Bitcoin is a digital currency that has garnered global popularity owing to its skyrocketing price. The cryptocurrency is produced via a process called “mining.” New bitcoins are introduced into circulation via bitcoin mining.
This is how it works
Bitcoin mining requires solving remarkably complicated problems of mathematics that authorise transactions in the currency. When a bitcoin is mined, the miner gets a predetermined portion of the digital currency. Since the value of Bitcoin has skyrocketed in the last few years, it’s expected that the interest in mining has ballooned among individuals. But still, for most individuals, Bitcoin mining is a tough nut to crack due to its complicated nature and huge costs.
Bitcoin operates on a decentralized computer network. When computers on the network check and authorize transactions, new bitcoins are created.These connected computers, or miners, process the transaction in return for a payment in Bitcoin. The cryptocurrency runs on Blockchain technology that serves as a decentralized ledger of all the transactions over a network.
Bitcoin miners across the world compete to solve very complex math problems that necessitate the use of high-end computers and huge amounts of electricity.
The computer hardware needed for Bitcoin mining is termed application-specific integrated circuits or ASICs and can cost lakhs of INR. The hardware also consumes a significant amount of electricity which is why environmental groups are against the process of Bitcoin mining.
The currency,however, is not recognised in a lot of countries and is highly volatile. Last month, China’s central bank declared that all transactions of crypto-currencies will be deemed illegal. The value of Bitcoin plunged by more than $2,000 shortly after the announcement.
The announcement of the ban also shook the mining industry as China, o,wing to low electricity costs and affordable computer hardware is the hub of global Bitcoin mining.
Bitcoin mining flourishes in the country to such an extent that gamers blame miners for the shortage of graphics cards that miners leverage for processing transactions.