The term Bitcoin mining is very popular but only a few people understand the true meaning of the process. Bitcoin Mining refers to a process of introducing Bitcoins into the Bitcoin ecosystem.it is an energy-extensive and cost acquiring process.
What is Bitcoin Mining?
It is similar to printing new currencies and introducing them in the market but not as simple. This process is governed by the rules of mathematics as the supply of Bitcoins is fixed. This process of producing a Bitcoin is call Proof of work and the complete process is called Bitcoin mining.
In Bitcoin mining, the miners have to find a valid Bitcoin block successfully through which the user gets rewarded in the form of Bitcoin. This process of mining is also called as the lottery as the miners win Bitcoins based on guessing which is constrained and highly educated guesses requiring a lot of cost and energy.
During this process, the miner has to make numerable attempts in order to guess the right code and if it is not correct, a lot of energy and cost are wasted from the miner’s pocket.
Proof of Work
Despite all the hardships, miners in the world guess the right code and add that block in the already built blockchain and receive the reward in the form of Bitcoin.
Thus, a lot of energy must have been wasted by the miner in order to make the correct guess. This process is known as the Proof of Work and for burning their energy and making the right guess, miners get the remuneration in the form of a Bitcoin which they can sell or hold.
Future of Bitcoin Mining
Bitcoin mining has evolved over the years. Initially, anyone should set up a complete node and start mining on his or her CPU to find a valid block.
However, today with the setup of Bitcoin exchanges, the process has become more difficult and costly as it requires a lot of special hardware to mine Bitcoins. With the addition of ASIC miners and GPUs, difficulty levels have risen to such high levels that it is not even profitable to mine Bitcoins. So, now mining is carried out in big Bitcoin mining farms where there is an availability of special hardware, electricity and cooling devices.