- Bitcoin mining is the process of allowing new coins to enter circulation and increasing the cryptocurrency ecosystem.
- Miners receive Bitcoin as a reward to verify transaction “blocks” on the blockchain.
- Last month, their total income exceeded $1 billion. This is their approach.
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Bitcoin was created on a decentralized network called the blockchain, where a huge network of digital “miners” can verify transactions at any given time.
The total revenue of these miners in January was $1.1 billion, a 62% increase from the December Bitcoin price surge to $42,000. The road to making so much money is never easy.
What do Bitcoin miners do?
Miners are responsible for reviewing transactions on the blockchain to ensure the legitimacy of the network. They also work hard to avoid “double spend” situations, in which Bitcoin owners can secretly spend the same coin twice through copying or forgery.
Miners are not necessarily teamwork. They compete with each other to add the next “block” or all Bitcoin transaction records to the chain. A data block contains a partial record of the latest transaction and carries 1 MB (megabyte) of data.
The miner who receives the reward will be the first in a group of people to solve the number problem called proof-of-work by combining numbers in groups to obtain an acceptable 64-character code. The code of the winning block helps ensure the security of the blockchain. It usually looks like the last line of this picture:
As the first person to solve the equation and successfully add the next block to the chain, the miner will receive a certain amount of Bitcoin. Only one such block can be added at a time, and each block takes about 10 minutes to be verified and appended.
In the next 20 years, a total of 21 million coins will be issued.
What reward value?
In 2009, Bitcoin was created for the first time, and miners received 50 Bitcoin rewards for each block. However, according to Satoshi Nakamoto’s authorization, the remuneration for mining is halved every four years. The reward dropped to 25 bitcoins in 2012 and 12.5 bitcoins in 2016.
As of February 2021, miners can earn 6.25 bitcoins for each new block mined-approximately equal to US$330,475 based on the current value. They can also keep the transaction fee for each transaction performed in the block, each transaction is worth $20.
Currently, an estimated 1 million Bitcoin miners are operating.