If you’ve heard of Bitcoin and other cryptocurrencies, you’ve probably heard of cryptocurrency mining, commonly known as Bitcoin mining. Bitcoin mining is the process of performing mathematical calculations to unlock, or “mine” new cryptocurrency.
Technically, this works for any cryptocurrency. In our examples, we’ll be using Bitcoin, since it’s the original crypto and still the most popular. That said, the same principles apply to any type of crypto. Let’s take a deeper dive into the process.
Bitcoin Mining Basics
Bitcoin mining is the way new Bitcoins are produced. It’s also the way that transactions are confirmed, and the blockchain remains constantly up to date.
In order to perform the task and maintain a secure blockchain, computers have to complete complex mathematical problems to successfully update the record. As a result, it takes many computers working together to solve the problem. The first computer to solve the problem unlocks the next block of bitcoins, and all computers begin solving the next problem.
For this reason, Bitcoin mining is not always rewarding. If you’re running a single computer, you could mine for years and never unlock a single fraction of a bitcoin. Or, you could fire up your mining rig, and unlock thousands of dollars worth of crypto in just a few minutes. It’s unpredictable, and if you’re using only one or two computers, it’s more like playing the lottery than an actual business.
Of course, there’s nothing wrong with mining crypto as a hobby. Millions of day traders play the stock market for fun and never earn a penny. If you’re a tech-savvy person, setting up a mining rig is straightforward, and might even be fun.
That said, it’s important to understand what you’re getting into. Otherwise, you could sink a lot of money into an activity that never pays off.
How Bitcoin Mining Works
When you mine Bitcoin, your computer generates a 64-digit hexadecimal number known as a “hash”. That hash is then compared with the target hash on the blockchain, which is invisible to the miners. The first computer to generate the correct hash is awarded the next Bitcoin block.
The good news here is that there isn’t any advanced math going on. Your computer is just continuously generating random numbers.
The difficulty comes from the fact that there are trillions of possible hashes, and only one will be correct. Not only that, but you’re competing with other miners to get the right answer first. This means you need a computer with a high hash rate. In the crypto mining community, this is measured in Gigahashes per second (GH/s), and sometimes even as Terahashes per second (TH/s).
So, What Is a Mining Farm?
A Bitcoin mining farm is an array of computers that are specifically designed for crypto mining. These are typically professional operations, with large server rooms and hundreds or thousands of computers.
That said, there’s no rule against creating your home crypto mining farm. The trick is to use specially-designed crypto PCs. These PCs typically have multiple slower processors, rather than a single faster one. They also often include multiple GPUs, which are ideal for getting the highest possible hash rate.
On the other hand, crypto mining isn’t always profitable. You need to make your system as energy efficient as possible, or you’ll spend more on your electric bill than you earn in crypto. You need also to mine a right cryptocurrency.
What Are the Benefits of Bitcoin Mining?
The main attraction of Bitcoin mining is fairly straightforward: you can earn Bitcoin. If your rig is well-designed and energy-efficient, you’re looking at an easy stream of mining rewards.
Bitcoin miners also provide value to the community. Because individual miners are verifying transactions, there’s no single, centralized authority. This increases public trust in the cryptocurrency since it makes it virtually impossible for any one person or business to dominate the verification process.
That said, there are plenty of ways to own cryptocurrency without setting up a mining farm. The most straightforward method is to simply buy it with fiat currency. There’s no such thing as a guaranteed return, but over time, Bitcoin and many other mainstream cryptocurrencies have tended to go up.
Another method is to accept cryptocurrency as payment for a product or service. There are even crypto blogging platforms like Steemit, with its STEEM currency, or video platforms like Odysee, with its LBRY currency. People can tip you with these currencies for your content. You can then exchange them for Bitcoin or some other currency on a crypto exchange.
So, why do Bitcoin miners get to earn Bitcoin? Clearly, they must be providing some value. The purpose of Bitcoin mining is to verify the security of transactions and prevent double-spending.
Double-spending is a problem unique to cryptocurrency. Think of physical cash. If you have a $10 bill and you use it to buy fast food, that $10 bill is no longer in your possession. You can’t go next door and use it to buy a pack of cigarettes.
With digital currency, however, someone might simply make a copy of the same piece of currency, analogous to someone making counterfeit cash. Then, they could spend the same Bitcoin over and over and over again.
When they’re checking hashes, Bitcoin miners are performing the digital equivalent of comparing the serial numbers on two pieces of cash. If the serial numbers match, at least one of the bills is counterfeit. By weeding out fraudulent transactions, Bitcoin miners ensure the integrity of the entire system. This isn’t exactly how it works, but it’s a good “TL;DR” explanation.
Choosing a Mining Pool Company
While you check the credibility of a mining pool or company, consider the following:
- Past performance. Has the mining pool earned rewards? This can be easily verified on the blockchain explorer. Check the company’s record of block rewards.
- Consistency. Is the company consistent in earning rewards and issuing payouts?
- Fees. Some mining pools impose high fees. This means you won’t be getting much in rewards.
- Payout frequency. Check the frequency of payouts to make sure you will receive your coins and rewards regularly.
What is Quidafund?
Hashpower is the computing power needed to generate cryptocurrencies. This is the product and service that Quidafund offers its customers. Hashpower provided by Quidafund is used to mine Bitcoin (BTC) and other cryptocurrencies.
Is Quidafund Legit?
How can you tell if a cryptocurrency player is legit? Quidafund provides real hash power for users. Quidafund also leaves banned markets and takes a compliant approach to new laws and regulations, adjusting to global markets.
Whether you are looking for a platform that provides mining plans or software to secure your Bitcoin, you need to work with a company that is committed to ethical business practices and abiding by local laws and regulations.
A great example of Quidafund’s commitment to compliance is its recent implementation of KYC, AML, and other compliance check processes.
Other Benefits of Bitcoin Mining
So, why else might you want to be a Bitcoin miner? To begin with, Bitcoin miners have voting power whenever changes are proposed to the Bitcoin network. If you’re already a Bitcoin holder and you care about things like forking, you’ll appreciate having a say in how the network develops.
Another potential benefit is that Bitcoin miners will someday be paid a set fee for their services. However, this won’t happen until the final Bitcoin has been mined, which won’t happen until some time around the year 2140.