Introduction
Everyone in this world is aware of the process in which physical money comes into existence. Printing of bills happens in the mint, owned and looked after by the government of the concerned country. However, only a minor percentage of the world’s population has information about the production of cryptocurrency.
Cryptocurrencies like Bitcoin and Ethereum are decentralized forms of currency. Therefore, No country’s government can produce them. It has no physical form, so it does not exist in print. They are farmed or mined. Since BTC is known as ‘digital gold,’ its extraction by solving highly encrypted puzzles is Bitcoin mining.
What is cryptocurrency mining?
Cryptocurrencies are finite in number and are present in the form of highly complex code and puzzles. On solving the code, the person earns a certain quantity of the specific token. This process of extraction of cryptocurrencies is known as ‘cryptocurrency farming’ or ‘cryptocurrency mining.’ The people involved in this process are called ‘miners’ or ‘farmers.’ It is a significantly complex process and requires high-tech computers and GPUs for proper execution. For further assistance, consult crypto revolt!
Cryptocurrency farming does not solely refer to Bitcoin farming. You can also farm other tokens like Ethereum. New coins come into circulation only through the process of farming.
History of bitcoin mining
Bitcoin mining dates back to the time when Satoshi Nakamoto first released Bitcoin in 2009. It started with the Genesis block, or block 0. Since then, the reward for Bitcoin mining has been reduced by half every four years. So, on solving the initial block, the person got rewarded with 50 bitcoins. Currently, on solving a block, a person gets 6.25 bitcoins.
Is crypto farming legal?
The legitimacy of Bitcoin farming depends on the political location of the miner. Mining is legalized in certain countries, whereas other countries have completely banned it. Some countries where Bitcoin farming is prohibited are:
- Bangladesh
- Bolivia
- Ecuador
- Iran
Functioning of the process
Bitcoin farming or mining is a strategic and complex process of guessing. It involves solving codes of 64 digit hexadecimal and similar mathematical operations.
To explain in layman terms, let’s say that the answer of the block is 30. Miners try to guess the closest answer. If A guessed 28 and B guessed 10, then A wins the block, being the closest guesser. This process is known as ‘hashing.’
Bitcoin mining hotspots
The place where Bitcoin mining happens is known as a ‘farm.’ A Bitcoin mining farm draws heavy electricity. Estimation says that cumulatively, the computing power spent over Bitcoin farming can effectively run 3.7 million supercomputers. Location of some of the top bitcoin farms are:
- Dalian, China
- Reykjavik, Iceland
- Moscow, Russia
- GigaWatt, Washington, United States of America
- Bitfury, Amsterdam, Netherlands
- Linthal, Switzerland
Bitcoin mining as a profession
Bitcoin mining sounds luring, although it is not a stable source of income. Earning potential increases or decreases in correspondence with the market value of Bitcoin. During high prices, mining a block of Bitcoin can result in a net earning of around $250,000.
However, there are a lot of constraints to choosing Bitcoin farming as a career. It is a rat race.
- You can spend hours of hard work and monetary investment trying to solve a block and get compensated with nothing if someone else bags it.
- It was a hefty investment behind the computational setup consisting of Hi-Tech GPUs. The entire process generates a lot of heat, demanding a reasonable investment in coolants.
Bitcoin farming is an exciting process and demands a lot of research. With increasing popularity, the number of farmers and farming units is growing day by day. The transparency of cryptocurrency usage is gradually witnessing a rise, with famous personalities transacting in cryptos.
Conclusion
Corresponding to this increase, the reward for mining is decreasing proportionately. Although cryptocurrency’s market cap has crossed a trillion dollars, it is still a volatile zone for investment. We suggest the readers perform thorough research before jumping to conclusions or investing their hard-earned money in cryptocurrency farming.
