If you’re curious about trying Bitcoin mining, know that you’re delving into a fascinating but complex world.
Bitcoin mining requires a significant amount of resources, such as energy and specialized hardware, and it’s not a practice that can be improvised, not alone. In this article, we will guide you through the discovery of this world, revealing all the details about how it works, why it is important, and what the earning opportunities are.
As you read, you will realize that mining is, nowadays, undoubtedly a difficult activity that requires advanced technical skills and a significant amount of resources. But not all is lost for those who want to start this activity. A clue? SWAG
- Bitcoin Mining: what it is and how it works
- Deepdive: the halving
- What effect will the fourth halving have
- How to mine Bitcoin
- Deepdive: difficulty
- How to mine Bitcoin in 2023
Bitcoin Mining: what it is and how it works
Bitcoin mining is the process by which new Bitcoins are extracted and transactions are verified on its blockchain. The term “mining” comes from the fact that this process requires significant computational effort, similar to what a miner must do to extract gold or other minerals from the ground.
Transactions on the Bitcoin network are confirmed through a distributed consensus process, known as proof-of-work (PoW). This process requires miners to solve a very complicated cryptographic hash algorithm. When a miner successfully solves the algorithm, they are rewarded with a certain amount of Bitcoin, and the transaction is added to the Bitcoin blockchain.
But that’s not all, the miner who validates a block also earns all the fees paid by the senders of the transactions included in the block.
Bitcoin miners play a critical role in this process, as they verify transactions and include them in a block of transactions that is added to the Bitcoin blockchain. Because this activity is so important, the Bitcoin protocol ensures that it is well rewarded.
For each new block, currently 6.25 BTC, equivalent to approximately $100,000, are put up for grabs, which are awarded to the miner who manages to confirm the block by extracting the correct hash.
It is essential to know, however, that the maximum number of BTC in circulation can never exceed 21 million. Once that threshold is reached, production, i.e., mining, will stop forever.
However, there is a mechanism, called “Bitcoin halving,” that has a profound impact on reaching this threshold. Halving, in fact, slows down production rates, preventing the immediate attainment of 21 million and making the currency less exposed to depreciation risks.
Deepdive: the halving
With the halving, the miners’ reward is simply halved and the number of BTC entering the market decreases. As a result, their value tends to increase.
In the next halving, which should occur around 2024, the production of BTC will be halved: currently about 900 bitcoins are created every day, but with the halving the production process will only be able to produce 450.
For this reason, this mechanism has always generated a lot of enthusiasm in the crypto world. In fact, the halving is an event that makes Bitcoin an anti-inflationary cryptocurrency and for this reason, it is typically also an anticipator of a significant price increase.
What effect will the fourth halving have?
After the 19 millionth Bitcoin block, “730002,” was extracted on April 1, it became clear that there are only 2 million BTC left before reaching the limit of 21 million Bitcoin. The reduction in supply usually leads to an increase in demand, which implies that prices could soon increase.
In the past, Bitcoin halving events have been followed by gradual and significant price increases over time, culminating in about a year and a half. If the same thing were to happen with the next halving, Bitcoin investors will be particularly pleased.
The most likely hypothesis is that the bullish price action will be repeated based on the past halvings of July 2016 and April 2020. In both cases, Bitcoin experienced bullish trends in the 15 months leading up to the halving, and in the same month as the halving, it was traded more than 30% higher than the previous halving.
How to mine Bitcoin
As one can easily understand, mining is indeed a competition because the reward is collected only by the first miner who finds the validation hash.
Since these hashes are extracted randomly, those who extract more have a greater chance of finding the correct one that validates the block and thus collecting the reward. This competition starts again every ten minutes or so because as soon as a block is validated, hashes are extracted to try to validate the next one.
To mine Bitcoin, you need to have machines capable of extracting as many hashes as possible.
Although computer CPUs or at most particularly powerful graphics cards were sufficient in the past, these tools have not been competitive compared to ASICs (Application Specific Integrated Circuit) for several years now.
These machines do only one thing: they extract hashes. Those who mine using less powerful machines such as computer CPUs or graphics cards can extract only a limited number of hashes, greatly reducing their chances of confirming a block.
We can therefore say without a doubt that only those who use ASICs possess sufficient computing power to be competitive.
To ensure that a block is mined approximately every 10 minutes, the Bitcoin protocol provides for an update of the so-called difficulty about once every two weeks.
This term refers to the difficulty of finding the right hash that confirms a block.
When the total computing power allocated worldwide for Bitcoin mining increases, the average time required to extract the right hash decreases. At that point, the difficulty increases in order to bring the average duration of this process back to 10 minutes.
Of course, the opposite also happens, meaning if the computing power decreases, then the difficulty also decreases.
So, there will always be only one new block to mine approximately every 10 minutes, regardless of how much computing power is used, whether it is a lot or a little.
The computing power allocated to Bitcoin mining is technically called hashrate.
It is useful to know that when the difficulty increases, so does the electricity consumption and therefore the costs. The reward, on the other hand, remains unchanged, so beyond a certain level of costs, miners stop adding computing power. The opposite also holds true, meaning if the difficulty decreases, the consumption and costs decrease as well.
Become a Bitcoin Miner in 2023
Nowadays, Bitcoin mining has become such a difficult and costly activity that only professionals in the field or those who rely on them are able to make a profit.
Our advice is to rely on those who manage thousands of machines in the main international mining farms on a daily basis. Those who have created a powerful community capable of obtaining the best economic conditions. Those who have invested seriously and concretely in performant and real machines. In a word, SWAG!
Swag, in addition to providing the best hashrate available on the market, offers the possibility of renting fractions of real machines by modulating the cost of access to the service. From fixed extraction fees to variable extraction fees, through structured accumulation plans. A complete offer suitable for all types of users.
Once you have selected the machine and the duration of the contract, you only need to check the messages you will receive every day to stay updated on your investments.
You will then be able to know the amount extracted in BTC and check it directly on your Swaggy wallet balance, a unique tool to manage your transactions with maximum reliability and with the support of the most advanced technology available.