Bitcoin Minig
Bitcoin has a public ledger which is called the blockchain. The process of mining adds new transactions to this public ledger. Why? Well, Bitcoin users need this process because it means that every transaction is securely confirmed and verified while all the users making use of the Bitcoin network has full access to the blockchain – in other words, the Bitcoin ledger. Mining also helps the network figure out which transactions are fair and legit, eliminating any transactions that try to spend money a second time.
So when someone “mines” Bitcoin they are in fact performing a service to all Bitcoin users because they ensure Bitcoin transactions are legitimate. During the process of mining people who mine Bitcoin will complete a new block which means that the miner gets a reward. In 2018 the return for completing a new block was 12.5 Bitcoin, but the reward gets lower with time.
As you can imagine, mining requires a lot of hard work and patience – you do not get Bitcoin mining results quickly. So there’s an obvious analogy with actual, physical mining of metals like gold. Hence using the word “mining” for the computational tasks that generate new Bitcoin.
Choosing your mining equipment
Mining Bitcoin involves very complex calculations which are very computationally intensive. So, choosing the right hardware kit when you mine Bitcoin is really essential. You need to think about a number of specific characteristics when you choose your Bitcoin mining kit.
Hash Rates
Perhaps the key aspect of your mining kit choice is this: the hash rate that your mining hardware can sustain. Hash rate is basically the number of crypto calculations that your mining hardware can perform every second. It’s easy to see why a higher hash rate will help you mine coins more quickly – simply because more calculations per second mean that you solve the crypto math required to mine a coin much more quickly. As a result you can quickly complete a block and get your reward for doing so.
Hash functions work like this: whatever input you insert will always give you the same output. So to find a specific output you have to try as many random inputs as you can – as fast as you can. It makes mining competitive and the miner who can process more inputs than other miners will end up getting rewarded faster. So, again, if you can get hardware with a high hash rate you will have an advantage over other miners which means you get more rewards more quickly.