Nobody can talk about Cryptocurrency or Blockchain technology without mentioning Bitcoin. Of course, Bitcoin was the first Cryptocurrency to be created on this planet. We cannot talk of Bitcoin without mentioning Mining Bitcoin because the latter is the mother. In a simplified language, it is the process of creating or producing Bitcoins from the computer. However, this article will go deeper to give an overview of Mining Bitcoin, and how it works.
Also Read: How to get started with Bitcoin in 2021
To invest in Mining Bitcoin, and remain profitable, one needs to be prepared with the required equipment and resources. It requires heavy and powerful devices and cannot be run at home. There needs to be cooling and storage space. To start mining Bitcoin, it’s required to have a miner, bitcoin wallet, mining pool, and program.
It is a concept where Bitcoin transactions are updated on a ledger called Blockchain. That process is known as mining and those who mine Bitcoins are simply called Miners. It is achieved by running complex arithmetic puzzles in a powerful computer otherwise known as ASIC to guess the desired number. The Miner who gets the number first updates the Blockchain. The Miner is in return compensated by the mined coins. The current value per one mined Bitcoin or one solved puzzle is 6+ Bitcoins.
How it works
As said earlier, the mining is done through guessing via a computer. Remember, the more guesses a miner makes within a second, the more chances of getting it right. That is why a powerful computer becomes necessary. After getting it right you go to the next digital ledger page on the Blockchain. The amazing nature of Mining Bitcoin is how it becomes easy to validate but very difficult to solve the equation. The computer carries the key on which transactions are to be inserted in the ledger (Blockchain) once it solves the complicated puzzle.
Once a new block is compiled, an update is sent to the transaction ledger. The information is then sent to other computers for authentication and validation. As the process is done in different computers they automatically do the same with their transaction ledger. Remember, as previously said one right guess is equivalent to 6.25 Bitcoins and is passed over to the miner to cater for energy/power or time used. Not that alone transaction fees also is another boost to the miner. The confirmed blocks are encrypted in the Bitcoin network and cannot be reversed.
The Amazing Part
It should be understood that the more miners are using the Bitcoin Network to mine, the more complicated the guess becomes. That was the secret, the founder, Nakamoto had in mind as he created the network. He never wanted the issue of over flooding the market with valueless Digital coins to become a bother. Therefore, as the demand and price of Bitcoin go up the more difficult it will be to solve the equation because more miners will come in. That is how the term Mining Difficulty came in. To keep the process in check, there is a readjustment that occurs after the creation of every 2016 Blocks.
Mining Bitcoin requires a lot of power therefore, before embarking on the venture it is important to evaluate the power source. The inflation challenge is put on check through Mining Difficulty. In summation, it is important to note that there are a lot of processes involved in producing a single Bitcoin.
Is it Legal to Mine Bitcoin?
This answer about if the Bitcoin mining is legal or not really depends about the country you live in. Some countries still consider Bitcoin and other cryptocurrencies as a threat for their fiat currencies. Some government are afraid that Bitcoin takes over their financial system. So they have decided that mining Bitcoin is forbidden and illegal. But the good thing is that this practice is a overall legal in most places in the world. Despite the fact that many governments are starting to get the value of the Blockchain and cryptos, many of them have set regulations and are not accepting it as part of their financial environment.
Countries where owning and or mining bitcoin is illegal
Even after being in circulation for nearly 10 years, Bitcoin still remains a currency which create debates in most countries. It still unclear whether or not Bitcoin can be owned, mined or used. The fact that it doesn’t rely on a centralized system and its anonymous nature makes it hard to be widely accepted and trusted globally. Bitcoin had a bad reputation when first adopted by criminal organizations. It was used as a way to finance their illegal and dangerous activities. But nowadays, Bitcoin is getting understood. Many reputable Banks and businessmen such as Elon Musk are trusting and even investing in Bitcoin. Tesla’s founder and owner had bought $1.5 Billion in Bitcoin in order to start accepting this currency as a way of payment to buy a Tesla car. This gives a lot of hope that Bitcoin will become accepted and legal all over the world very soon.