Think of mining and most people imagine hard manual labour, going down a pit and digging out a valuable resource. But there is a kind of mining that doesn’t even require you to leave the comfort of your home: Bitcoin mining. The resource mined is a digital currency called Bitcoin and the hard work is done by a computer.
Bitcoin mining is essential to the whole idea of Bitcoins. When someone buys or sells something using Bitcoins, the transaction is recorded in a public ledger called the blockchain. A bunch of records is called a block. The records are protected by some complicated maths called cryptography. For transactions to go through successfully more maths needs to be used to check they are legitimate in a process called verification – this is what miners do. In exchange for verifying a block, they are rewarded with new Bitcoins.
So how do you mine Bitcoins? A computer and a graphics card are good enough but there are also special Bitcoin mining machines. Next you need to download a digital wallet where you can collect your mined Bitcoins and finally some free mining software – the tools that actually do the mining.
Mining software solves complicated mathematical problems to verify blocks, ultimately creating new Bitcoins. The computing power needed to mine Bitcoin can heat up your computer, wearing it out. Then there is the cost of electricity.
So sometimes there isn’t much profit in mining solo, which is why people join groups of established Bitcoin miners, combining their computing power to mine more Bitcoins more quickly and splitting the rewards.
Like coal, Bitcoins are finite. 21 million Bitcoins will be created, with the last Bitcoin estimated to be mined sometime in 2140. So there’s lots of time to get in on the action.