You must be hearing terms such as bitcoin mining , miner’s income and digital currencies a lot these days. We know many people who earn money in this way and have benefited a lot from miner’s income. Yes, today the market of cryptocurrencies and digital currencies is one of the most prosperous commercial markets. If you step on this path with sufficient training and awareness, they can bring you good profits. You can earn a decent income by mining bitcoins with miner devices. In the continuation of this article from the University of Business, we provide explanations regarding Bitcoin, digital currencies and miner devices, and we examine the working routine of a miner device. Join us at the University of Business.
What is Bitcoin?
Bitcoin is one of the most discussed, successful and profitable digital currencies. This currency is actually a decentralized digital currency and has differences with common currencies. From the beginning of the creation of Bitcoin until today, a large amount has been added to the value of this digital currency, and this currency is known as the most profitable digital currency and the most profitable asset in the world; But the question that exists is, how are these decentralized online currencies that are not affiliated with any particular institution or organization produced?
This is where we come to the discussion of miner and mining of bitcoins and cryptocurrencies. Bitcoins are generated and mined decentralized by many devices and computers around the world and their transactions are processed. With this type of mining that is done online, everyone around the world is allowed to mine and can earn miner’s income.
Bitcoin can actually be called digital money . In fact, it is an unbacked currency trying to make its way into the markets and payment system. Today, some countries have decided to consider Bitcoin as the official currency of the country so that people can do their transactions based on it.
How to mine bitcoins?
As we said, digital currencies like Bitcoin allow people anywhere in the world to extract and in the term mining, and do not consider any limitations in this issue. It is the users who manage and control it. So, in addition to buying and selling Bitcoin, people can also mine it.
Bitcoin mining, as the name suggests, means digging. In fact, mining is the process of producing and processing Bitcoin transactions.
To start this work, we need a miner device. These devices, which are also called ASICs, along with electrical equipment, are basic requirements for mining Bitcoin and making miner’s income; Because you need high electrical energy to perform this activity. If you decide to mine Bitcoin on a large scale, you need other peripheral equipment to start this activity, including proper ventilation.
In the past years, Bitcoin extraction and mining were done in simpler ways. That is, we could do this activity using not so advanced computer systems. These days, however, this operation is more difficult and is not possible with simple systems. To earn money, we need special devices for this work, namely miners.
What is a miner and how does it work?
The miner device is an IC or integrated circuit for special applications, which, as we mentioned, is also called ASIC. These devices are designed in such a way that they can perform the calculations required to extract digital currencies or bitcoins and help us in extracting them. These devices have many types and are produced by different manufacturers. Miners actually produce unmined bitcoins and people can make money from the transactions made through them and their sales and earn high profits.
The act of mining leads to an increase in the security of the set of cryptocurrencies and the decentralization of their production network. In fact, in the mining process, confirmed transactions are collected and coded in blocks. These encodings help these blocks to be combined with other blocks, and miners must decode and solve these encodings in this process. The devices that can solve these codes and coded puzzles the fastest will be rewarded. This reward is the digital currency. Of course, detailed and specialized explanations of miner’s working process may seem a bit complicated; But the miner device is an IC programmed to perform the same actions.
What are the factors affecting miner’s income?
One of the important issues in this field that may have occupied your mind is the amount of miner’s income and how it is calculated. What is the profitability of mining? Is making money in this way associated with risk ? Is miner’s income guaranteed and fixed? In the continuation of this article, the University of Business provides explanations in this field.
First of all, you should pay attention to the fact that earning money through Bitcoin mining is not always guaranteed and risk-free. This activity, like many other things, has certain principles that you must follow. If you engage in this activity in principle and with full knowledge and training, miner’s income will be good for you. Otherwise, you may lose your initial capital. In any case, Miner’s income is not a guaranteed monthly income, and you will not earn any profit from this work until the amount of expenses invested by you at the beginning of the work is returned. Important factors are effective in calculating the miner’s income, the most important of which are mentioned below.
The type of miner device and its power
One of the factors affecting the miner’s income is the processing power of the device you use. The manufacturers of these devices are constantly improving the processing power of these income generating ICs. As this progress increases, older devices become obsolete. In the same way that years ago with a normal computer and their CPU or graphics card, we could mine Bitcoin; But today, we do not benefit from this work. The power of miner devices is called hash rate. The higher this rate, the higher your profit and the faster the return of your initial investment.
Effects of electricity price on miner’s income
The amount of electricity consumed by a mining device is one of the factors that should be considered when buying a device, in addition to the hash rate. A lot of electricity is consumed to mine bitcoins and cryptocurrencies through these devices. The cost of electricity generated may affect how much you profit from mining and trading between coins. So it is better not to pay attention only to hash rate when buying a device; Because miners with a high hash rate usually have a higher share consumption and you must be able to afford the side costs.
