It is reported that what is Bitcoin mining? Is Bitcoin Mining Worth Digging in 2022? In recent years, as mining has led to a worldwide shortage of video cards, many people have begun to pay attention to Bitcoin. For novices, it is unclear what Bitcoin mining is and whether it is worth it. Let's learn about Bitcoin mining.

What is Bitcoin mining?

Although many cryptocurrencies have been mined, our focus will only be on Bitcoin, becoming the first cryptocurrency to put algorithms into use and promote this concept in the industry.

Bitcoin miners use high-performance equipment to solve complex computational math problems. This process is driven by the following factors. The consensus algorithm of "proof of work" is the backbone of Bitcoin blockchain. Miners verify and verify transactions and charge a fee for this (at BTC). This ensures that there is no duplication of expenditure and false transactions.

They also package these transactions into blocks and add them to the network (hence the term "blockchain"). For this purpose, the winning miners will receive a bonus. This reward is halved every four years, which is called

Bitcoin halved

Every four years, the Bitcoin will be halved to reduce the reward received by miners by 50%. So far, there have been three previous cases - in 2012, 2016 and 2020. The first one reduced the reward from 50 BTC to 25 BTC. The second is from 25 BTC to 12.5 BTC. The last one - from 12.5 BTC to 6.25 BTC.

It will occur every 210000 blocks (about every four years), and the next one will occur in 2024, further reducing the reward to 3.125 BTC.

Bitcoin mining over the years

As early as Bitcoin was first introduced to the public, mining was usually carried out on personal computers using standard GPUs. At that time, it was very easy to get rewards because the miners had the necessary equipment, so they did not need to invest any money to start.

In addition, there is little competition because few people know about cryptocurrency, let alone how to start mining it.

However, with the emergence of application specific integrated circuit chips (ASICs), this situation has changed quickly. ASICs provide higher functions than ordinary personal computers, thus making them obsolete. Standards have been significantly improved. This also makes the cost of effective mining very high, which means that individuals rarely compete with new standards. In addition, this is the beginning of the emergence of large Bitcoin mining centers, which have incredibly powerful machines.

It is worth noting that after the ASIC driven computer started to run, the bitcoin hash rate also increased significantly, ultimately making the network more healthy.

Bitcoin mining issuance

With the introduction of new powerful technologies and the establishment of large mining centers, it is clear that these institutions will control Bitcoin mining. For many years, China has been the leading country in cannabis consumption (more than 66%), but when the government officially declared miners illegal, everything changed. The company was forced to shut down their machines. It can be seen from the above chart that there will be a significant decline in May 2021.

However, the network recovered almost immediately, showing the resilience of Bitcoin again. No central authority can "shut it down".

As far as the entities accounting for the more significant part of bitcoin hash rate are concerned, AntPool is the largest known pool, but a large part of it is scattered around, and its source has yet to be determined.

Is Bitcoin Mining Worth It Today?

The big question came, but it didn't have a straight answer. Before we begin to understand whether BTC Mining is still worthwhile today, there are four main factors to consider: the electricity charge for power supply to the computer system; Mining difficulty; Availability and price of computer system; Competition.

The first method is somewhat subjective and mainly depends on the location, because the cost of electricity varies depending on the location of the mining machine. It is also worth noting that power sources are another major component - how do miners power their equipment? Some use hydropower resources, while others use solar energy, wind energy and even fossil fuels. These should be taken into account in the calculation.

The difficulty coefficient is closely related to the bitcoin hash rate, because it measures transaction verification by the number of hashes per second. The network aims to generate a certain amount of Bitcoin per second. When there are more active miners, the difficulty will increase to ensure that the distribution level is static.

While the availability of computing power does not sound like a problem, this is not always the case. During the parabolic price rise and media attention increase in 2017 and 2021, Bitcoin mining has become very popular, and many people are trying to enter. Mining hardware becomes scarce, which also leads to the very high price of some components such as chips and video cards.

As mentioned above, competition may be the most important factor. It can be seen from the previous paragraph that large mining companies are the leaders, leaving few opportunities for individual miners.

With these ideas, we can understand why there are more than "yes" or "no" answers to this question. In fact, by observing all these factors, every future miner should ask himself whether it is worth it for him. However, before you go to the hardware store to buy bulk commodities with the idea of mining Bitcoin, please make sure that you have done all the necessary calculations.

summary

In recent years, mining industry has become a multi billion dollar industry, and many large enterprises are trying to establish further control. However, these changes usually exclude individual miners, while many continue to do so and try to make profits. In 2024, Bitcoin is expected to halve for the fourth time, and the rewards for miners will halve to 3.125 BTC.

On the surface, this may disgust potential newcomers, who will ask whether it is more profitable to just invest and wait for its growth over the years. However, such growth is not guaranteed. On the other hand, through mining, people can not only get BTC as a reward, but also maintain network security and verify transactions, making it the most critical part of the Bitcoin puzzle.