Learning on How Does Bitcoin Mining Work and If It Legal
Despite the decline, Bitcoin enthusiasts still see the cryptocurrency as highly valuable. Thus, people still try to acquire Bitcoin in many ways, including mine. Also, understanding how does Bitcoin mining works is intriguing due to zero transactions.
Aside from mining, there are two plausible ways of earning Bitcoin. First, you have to exchange it with the real currency for the Bitcoin cryptocurrency. Second, you should profit from trading in your services or goods.
Earn Bitcoin by Mining
So, before learning how does Bitcoin mining work, you should know the concept of Bitcoin mining. The phrase itself is telling it all, you have to mine the cryptocurrency. Just like mining natural resources, all you have to do is find crypto money in its network.
For short, you have to solve puzzles in the blockchain and find Bitcoin. Your puzzles must be verified. Once your Bitcoin finding gets validated, your mine-earned Bitcoin will be added to the blockchain ledger.
If we talk about it in this simple manner, it seems easy to do. But when you try to do it yourself, then you will believe that it’s a hard process. Because solving a puzzle means trying to solve some complex cryptographic hash puzzle.
This process is to verify blocks that contain transaction identities on each blockchain ledger continuously. In the end, there’s Bitcoin as a reward for solving the complex puzzle.
Hence, the process itself will cost high-end computer units and consume a tremendous amount of electricity. But, with the proper computers, it said that in 10 minutes you can earn Bitcoin.
This is because, at the 10 minute mark, one new block is generated into the chain. By that, a new Bitcoin is minted in roughly 96 secs. But what you have to take note of is that this single Bitcoin is mined by miners from around the world. Thus, presumably, you have to share it.
Bitcoin Mining Process
Now, you have at least a simple understanding on how does Bitcoin mining work. Then, for the next step, you have to know that there are two process in this Bitcoin mining, they are:
1. Large Scale Mining
As you know, this mining work requires top-notch computer units and consumes so much energy. This is because the difficulty of solving puzzles gradually increases during the mining process.
The reason is that the network is getting bigger, and the blockchains get longer. Also, with the allure of getting Bitcoin for free, this activity attracts new miners to try their luck.
Since the process needs many resources, usually the miners come from companies with data centers and servers. With the help of numerous computers, they will create mining farms to try and get bitcoins for free.
Therefore, farms require huge amounts of energy. That’s why most mining farms are located close to energy sources. This is to make sure they get their electricity supply for their computers.
2. Home Mining
If we put the home mining with large-scale mining side by side, then it will look like David vs Goliath. This expression is not entirely wrong, because we can say it like that. This due to the high costs of mining will put the home miners at disadvantage.
Despite this drawback, home mining is reasonable. All you have to do is get a Bitcoin mining rig. This kind of rig will cost around 10 k.
But looking at the electricity cost, some said that home mining is less profitable. Further, some mining rigs are very loud, which will put you and your neighbor in discomfit. Also, they need a proper cooler system, or they will overheat.
Another option that you can take is by using cloud mining. With this process, you only have to rent a third party for some computing power.
Is Mining Bitcoin Legal?
The last question about this Bitcoin mining work is whether the process is legal or not. The answer will depend on where you live at the moment. Because some countries are open to the activity, yet some others ban it.
The most recent ban on this mining process is China. This is due to the Bitcoin miners consuming most of the electricity in the country amidst the heat wave.
In some countries, there’s no national-wide ban on mining activity, but the local government does. For example, in the USA, you have to learn what state bans it and what’s not.
Although how does Bitcoin mining work requires high resources and costs, many are intrigued by the idea. Because the promise of Bitcoin value is worth all the trouble.