Mommy, Where Do Bitcoins Come From? Bitcoin Mining Explained

“Mom, where does Bitcoin come from?” Okay, you see, when a shiny young bitcoin catches the eye of an aspiring miner, and because they love each other so much …

Wait, this is obviously very difficult to solve here. Also, my whole goal is to keep things simple. However, Bitcoin is created by solving complex math problems. This is done by a powerful machine built to solve these math problems. This process is called mining. Those who own these machines to make money from Bitcoin are called miners. When a batch of problems are solved it is known as a block. Blocks are verified by other users and once verified, they are added as block chains. This chain continues to grow with the addition of a new block approximately every 10 minutes. This chain is truly a master laser that will continue to grow and never end.

Very powerful machines that give the miners a lot of power and run the monthly utility bills of the miners. It takes so much energy because of the math talent involved. Mining machines are needed to perform complex cryptographic algorithms. Once a math problem is solved by the machine, a block of coin is born. Each time 210,000 blocks were created, the prize for mining was halved. It takes 4 years to complete. So it’s a bit like the Bitcoin Olympics. Currently the block prize is 12 bitcoins (on June 23, 2020 the prize will be only 6 coins). The coin goes to the mine whose machine was the lucky lottery winner at the time. There is one winner every 10 minutes. Lots of miners are competing there too. Says mining now has some value. Mine enough coins and you pay your electricity bill and then some.

There is also another way to mine. This is called cloud mining. With this type of mining you are paying to use someone else’s network and this significantly reduces your profits. The positive side of this method is that it does not require you to use electricity or even buy a machine.

I feel good. I want to start digging now. This is a good idea and can I make a passive income on a regular basis? Probably. Hold on tight for now and you can make that call later.

Let’s try to break it.

To get back to the basics of machine mining, you need to start with buying a quality mining machine. This will give you back about 2,000. Here is a picture of a good machine (from Bitmain to Antminer S9) capable of creating a high hash rate of 14 TH / s. 1 TH / s is ,000 1,000,000,000,000 hash per second This machine does 14 times. That’s a lot of hashing power. A hash is a really long number that the machine generates every time it tries to solve the algorithm. Again, to use my lottery analogy, all these machines have moved away in the hope of being the next winner.

Then, your chances of winning become more difficult with more competition. This complicates the matter so that every time a math problem is solved, the next problem becomes increasingly more difficult to solve. Bitcoin network difficulty varies roughly every two weeks or 2,016 blocks. The number of bitcoins that will ever be created is finite. This number would be 21,000,000. Once we hit that number, bitcoin can never be mined again. However, the blockchain itself continues to expand as it is used to verify every transaction or purchase.

Remember that pseudonym Satoshi Nakamoto that I also wrote? Did you know that today’s math problems are 70,000 times more difficult for machines to solve than the 1 bitcoin we dug in 2009 ?! It is estimated that the final coin will be mined in 2140 as the system halves every four years (210,000 blocks). Already 16,400,000 coins have been mined (78%) and from here each coin will be mined much slower. Yes, you read that right. Originally 80% was excavated in the first 8 years and it would take more than 100 years to excavate the final 20%. If any of my great, great, great grandchildren have read this, I hope you sit nicely with our family’s bitcoins which are now worth 220,000 per bitcoin. We can all dream!

Buying a machine for mining or buying a mining cloud contract is risky. While there are some great success stories out there, be sure to research them thoroughly before deciding if the mine is right for you. To make money for everyone, a lot of people are losing money.

However, a great place to visit all the cryptocurrencies out there and their total coins and market caps, the Coin Market Cap is a great resource. You will see all 700 plus fly-by-night altcoins there. An altcoin is another way of saying a cryptocurrency coin that is not a bitcoin. By now you probably know that Bitcoin is like the Rose Bowl, the grandfather of them all! I will really try to limit my focus and research to the top 10 now. Not that there aren’t success stories from one of the almost worthless ones right now. It’s just like finding the right penny stock to find one. Sticking with established companies recognized by mainstream analysts is a much safer game. The same goes for the exchanges you use for buying, selling and trading. This is why I use Coinbase to do my business because they are the most reliable, secure, and convenient exchange. They also have the most thorough verification process for adding altcoins.

Here is a summary of the main points of this article:

– Bitcoin is made from mining

-Mining is done by powerful machines that solve complex math problems. If you do not want to buy a machine, you can buy a deal called Cloud Mining.

– Coins are mined and problems are exacerbated by declining production rates

As of May 2017, only 72 bitcoins have been mined per hour (12 per 10 minutes).

– On June 23, 2020, it will again halve to just 6 every 10 minutes created

-Lite number of bitcoins about 80% of 21,000,000 coins have already been mined

– Competition among miners and increasingly complex mathematical problems make it more difficult to turn a profit into a mine

– The final coin is estimated to be mined in 2140

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