Let us first know what Bitcoin Mining is and then learn about the role of Bitcoin Miners.
What is Bitcoin Mining?
Bitcoin Mining is a process where transaction records are added to Blockchain digitally,which contains the history of every Bitcoin transaction. It is called Blockchain because it is a chain of blocks which contains ledger of past transaction. Bitcoin Mining is used to ensure that the payment network is secure and trustworthy, and a Bitcoin Miner contributes to a decentralized peer-to-peer network to ensure that the payment network is secure and trustworthy.
Why Bitcoin requires Miners?
Blockchain Mining is metaphor for the mathematical work that connects the network & hope in new earning of tokens. In real world, minors are paid for their work as auditors who check the entire process. They are doing the effort for checking the transactions done. By verifying the transaction the minors help to prevent double- spending problem which earlier users used to face. Double - spending problem was a problem where a Bitcoin owner used to spend the same Bitcoin twice which is not faced with physical money.
Role of Bitcoin Miners
Bitcoin Miners are group of people who are working in a Bitcoin network. In Bitcoin Miners there are processes and transactions to confirm. Anyone can be a Bitcoin Miner and run the client by themselves. But these Bitcoin Miners use high-end (powerful) computers that are designed and built to mine Bitcoin transactions. They do Bitcoin Mining by resolving cryptographic issue and solving many math problems because each and every transaction needs to be cryptographically secured and encoded. These mathematical problems ensure that nobody is interfering with the data.
Moreover for Bitcoin Mining, the Bitcoin Miners are always paid in Bitcoins , which is the key feature in Bitcoin. In Bitcoin Mmining, there are no regular currencies such as Euro,Dollar etc. instead it uses digital currency.
Is Bitcoin Mining Legal ?
Bitcoin Mining is legal in many countries but not in all countries. Some countries have banned this. The countries which allow Bitcoin Mining are Algeria , Bolivia , China , Egypt , Morocco , Nepal , and Pakistan.
What do you need to mine Bitcoin?
A Bitcoin Miners must has the following things:
- High-end / performance computers
These computers are designed for specific application and these help in mining process.
- Electricity -
Then main operating expense is power and it is calculated in cents per kilowatt-hour.
- Low / Min cost power supply -
Having efficient power usage is important as it involves the cost of Bitcoin mining and power consumption.
- A good mining software -
A good mining software solves math and cryptographic problems in the mining process.
- Mining pool -
This process helps to make Bitcoin mining accessible.
How Bitcoin Blockchain Built?
A Bitcoin ledger is formed which consists of records of Blockchain and these are bulit by miners. These ledgers are called as blocks. Each block consists of different transaction that has taken place. A block is added or created to Bitcoin Blockchain every ten minutes when a new Bitcoin Transaction is completed. So, the role of miners is to process the different transactions. The minors in the process build the blocks and when the block is created or confirmed, the block is added to the Blockchain. The Bitcoin Blockchain provides records of all Bitcoin transaction and these transactions are permanently stored/ recorded.
How much do miners earn?
As of March 2022, the rate of Bitcoin was targated /priced around $39k/ Bitcoin, which gives a view that miner have earned around $2.43k for completing a block. It is a good amount of money to solve such hash problems and the rewards of Bitcoin Mining are reduced by almost half every four years.
Downside of Mining
Mining is a very risky process. It involves financial risks because one have to purchase two hundreds or even more dollars amount of mining products / equipment & expect no return on their investments. This risk can be reduced by joining mining pools which are already present. If you are living in an area where mining is prohibited then you should reconsider it and think over it again. It is always better to do a research on your countries terms and conditions / regulations before investing in equipment of mining as it involves huge amount of investment and risk.
Another risk for Bitcoin mining is the energy consumption of computers systems which run mining algorithms.