is a style of receiving mining rewards as dividends by investing in organizations and companies that are doing mining as a business.

You don’t need to provide your computer or power, and you can get started easily without any specialized knowledge. It’s easier to think of it as an investment in a mining company than a mining company.

The most important thing to keep in mind in cloud mining is whether the investee organization can be trusted. In the past, there has been a scam case in which cloud mining raised funds and died.

Those risks remain today. Make sure you’re a trusted organization and invest in a way that doesn’t hurt you in the unlikely event.

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