Since Bitcoin’s inception back in 2009, it has emerged as the backbone of the crypto industry. Soon enough, owning a Bitcoin became the biggest flex among investors and traders alike. People started looking for ways to earn BTC, and mining is one of them. But what is Bitcoin mining?
Bitcoin mining involves developing valid blocks of transactions that are added to the BTC public ledge or the BTC blockchain. Mining is an essential part of the BTC network as it solves the double-spend problem, which needs consensus on the transaction history. You can use public-key cryptography to know the ownership of bitcoin. All of this is complex for a common person, but it’s fascinating if you want to get a piece of the pie called crypto. If you are fascinated by BTC mining, here are three things you must know about it.
Effect of price fluctuations on mining rewards
The price of Bitcoin has grown immensely over the past decade. In Feb 2011, one BTC was valued at $1. Fast forward to March 2017, it was around $1,290; now, in 2022, it is $30,074. The only lesson you should be getting from this spectacular price hike is that it reflects on the mining rewards. That means when the price of Bitcoin increases, your mining rewards also increase.
BTC Halving
Once you know the answer to your question, “what is Bitcoin mining,” there’s one more significant concept you should be aware of: Bitcoin Halving. Bitcoin halving is an event that takes place every four years, and it slashes the rewards you get by mining Bitcoin by its half. It is a significant event in the BTC network, and every investor, trader and enthusiast must know about it.
The first BTC halving event that occurred in 2012 slashed the reward value for mining from 50 to 25. After four years, in 2016, the mining rewards were halved to 12.5 BTC from 25 BTC. In 2020, you would get 6.25 BTC for mining one block of Bitcoin. Now it will reduce to merely 3.125 BTC in 2024.
Mining Rig Maintenance
Most bitcoin miners often worry about how much energy the mining rigs consume. Setting the mining rig is easier with thousands of tutorials and guides, but a rig’s maintenance is another story. Most houses have 110 volts power outlets, while the Bitcoin rigs require 220 volts plugs. Such high voltage plugs are often only used by appliances that require higher energy, such as refrigerators or ovens. That means you would either have to unplug your already plugged appliances permanently or would have to install new 22o volts outlets.
Once the setup is done, the mining rig would constantly be running, and a power cut means the mining setup stops. You might have to get a high energy power backup that can keep the setup running continuously. You can imagine how much energy it would consume and what your utility bill would look like. On top of that, the whole setup creates a lot of heat, so you might have to install additional exhaust fans or a cooling system to keep the setup at optimum temperatures. Plus, a highly complicated electrical setup always runs the risk of short circuits and fires.
Mining Bitcoin is essential for the protocol, and many people also make a lot of money from it. If you are considering mining BTC, take a look at these points before doing it.
