Bitcoin mining is a process of confirming and recording a Bitcoin transaction on a ledger distributed on the network. This is the most important procedure of the entire Bitcoin technology, since it makes the system safe, ensures that users are acting correctly and finally introduces new bitcoins in circulation.
Obviously there can be no extraction without extractors, also called miners. The extractors, all over the world, help to make the network decentralized by distributing hardware and electricity that support the system. They are rewarded on a rotating basis through transaction fees and newly extracted Bitcoins. These gains incentivize miners to continue contributing to the cause and to cover maintenance costs.
Simplifying, it works like this
- Each extractor sets up its hardware so that it can verify transactions on the Bitcoin network.
- Verified transactions are grouped into 1 Mb groups every 10 minutes.
- Every computer that joins the network must solve a complicated cryptographic puzzle in order to add a new block to the Bitcoin blockchain.
- The first computer to solve the puzzle adds the block and is rewarded with Bitcoin.
Currently, once the puzzle is solved and a new block is added to the blockchain, the extractor receives a 12.5 BTC prize. This bonus tends to decrease over time (it becomes half after adding 210 blocks). The first Bitcoin extractor in history has received 000 BTC per block, while in 50 the gain will be 2020 BTC.
Keep in mind that there are no more than 21 BTC in circulation. This limit is needed to make the deflationary system. For the time being, the new Bitcoin extractions are intended to encourage miners to keep the network alive, but the system is designed to gradually decrease once it has touched the 000 million BTC extracted.
In 2025 95% of the bitcoins will have been mined while the rest will slowly enter the market by 2140. At this point, the extractors will be rewarded only through the commissions paid during the transactions by the users, in spite of this it will be ensured that everyone it is still convenient to feed and keep the network alive.
And you, would you like to mine Bitcoin?
Bitcoin is a completely open source project, anyone is free to join the network and benefit from new extractions. Mining can be highly beneficial, especially if Bitcoin continues to appreciate and keep the exchange rate high. However, to have a minimum guarantee of profit, you need to have an extremely powerful computer (known as ASICs) that supports the necessary software, and be aware that electricity consumption would be very high and expensive.
Due to the very high competition between miners it is impossible to be able to load a block with a simple PC or GPU in private contexts. If you are really interested and after evaluating a good business plan, you can always pay a qualified company that extracts BTC for you.