The value of Bitcoin in the cryptocurrency market
As you know, after performing the mining processes and working with these devices, you receive your miner’s reward and income in the form of Bitcoin; But Bitcoins are still not accepted as a currency for transactions in countries and you have to convert your digital currencies to the country’s current currencies. Therefore, the value and price of Bitcoin in the digital currency market is very influential on the amount of your profit, and sometimes you may have to temporarily stop the mining process due to the low price of Bitcoin and the high cost of mining.
Bitcoin mining difficulty and the effect on miner’s income
In the mining process, a unit called difficulty is defined. As normal, new digital passwords are generated every 10 minutes; But if a more powerful device enters the field and can reduce the processing process, this time will be reduced to a smaller amount and powerful devices will mine faster. At this time, you may have to update your devices to reach them. The higher the mining difficulty, the miner’s income may decrease significantly.
A look at Bitcoin mining methods and Bitcoin miner income
Let’s break down the mining process to understand how it works and what is required to start the process. Follow the business university team until the end of this article.
Launch powerful hardware resources
Before a miner can begin the process of mining bitcoins, he must set up his rigs in terms of powerful computing resources and other special tools to effectively solve complex puzzles. As mining hardware, you need Graphics Processing Units (GPU) with advanced graphics cards, Field Programmable Gate Array (FPGA) or Application Specific Integrated Circuits (ASIC) for efficient and effective mining. Currently, ASIC-based hardware is the most advanced hardware and is capable of generating huge amounts of hashes per second. However, such advanced hardware is expensive and may cost you thousands of dollars.
Installing mining software and electronic wallet
Apart from powerful hardware requirements, miners need special software such as CG miner, XMR miner, multiminer. Many of these software are free and can be run on Windows and Mac computers. Once the software is connected to the necessary hardware, everything is ready to mine Bitcoin.
A miner also needs an e-wallet to store his rewards as bitcoins. A bitcoin wallet is a digital place that makes it easy to store, transfer and accept bitcoins or other digital currencies.
Miner’s income from mining pool or individual mining
Miners can choose whether they want to mine individually or use a pool to mine. Since mining alone is not easy, mining pools were invented. In a mining pool, groups of miners are formed together to deal with increasing mining difficulty. In this way, each miner gets paid for his share of work.
Mining Bitcoin in a pool with combined computing power also improves mining efficiency by reducing the difficulty of mining to solve a block. This also increases the participation of small miners to have a chance to earn Bitcoin, even if they only receive a certain portion of the reward. Never forget the following formula:
More secure + reliable network = more miners
Types of Bitcoin mining and miners’ income from it
Bitcoin mining can be done in different ways and forms, each of which offers different levels of hash power and block rewards, or miner’s income. Below we have briefly explained the different methods that exist for mining bitcoins.
CPU extraction and miner’s income from it
When Bitcoin was launched and first mined in 2009, it was mined through central processing units (CPUs), also known as the brains of computers, which contain all the circuitry needed to process input and output results. In the early days of Bitcoin, it was easy to mine via CPU because there were very few miners and Bitcoin was still in its infancy.
Miner’s income from GPU mining
As the adoption and popularity of Bitcoin increased over time, along with the competition between miners, GPUs were used to mine Bitcoin. GPU-based systems, mainly used for modern gaming and video editing, are more efficient than CPUs for mining with better hash rates. The first GPU mining software was launched in 2010. However, Bitcoin mining was relatively short-lived and was replaced by a new type of ASIC hardware by 2015.
ASIC extraction and miner’s income from it
ASIC is a type of hardware designed only for mining digital currencies. This hardware was launched in 2012 and proved to be 200 times more powerful than mainstream GPU miners. However, ASIC mining rigs are very expensive, currently ranging from $2,000 to $15,000. With varying power consumption and electricity costs combined with network issues, ASIC miners can be very expensive to purchase. This issue reduces the miner’s income.
Miner’s income from FPGA mining
FPGA stands for Field Programmable Gate Array (FPGA) which is a better choice between GPU miners and ASIC miners in terms of speed and cost efficiency. These hardwares are also able to stabilize strong hash power; Because it is not supposed to; Like ASIC miners, they are locked in mining a specific coin or algorithm. The type of hardware technology gives the miner the flexibility to use a reset if your mining activity changes with something else. FPGA miners are good options for cryptocurrency enthusiasts who don’t want to invest huge amounts of money in mining hardware. Using FPGA is highly recommended for miners who do not have a lot of initial capital. Miner’s income with this hardware will be very good.
