( not recommended for novice or hobbyist miners)
Ok, now that you know exactly why you would want to mine Bitcoin, let’s get onto the bit I’m sure you all came here for – learning how to mine Bitcoin! There are three ways to start mining Bitcoin: When each Bitcoin is worth thousands of dollars, it’s a very strong incentive indeed! The Three Ways This makes it worthwhile to spend money on the electricity and computer systems needed to mine. They also get the reward of the fees that users include in their transactions. Miners unlock new Bitcoin when they add a block to the blockchain. Simple, right? Block Rewards and Miner Fees This collection of blocks in the sequence is the blockchain. It’s the single most important security feature that you need to know to know how to mine Bitcoin.īy including the hash of the previous block, the other miners on the network can verify that those transactions contained in a block did come after those in the blocks that went before it.
This guessing process is called “ proof-of-work”. Once correctly guessed, the miner can add the block to the chain. Each block contains the hash of the previous block, as well as a new hash that needs to be guessed. These characters are known as the “hash” of the block. Transactions are grouped into blocks and then a string of characters must be guessed by the miners on the network. When you submit a transaction to the Bitcoin blockchain, these miners need to check that you have the necessary Bitcoin to send it, and that various other rules are followed. The network is secured by specialized computer units called miners that are distributed across a large number of unique entities. It’s been designed to be trust-less money!īut wait a minute, if you don’t need to trust a bank, how do you know that people won’t cheat the network? How do you know that every Bitcoin can only be spent once? It’s no coincidence that Bitcoin was created just after the global financial crisis of 2008.
You only need to trust the code that created the network, and its rules. It essentially works similar to a bank’s ledger ( record of transactions). As you most likely already know, Bitcoin is a blockchain-based cryptocurrency.