Mining
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.
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.
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.