Bitcoin Mining: What Is This? How Can You Earn Money?

12.03.2016

When Web was just a secret development of American scientists and didn’t cover the globe with its invisible net, its developers didn’t suspect that after several years millions of people would consider Internet as a main source of income. The virtual world became an employer of a global scale. One of the types of earnings is Bitcoin mining. What is this? What is its concept? How many bitcoins can you earn through mining?
 
What is Bitcoin?
Bitcoin is a cryptocurrency, a unique creation of human mind. It is born, exists and develops in a virtual mode and doesn’t have its material equivalent. Cryptocurrency is generated as a result of efforts of users who install special software on their PCs and offer computing powers of their machines.
Professional software for operations with Bitcoin can be divided into two types:

  • Mining software.
  • Bitcoin-wallets.

The first type is used to carry out operations confirming payments and mining cryptocurrency. The task of wallets is storing the alternative monetary unit and carrying out some operations for its usage for specific purposes.
Besides mining there is one popular method of getting Bitcoins – purchase of bitcoins with fiat money. More and more people across the world buy bitcoins considering it as the best way of saving their money.
 
Concept of cryptocurrency mining
Literally, mining means ore extraction, and in our specific case it means extraction of the cryptocurrency. Popularity of this kind of income is explained by growth of Bitcoin exchange rate and rise in unemployment in conditions of raging economic crisis. The key principle of mining: through building hash-blocks the program generates Bitcoin units.
It is difficult to explain to ordinary users what Bitcoin mining is. In simple words cryptocurrency mining can be described as following: a vast number of computers spread unevenly all over the world simultaneously make calculations to solve complex equations. Due to implementation of unlimited computing powers Bitcoin, which resources are limited, is generated. Bitcoins represent a reward for a miner who discovered a new block.
Mining principles
The key principles of mining system include:
- Lack of centralized control system.
- Anonymity. Impossibility to keep tabs on system users.
- There is a special algorithm for system operation that allows extracting a specific amount of bitcoins. Cryptocurrency issuing is limited. Despite the fact that capitalization has already exceeded 6 billion dollars it continues growing due to mining acceleration and increase in the exchange rate of virtual coins.
Earned bitcoins can be not only stored (in the long run they have all chances to become the main reserve currency replacing traditional fiduciary money) but also exchanged for various goods. There are different online-resources used for conversion of the cryptocurrency. As for exchange for products, more and more Internet-shops accept alternative e-money.
 
Secrets of profit-making
To get profit through mining, like in any other business, you have to make investments, first of all, into computing units. Please note that Bitcoin mining requires a very powerful computer. Moreover, you will need an up-to-date graphics card.
For the moment there are many challenges in bitcoin mining. Some of them are:
- High power expenditures for performing calculations that result in heavy energy costs.
Ignorance of major principles of cryptocurrency mining. Many people believe that this kind of income is accessible only for specialists. In fact, everybody can master Bitcoin mining.
- Increase in frauds of various kinds complicates the process of searching and purchasing of high-quality equipment for work.
 
Reasonability of mining
 
To determine profitability of industrial cryptocurrency mining we have to take into consideration the following factors:

  • Energy costs.
  • Maintenance costs.
  • Commission of money-transfer systems charged for conversion of earned bitcoins into fiduciary monetary units.
  • Fluctuations of Bitcoin exchange rate in comparison with other currencies.

Are there any prospects?
 
During early times miners faced fewer difficulties during bitcoin extraction. With boost of popularity and exchange rate mining was professionalized, so to earn a decent amount you have to purchase rather expensive equipment. Intensity and rate of mining grow very quickly that is why mining equipment becomes outdated in a very short time.
Joining crowded army of miners you have to realize that cryptocurrency generation is limited. Bitcoin mining becomes more and more complex yearly.
Ordinary miners have developed a collective mining method. They unite in pools. Consolidation of smaller computing powers into a single conglomerate increases chances of participants to earn more virtual coins.
 
There is only one efficient method of cryptocurrency mining – use of professional expensive equipment bought from your own savings or rented from specialized companies involved in Bitcoin mining.
Understanding of what Bitcoin mining is and knowledge of how the process works does not guarantee steady income. Problem solving requires the whole set of factors: understanding of operation principle, availability of powerful equipment and intention to earn money. Despite all difficulties, cryptocurrency mining with computing units is still in-demand and able to bring in returns.
 
Regardless of challenges, it is possible to become an amateur miner and extract bitcoins at leisure, in-parallel to your main job. Taking into account how much time we spend with computers, it is reasonable to earn bitcoins through collecting small amounts in satoshi (fractional currency of bitcoin).


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