We talk about Bitcoin quite a lot, but one thing we’ve never really explained in much detail is how Bitcoin mining actually works. You’ve probably heard about mining before, and if you’re not familiar with the process, it’s confusing to think about. How do you mine a digital asset?
You need to understand that when we say mining, we don’t mean the type of activity you do with a pickaxe in a dusty cave. Bitcoin mining is actually quite a complex process that involves a lot of mathematical ability, so we thought we would talk about how Bitcoin mining works and teach you the basics of how these coins are found and brought into public circulation.
Bitcoin Mining – The Basics
So, one of the reasons why Bitcoin has such a high value is because of something called supply and demand. The demand for Bitcoin is greater than the supplier, so the value of each coin is higher as a result. However, why aren’t there more coins? Why is it that there are so few coins that the price of bitcoin is so high?
The reason for this is that there are more coins still to be mined and then added to public circulation. If you want to mine Bitcoin, you have to solve incredibly complex mathematical problems. By solving these problems, you verify the currency, which unlocks a certain amount of Bitcoin.
Lots of these problems are too complex for a person to solve quickly and efficiently, which is why Bitcoin mining setups are usually banks of computers working 24/7 to unlock more coins. They use a lot of energy to do so, which is why Bitcoin is such an energy-intensive currency.
Can Anyone Mine Bitcoin?
Technically speaking, anybody can mine Bitcoin. However, the main restriction that most people face is the computer system required to do so. They cost a lot of money and use a lot of electricity to function, and for most people, the cost is just too high. They don’t have the capital to do it, or the reward isn’t worth the investment.
For this reason, mining coins is usually only reserved for big companies and groups who have the funding and resources. This does limit the number of coins that can be released into public circulation at any given point, but at the same time, they are slowly being found and added.
So, ultimately, Bitcoin mining is an energy-intensive process, but it’s also one that you need to think about. Mining is more complicated than people give it credit for, but it’s interesting to see how it works.
We don’t know yet exactly how many coins are still waiting to be found, so it’s a matter of time before all of them are found and released into the public eye. There may not actually be a limit to the number of coins we can find; it’s a case of waiting and seeing.
Main Photo: Concept of digital crypto mining by Marco Verch under Creative Commons 2.0