Bitcoin Mining 101

Mining Bitcoin vs Gold

If we compare it to mining gold or some other mineral, you might think it would cost you less to go to the mines and get a chunk of gold than to purchase a similar piece. But you have to take into account how much it costs to mine the material. You usually can’t just walk into a cave and rip a piece of gold out of the wall. Instead, you have to purchase mining materials, like pickaxes, flashlights and helmets, not to mention the investment of time required.

Solving the Puzzle

To lay the groundwork for understanding what Bitcoin mining is, you could think of it like solving a complex puzzle or equation. The first person to figure out or verify a “block” (one component of the blockchain) gets a reward, which is Bitcoin. The hard thing is, these puzzles aren’t easily solvable by the human mind because a lot of the process is pure speculation, like guessing how many jellybeans are in a jar until you get the right answer. Because of this, specific mining computers have been made with the sole purpose of computing and solving these extremely complex puzzles.

Race to the Reward

To even get a reward, a Bitcoin miner needs to verify 1MB worth of transactions. And remember, this is a race, so you need the fastest computer processor, RAM and graphics card available. You wouldn’t be the only one trying to solve the same equations, and just the computer that solves them first will reap any rewards. Getting the right answer before any other computer is primarily based on luck and speed, and it isn’t easy to win the game anymore.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Coin Cloud

Coin Cloud

The world’s leading operator of two-way Digital Currency Machines (DCMs), more advanced Bitcoin ATMs.