This process is referred to as “Cloud Mining”. Rather than purchasing bitcoin mining specific hardware like the ASIC’s mentioned above, many miners have chosen to mine Bitcoin by renting out a physical mining computer from a cryptocurrency mining company. You can learn more about these machines in our article: The Best Bitcoin Mining Hardware
Specialized computers solely created for mining, known as application-specific integrated circuits, or ASICs are the standard for bitcoin mining today. This type of “Hardware Mining” was difficult and expensive. Initially, mining Bitcoin was only possible if you set up your own computer with mining software. For Bitcoin, this is done using a proof-of-work method, or by having to dedicate electricity and computing power in order to solve a complex equation that proves the next block of transactions is legitimate. Since Bitcoin is a decentralized ledger with many different entities taking part in protecting and verifying the network, it is important that all verifiers remain truthful to make sure the network is not compromised. Miners are compensated financially (with bitcoin as the reward) for ‘mining bitcoin’, and it is easier or harder to be rewarded based on how many other miners there are in the network. What is Bitcoin Mining?īitcoin mining commonly refers to the process of using specialized computer software and hardware to validate blocks of Bitcoin transactions. We break down the best available bitcoin mining software and the best ways to utilize them in this article. It serves the important function of securing and validating blockchain transactions, and it can be potentially lucrative if approached strategically. Bitcoin mining is a catch all term to describe the process of adding transactions to the bitcoin ledger.
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