Mining for Crypto
How to snag a cryptocurrency without buying ⛏
Real-life miners dig for gold, silver & other precious stones & gems. Crypto Miners dig to bring new cryptocurrency into circulation.
But that’s just a part of what Crypto Mining is about. The real “tea” is in the verification and security of records & transactions that happen in the blockchain. That’s what mining is majorly about.
Stay with me.
In my previous article explaining the term “cryptocurrency”, I talked about how it’s “decentralized” & not governed by a central body like the Bank. But then if this is so, what makes crypto safe? why should people trust that it’s well-regulated?
That’s where blockchain comes in, whereby many many computers are connected all over the world. These computers & the people who operate them (a.k.a Miners) are the ones in charge of making sure that transactions that happen on the blockchain are validated.
Miners voluntarily perform complex calculations required to verify every new Bitcoin transaction in order to keep the blockchain secure.
This seems like (it is) a lot of work so why would anyone want to go through the hassle of trying to “help” secure & validate stuff to make sure that things are going well on the blockchain?
It’s because there’s a reward. And that reward is a coin, a crypto. (the kind of crypto it is depends on what blockchain is being operated on. For this article, I’m using the great Bitcoin as an example).
To reiterate, the reward for struggling to secure the network, solving complex puzzles, and being the first to guess a 64-digit hexadecimal number (known as “hash”) that can be used to update the blockchain ledger with all the newly verified transactions is because when you do, you earn a certain amount of newly minted Bitcoin :)
Knowing how valuable a Bitcoin is, that’s a pretty huge reward.
To further add context, every piece of Bitcoin that exists is unique. Bitcoin is not infinitely available like money that can keep getting printed. The number of Bitcoins that would ever exist in this lifetime is limited & already known.
They’re just not all in circulation yet.
So every time someone “mines” a new Bitcoin, that’s an additional coin added to the ones that are already in circulation.
“As of late 2020, the reward was 6.25 BTC — but it will be reduced by half in 2024, and every four years after. In fact, as the difficulty of mining increases, the reward will keep decreasing until there are no more bitcoin left to be mined” — Coinbase
The juicy part
How can you mine to earn a Bitcoin without having to buy one?
You can’t.
And it’s not because all I’ve just said about mining is a lie, it’s because I know your computer is just not powerful enough to mine for crypto :(
Verifying the blockchain & solving these complex calculations require a huge amount of computing power. Years ago, a simple computer & a fan to cool it down would’ve been able to get you some coins. But now, the condition for meeting the requirements to be able to mine is a whole lot.
Mining these days is handled by dedicated data centers that ensure that they meet adequate requirements like inexpensive electricity (‘cos it requires lots of electricity), a cold climate (it generates loads of heat), and jurisdictions with clear regulations.
It’s why places like the US, Kazakhstan, Russia, Canada, and Ireland are hot with crypto miners that set up their big centers. These places fulfill one or more of those needed requirements.
Wrapping it up with a fun fact
Bitcoin supply
Rumor has it that there will only ever be 21 million BTCs in this lifetime.
The final block should theoretically be mined in 2140. From that point forward, Miners will no longer rely on newly issued Bitcoin as a reward but instead will rely on the fees they charge.
see u next time, potential miner ⛏
