We all know that Bitcoin is a pretty valuable commodity. Anyone who has tracked Bitcoin price knows that it has seen some incredible highs (and would rather not talk about the historic lows that have happened, too).
It’s safe to say that most people don’t have any real clue about Bitcoin, let alone how it gets mined. After you finish reading everything below, you will be ready (mentally, at least) to tackle the process.
How are Bitcoins Created?
The creation of Bitcoins is straightforward but difficult to pull off. For starters, there isn’t this unlimited amount of them. Unlike the U.S. Mint, new Bitcoins cannot just be created on a whim, so the finite supply is a big factor in the demand of price.
With 21 million total coins, the only way to uncover more is to “mine” them. It’s not that the process is necessarily difficult, it is just really expensive to achieve. There is a lot going on when mining Bitcoins, and there is a reason that it’s not something just anyone can do.
How Does Mining Work?
Mining involves essentially adding a block to the blockchain. That’s the simplest explanation and doesn’t really offer a lot. To add that block, several extremely difficult math problems have to be solved. The key to solving them is having application-specific integrated circuits (ASICs). Those cost a ton of money and require even more electricity to pull off.
Getting set up with a prop rig is really, really expensive. It isn’t something that just anyone can do, making Bitcoin even more valuable because of that. If a miner can successfully add a block to the blockchain, they get 6.25 bitcoins as their bounty. Every four years or so, that reward gets cut in half, but it’s still worth a ton. When Bitcoin was at $24,300, that would make the aforementioned 6.25 coins worth more than $150,000.
Can You Make Much Money Mining?
Because of the cost involved, the natural question becomes, “can you actually make money mining bitcoin?” It keeps getting more complex and difficult, with the necessary computing power going along with it.
It also takes roughly 121 terawatt-hours of electricity to mine for a year, which is more than most countries. Basically, you would need the equivalent to almost 9 years’ worth of electricity for the average household to mine even one Bitcoin. Combined with the volatility of Bitcoin and you could find yourself in a very precarious spot in a hurry.
How to Start Mining Bitcoin
Any checklist to become a Bitcoin miner is three items long. You need the right equipment or “rig”, the proper mining software, and a place to store your coins. Getting everything together going to cost you the most, as a decent rig is going to run at least $10,000 before all is said and done.
You’re going to need software to run it, too. There are a few different software providers, too. At least, most software you find is free to download and can run on most Mac and Windows computers. When you connect the right software to hardware that is capable of running it, you’re just about ready to go.
The last piece of the puzzle is a crypto wallet. When you manage to successfully mine bitcoin, you need a place to store it. Wallets are encrypted online accounts where you can not only keep your coins, but accept them, store them, and transfer them. There are also a ton of companies that offer secure wallets as well.