What is bitcoin?
In this world of ever-evolving technology, it’s hard to keep up, let alone understand cryptocurrency, or more specifically bitcoin.
Bitcoin is the first and most widely recognised cryptocurrency and unlike traditional currency used such as printed bills or coins, bitcoin allows the peer-to-peer exchange of value in the digital realm through what is called a blockchain.
If you are interested in learning more about bitcoin and how it’s created, or mined, we explore all of this below.
What is bitcoin mining?
Various data centres focus on bitcoin with high-performance computing systems as they too see the value that bitcoin provides. Mining is a method through which bitcoin is sourced, created and circulated in the market. It also supports blockchain transactions.
Bitcoin mining is costly and can be very complex as it utilises algorithms and software to resolve complicated mathematical problems.
Nowadays, institutional investors are involved in bitcoin mining, and the best bitcoin mining companies are advocating to expand the benefits of bitcoin, make transactions legitimate and provide transparency. Industry-leading professionals work towards improving supercomputing and the financial benefits that bitcoin provides.
How does bitcoin mining work?
Bitcoin mining is done by miners who have to solve complex hash puzzles to verify blocks of transactions updated on the decentralised blockchain ledger. At the start of 2022, miners who managed to solve the complex mathematical problems were paid 6.25 bitcoins as a reward, the equivalent of approximately $125,000.
The proof of work (POW) is the consensus mechanism through which transactions are validated.
What do you need to mine bitcoin?
To mine bitcoin, you will need some essentials like:
- Bitcoin wallet: this will be used to receive your mining proceeds.
- Mining hardware: this is the machine used in the actual mining process (the more hash rate the machine has, the more powerful the rewards).
- Mining software: in its essence, this is what makes bitcoin work as it tracks and secures blockchains.
The takeaway
Bitcoin mining is the process through which new bitcoins are created and entered into circulation. It is a lengthy procedure that requires a great number of resources and it has been recently adopted by high-performance computing companies and trustworthy institutions that have brought investing to a whole new level.