In the early 2000s, if someone asked you what mining was, your answer would be vastly different to the one you’d give today. You would say that mining involved men and women donning their safety suits and hardhats with torches, heading into a coal or gold mine. They would then mine for gold and coal before receiving their paycheck at the end of the working week.
Today, however, mining is far less dirty and takes far more brain power than physical labor. It also doesn’t just involve coal or gold, either. Mining, when you refer to the process of “unearthing” Bitcoin, Ethereum, and other similar coins, can easily be considered entirely different altogether.
In this article, we’ll be talking about mining for Bitcoin and how it all works.
Why do you need to mine for Bitcoin?
Just like gold and coal, Bitcoin, while only digital, doesn’t appear in the cryptocurrency market on its own. It has to be “unearthed” by a miner. However, there is a set number of Bitcoins ever to exist, and this will be capped at 21 million. There are only four million Bitcoins that are yet to be mined, and after they are, the mining process is over. However, Ethereum, which is mined similarly, does not have the same limit and you can mine it finitely.
What does mining for Bitcoin involve?
Nodes, and lots of them. Nodes are computers that run Bitcoin software and help to keep Bitcoin running. It doesn’t take an expert miner to run a node, but it does take a significant amount of energy. All you need to do is download free Bitcoin software, leave a port open on this software and let the nodes work their magic. However, given the draw of energy and space, you do have to make sure your computer is up to the challenge. The network is only growing bigger, with storage space of over 167GB needed.
The role of these nodes is to spread the transactions from Bitcoin around the network. Just one node is all it takes to send information to other nodes before the data is spread throughout the entire network. Now, this is where miners come in. There are two types of nodes – standard, and mining. Mining nodes group transactions into blocks on a blockchain by completing mathematical puzzles.
These puzzles aren’t as simple as 1 + 1. In fact, they are exceptionally complex. Miners must find a number, known as a nonce, that they can combine with data in the block to be passed through a hash function. That number can be anything between 0 and close to 4.3 million.
How can you solve the puzzle?
Given that choosing the correct number out of close to 4.3 million numbers to match up with data in the blockchain doesn’t seem possible, it’s easy to get confused how these miners are successful. Choosing the correct number sequence is purely through random guesswork. The hash function that number passes through makes it impossible to predict with any form of equation, so it’s a matter of guessing and applying the hash function to that number.
If that isn’t confusing enough, the hash has to have a set amount of numbers at the beginning, and two different number sequences may work – or none at all.
Once the number sequence has been guessed – which believe it or not, does happen, then that miner must alert the rest of the network to their success. That way, everyone else who was working on the same block can start a new one. The prize for guessing? Bitcoins. Bitcoin has been known to reach up to $19,000 in value, so there’s every reason to give the mining process a go.
Mining for Bitcoin can earn you as much as 12.5 coins which in the first quarter of 2018, could make you a little over $100,000. While it might seem like a substantial amount of money, those looking to mine must take into account their power usage as well as the time it takes to complete those mathematical puzzles.