How to Mine Bitcoin?

What Is the Definition of Mining?

As we all know, Bitcoin is one kind of decentralized cryptocurrency, the transaction made by people should be confirmed by "some people", also the security of Bitcoin ecology needed to be maintained by "some people". The "some people" are what we called "miners", when they use computers to do these things, actually, they are solving complex math problems on the bitcoin network, by doing this, miners will get new bitcoins as a reward.

To be more specific, when a transaction happened, its validity should be verified and confirmed. First, bitcoin miners will clumping transactions together in "temporary blocks", called candidate blocks. Then, the bitcoin miner will try to find a valid block hash( a special ID combine by numbers and letters) for the candidate block.

With the correct block hash of the previous block, candidate block's data, a nonce, and submit them through a hash function, the candidate block will be verified and miners can get the bitcoin rewards. To search for the right answer, the computer will non-stop changing the nonce and doing the hash function till it finds a solution to that block (Proof of Work). The process of finding out a valid block hash is also the moment that the blockchain transactions go from pending to confirmed. That's what people call "mining".

How Much Will You Earn From Bitcoin Mining?

The miner will get two kinds of rewards, one is new currency rewards for creating new blocks, another is transaction fees. The following features will influence the income of miners.

Bitcoin halving: Periodical halving events that decrease the block rewards provided to miners. The block reward is halved every 210,000 blocks (or roughly every 4 years). In 2009, it was 50. In 2013, it was 25, in 2018 it was 12.5, and in May of 2020, it was halved to 6.25. So the new currency rewards are decreasing. The max supply of Bitcoin is twenty-one million coins. Till 2020, 90% of Bitcoin has been generated, but it will take over one hundred years to produce the last 10%.

Hash rate: Approximately every 10 minutes, a new block will be mined, for every 2,016 blocks (approximately 14 days at roughly 10 min per block), to keep the average time between new blocks at ten minutes, the difficulty target is adjusted based on the network's recent performance. So it means the more miners there are competing for a solution, the more difficult the problem will become. The opposite is also true. Because of the popularity of Bitcoin, more and more miners are rush to complete these mathematical puzzles to get bitcoin rewards. That's why it is easy to get Bitcoin using your own computer in the early stage but almost impossible for individuals today. How to compete with others? The answer is to increase the speed of find out the right answer. That is, the speed at which the mining computer can produce random nonces and test them is an important figure. This figure is what we called "hash rate" and is key to the success of a Bitcoin miner.

Energy consuming: the mining machine will need a lot of electricity to operate, the price of electricity will decide the spend of running a machine. If you spent a lot on electricity than the value of Bitcoin, the earning will decrease.

What Are the Methods of Mine Bitcoin?

Cloud mining contract: You can join a mining farm, rent mining power from a mining farm. The owner of the farm will share the mining profit with you.
Using your own mining machine: Use ASIC mining rigs to mine by yourself.