DEC 11, 2017 9:50 AM PST

Should You Try to Mine Bitcoin?

WRITTEN BY: Julia Travers

If you own any Bitcoin or have noticed the uptick in news of its value lately, you may be intrigued by the concept of Bitcoin mining. While it can seem like a mysterious endeavor, understanding the essential process and purpose of mining does not require in-depth technical know-how.

Bitcoin miner, credit: Mirko Tobias Schäfer/Flickr

Bitcoin is a digital currency that runs on the blockchain. The blockchain is a connected collection or network of records or “blocks” so in some ways it is similar to a traditional ledger. Blockchain technology is unique in that instead of being centralized in one hub, it is spread out over many different computers and secured with cryptography (the practice of encrypting and protecting information). Blockchain is also used as the basis for other cryptocurrencies and for the development of applications outside the financial realm.

Bitcoin users choose to donate their computer power to maintain the Bitcoin blockchain. The computers use complex mathematical puzzles to validate Bitcoin transactions, such as someone buying something with Bitcoin. Transactions typically start to be mined and confirmed within 10 minutes of initiation.

Miners compete to solve the puzzles associated with each transaction and validate them first because if they do, they receive both a reward of Bitcoin and a portion of related transaction fees. To “win,” a miner has to be the first one to solve a puzzle centering on a cryptographic “hash function.” A hash function is a type of encryption that takes an input and creates a random, fixed-length “hash value” to go with it, a sort of digital fingerprint without a key. Here is an example of a hash value: 46750fef 26f87ddd 5e15407f 45a0b8d2 9513291c 4e0f0acc 24a973de 907a1569.

Miners then use a hashing algorithm in an effort to be the first to solve the puzzle; “The aim of mining is to use your computer to guess until it comes up with a hash value that is less than whatever the target may be,” explains Ameer Rosic of the Huffington Post. It usually takes millions or billions of computer-generated guesses to do this. Once a miner is successful, this validates the transaction and it is recorded as another secure block in the public blockchain ledger. Whoever wins the block will get a reward of 12.5 Bitcoins.

At first, in 2009, miners who solved the hashing puzzles received 50 Bitcoin, but that number is halved every 210,000 blocks, or approximately every four years. Currently, a miner can receive 12.5 Bitcoins for mining one block. As of Dec. 11, 2017, that equates to about $204, 375. This high Bitcoin price has driven the current frenzy over buying and mining Bitcoin.

It is possible for anyone to download a mining app like Bitcoin Miner onto a home computer and start mining at home. Whereas early Bitcoin illustration, credit: public domainBitcoin miners earned thousands of Bitcoin each, the steep competition in mining has made it difficult for an individual miner with a laptop to earn more than Satoshi, the smallest units worth one hundred millionth of a single Bitcoin, named after its founder, Satoshi Nakamoto. Many early enthusiasts have expressed regret for selling off or losing track of their holdings in the cryptocurrency before its astronomic 2017 boom.

There is a limited amount of Bitcoin available to mine: 21 million. Also, Bitcoin is designed to be more difficult to mine over time. While about 80 percent is expected to be unlocked by the end of 2018, it could still take more than a century for all the Bitcoin to be mined, reports Matthew Field of The Telegraph.

CPUs (the central processing unit in a computer) and then GPUs (graphic processing units) were once primarily used, but the dominant current hardware are ASICs (application-specific integrated circuits) designed specifically for mining Bitcoin. Not surprisingly, Bitcoin mining is now a multibillion-dollar industry and many miners have formed mining pools to share computing power and rewards. Professional mining companies such as BitMain in China can mine a block in about eight minutes and generate millions in profits daily. Intensive, competitive Bitcoin mining requires a lot of energy, so for many solo miners or smaller-scale operations, it is very difficult to make a profit. As Bitcoin.org puts it, “it is not an easy way to make money.”

About the Author
  • Julia Travers is a writer, artist and teacher. She frequently covers science, tech, conservation and the arts. She enjoys solutions journalism. Find more of her work at jtravers.journoportfolio.com.
You May Also Like
NOV 13, 2019
Earth & The Environment
NOV 13, 2019
"Sea-thru" Algorithm Clarifies Underwater Photos
Have you ever tried to take photographs underwater, only to be sorely disappointed by the results? Pictures of vivid underwater scenery usually appear very...
DEC 11, 2019
Technology
DEC 11, 2019
An App Can Help Fight Drug Addiction Relapse
A computer game, on the verge of becoming a smartphone app, can use math to detect a patient’s comfort with risk-taking. Specifically, the game is ba...
JAN 15, 2020
Technology
JAN 15, 2020
Can A Computer Identify You By How You Dance?
We have heard of face and voice recognition software programs that work to ensure the identity of someone. But, now researchers are indicating that the way...
JAN 20, 2020
Technology
JAN 20, 2020
Open-Source Software Judges The Accuracy of Cancer Predicting Computer Programs
Cancers are generally composed of diverse cells that vary in genetics—these variations often make a particular cancer more susceptible or resistant t...
JAN 21, 2020
Technology
JAN 21, 2020
Expanding Microchip Storage with 3D Technology
Most recently engineers are utilizing 3D components on a standardized 2D microchip to use up to 100 times less chip space. Researchers added up to three or...
FEB 02, 2020
Space & Astronomy
FEB 02, 2020
Everything You Need to Know About Solar Orbiter
The Sun is something you see every day when you look up at the daytime sky, but despite residing right in plain sight, there’s still so much about th...
Loading Comments...