Mining or how to get Bitcoin

Mining is a new way of earning. This word means the extraction of valuable minerals, but in this case it is a matter of extracting a digital currency.Such activities involve the creation of new blocks, with the possibility of receiving remuneration in the form of cryptocurrency, first of all, Bitcoin. If you want to become a member of the network, you need a high-performance computer that can manage with complex mathematical calculations and provide protection against re-consumption of the same units. The process of Bitcoin mining cannot be controlled by government agencies and banking institutions, nor is there a single producing center.

One of the main characteristics of mining is security and data protection, since the users confirm themselves all committed transactions that are formed as blocks, shaping a chain called blockchain.

Mining is a technology that creates new blocks, but there are other options. An alternative is considered to be Forging, or in other words, the Minting, ICO. Most often, only one technology is used, but combined variants can be used in some cases.

How Bitcoin mining works

Bitcoin system allows the generation of new coins, thus ensuring the emission of cryptocurrency. Each user of the network can receive a reward for the created blocks. Thus, the new bitcoins gets the one who created the new block by executing the transaction. The probability of making a profit depends on the value: the ratio of the miner’s network power to the entire network power. If the value obtained is small, the reward amount will be extremely small.

The received reward can be used after 120 confirmations were made, and the network will give an opportunity to spend it with the passing 20 hours after receiving it. To summarize, we can say that if miner uses more new capacities, he will have more reward.

The search for optimal equipment, which is also known as a crypto mining farm, was long enough. Initially GPU GPUs and FPGA different graphics processors were used for this process, which had the same productivity as video cards, but they were more energy efficient.

However, the expected result was not obtained. After that, ASIC processors began to produced specially for this; the main function of which was exclusively the calculation of hashes for the Bitcoin network. They were much more productive and energy efficient than their predecessors.

In 2012–2013, mining of the most popular cryptocurrencies became unprofitable for users, as electricity costs significantly exceeded the received income. For this reason, in 2015, the complexity of Bitcoin mining increased ten thousand times. And this contributed to the emergence of cloud mining, when the user can rent computer capacities of the company, without the need to install them at home and pay huge amounts for electricity consumption.

Cloud mining has significant advantages over the usual production of traditional cryptocurrency mining. You can verify this right now if you familiarize with the service CredoMine. Also at registration you can receive 1000 GigaHash as a gift.

In general, every six months new improved chips appeared, which improve productivity of this process. After miners switched to ASIC, the companies increased the scale of the cryptocurrency mining. They began to place large equipment in various locations around the world, where electricity bills don’t differ in large amounts.

Also, many located buildings with mining farms in places with low air temperature, in order to avoid possible overheating of the equipment. For example, the most popular place for large-scale mining is Inner Mongolia (China).

After the result was achieved and the companies received the expected amount of cryptocurrency, they began to position themselves as cloud companies. This gave them the opportunity to lease their equipment, thereby attracting a much larger number of users to this process. Accordingly, they were able to earn several times more, as they provided rental capacities and earned by themselves thanks to such large-scale farms at the same time.