Cloud mining and miner’s income from it
This is the latest method of Bitcoin mining where a miner can purchase a cloud mining service or contract with a cloud mining provider that specializes in cryptocurrency mining rigs. Cloud mining facilitates Bitcoin mining without incurring the exorbitant costs and maintenance requirements of mining hardware. But to avoid any kind of scam or fraud, you should be very careful to choose a reputable cloud miner. The miner’s income from this method is a good income; But fraud happens a lot in this way.
Is bitcoin mining profitable? What is the miner’s income?
Bitcoin mining may sound profitable, but is it really? The inventor of Bitcoin, Satoshi Nakamoto, created Bitcoin mining in such a way that the more powerful the mining network, the harder the mathematical problem to solve. Therefore, the difficulty process is regulated by the combined mining power possessed by the entire network. Simply put, if more miners compete, the puzzle will be more difficult to solve. This arrangement was done to maintain stability and create a constant flow of new bitcoins to control inflation . The mining difficulty is set so that a new block is added every ten minutes on average. Therefore, the more the number of miners in the world, the income of miners will decrease in the same proportion.
Can miner’s income be considered as a fixed income and job?
Well, people generally think of Bitcoin mining as a profitable investment. However, it should be noted that Bitcoin mining is certainly not a get-rich-quick way and at the same time, you need to be technically skilled and equipped to perform the complex process of Bitcoin mining. It also requires huge investments in expensive equipment with high computing power as well as reliable internet and electricity. Therefore, it is always advisable to do some research on the activity you are trying to do before losing all your hard-earned money.
Bitcoin benefits and Bitcoin miner income
Compared to traditional currencies, assets can be transferred faster on the Bitcoin network. The system also has lower transaction fees because it is decentralized and there are no intermediaries, and it is cryptographically secure; This means that the identity of the sender and receiver is kept secret and it is impossible to forge or hack transactions. Plus, all information is available on a public ledger, so anyone can view transactions.
How to mine bitcoin at home and earn a miner’s income?
Bitcoin mining at home is challenging and requires certain steps to achieve good results. The first step is to set up the hardware properly and try to get a strong power connection . One can then create a mining wallet on any trading platform of their choice and join a mining pool to continue. The most important step is to install an effective mining software such as Awesome Miner, Easy Miner and Pionex and then enter the wallet details and mining pool information.
However, the hardware required for mining is expensive and not everyone can afford it. In addition, Bitcoin mining requires a lot of electricity. Only people with access to cheap electricity can mine Bitcoin at home. Therefore, mining bitcoins at home can be profitable, but it requires resources and efforts that cost a lot.
How much does a miner currently earn?
Bitcoin halving refers to the halving of the rewards for each block, meaning that the miners’ reward for discovering a block is halved. The halving exists to reduce the rate of Bitcoin inflation and the rate at which new Bitcoins are released into circulation, keeping the price of Bitcoin stable. The halving event happens after every 210,000 blocks are mined, which is approximately every four years. The number of bitcoins in circulation is calculated by the halving theory proposed by Satoshi Nakamoto in the Bitcoin protocol.
When Bitcoin was first launched, the reward for each mined block started at 50 Bitcoins. To date, three halving events have occurred, and the block reward has increased from 50 since 2009, 25 since 2012, 12.5 since 2016, to the current 6.25 bitcoins since 2020. The last Bitcoin halving event took place on May 11, 2020.
As of September 2021, 18.828 million of the cap of 21 million Bitcoins have been mined and circulated, which is approximately 89.7% of the total Bitcoins mined. The next Bitcoin halving event is expected to be held in the early months of 2024. Halving must continue until all blocks are mined and the Bitcoin supply cap of 21 million is reached in 2140. After this, Bitcoin miners will only earn mining income from transaction fees.
Is bitcoin mining legal?
No and yes! Even though Bitcoin has gained widespread acceptance around the world, it is still highly contested in some countries due to its decentralized nature and high volatility and energy consumption. In countries such as China, Russia, Bolivia, Algeria, and Ecuador, Bitcoin trading is either restricted or outright illegal due to its decentralized nature, volatile value, association with criminal activity, and several other reasons. In other countries, the legal status of Bitcoin is unknown. Bitcoin is widely accepted and traded in European Union countries such as Finland, Germany, France, and others, as well as the United States, Canada, Australia, and the United Arab Emirates. Only one country, El Salvador, has accepted Bitcoin as legal tender.
Digital currency markets are very profitable and booming these days, that’s why many people are leaning towards these markets. Also, apart from buying and selling activities in this market, some people mine Bitcoin using a miner device; But you should note that this activity also has principles that need to be learned before entering it. Entering without knowledge may result in losing your initial investment. In order not to suffer in this market, you should use the experiences of others and avoid emotional activities.